The Legal Representative Role Is a Personal Exposure, Not a Title
The 2023 Company Law revision tightened who can hold the role, how they leave it, and what directors personally owe. Groups still appoint into it as though it were a signature block.
HainanInc Corporate Advisory
· 4 min read
The legal representative of a Chinese company is frequently chosen for convenience — whoever is on the ground, whoever is available to sign. The revised Company Law, in force since 1 July 2024, treats the role rather differently: it ties the position to actual executive function, sets out how a holder gets out of it, and sharpens what directors and senior management personally owe. For a foreign group, the person most affected by these provisions is often the one who understood them least well when they accepted the appointment.
Who may hold the role, and how they leave
Under Article 10 of the revised Company Law, the legal representative is the director or manager who represents the company in executing company affairs, as provided by the articles of association. Two consequences follow. The role cannot be parked with someone holding no executive function, because it attaches to a director or manager who actually executes company affairs. And a director or manager serving as legal representative who resigns is deemed to have resigned as legal representative at the same time — with the company required to determine a new legal representative within 30 days of that resignation.
That 30-day obligation matters because the previous practice of leaving a departed employee on the register indefinitely, while the group decided what to do, now runs against an express requirement. It also matters to the individual, who has a route out that does not depend on the group getting around to it.
The Company Law provisions that apply
- Company Law of the PRC, 2023 revision (中华人民共和国公司法) — National People's Congress Standing Committee, adopted 29 December 2023, in force 1 July 2024, 266 articles.
- Same law, Article 10 — the legal representative is the director or manager who represents the company in executing company affairs per the articles of association; a director or manager holding the role who resigns is deemed simultaneously to resign as legal representative; the company must determine a new legal representative within 30 days.
- Same law — directors, supervisors and senior management owe duties of loyalty and diligence; a controlling shareholder or actual controller who does not serve as a director but in fact executes company affairs owes those duties; directors and senior management who cause loss to others through intent or gross negligence in performing their duties bear compensation liability; a controlling shareholder or actual controller who instructs directors or senior management to act against the interests of the company or its shareholders bears joint and several liability with them.
- Hainan Free Trade Port Regulations on the Registration Administration of Market Entities (海南自由贸易港市场主体登记管理条例) — in force 1 May 2024 — registration of the legal representative and the obligation to file changes.
- All positions above verified against the issuing bodies' published texts in September 2026.
Duties now reach past the people formally appointed
The revision extends duties of loyalty and diligence beyond the board as registered. A controlling shareholder or actual controller who does not serve as a director but who in fact executes the company's affairs owes those duties, and a controlling shareholder or actual controller who instructs directors or senior management to act against the interests of the company or its shareholders bears joint and several liability with them.
For a wholly foreign-owned enterprise this is the provision worth reading twice. The common operating model — a local legal representative executing decisions actually made at the offshore parent — is exactly the pattern these provisions describe. It does not make the arrangement unlawful. It means the offshore decision-maker is no longer as remote from the consequences as the org chart suggests.
The register records who signs. The statute is increasingly interested in who decided.
Personal liability for negligent performance
Directors and senior management who cause loss to others in the course of performing their duties, through intent or gross negligence, bear compensation liability. Combined with the requirement that the legal representative be a person actually executing company affairs, this produces a coherent picture: the role carries authority, and it carries personal exposure proportionate to that authority. An individual accepting it on the basis that it is administrative has misread it.
What to settle before appointing someone
- Whether the proposed holder genuinely executes company affairs, since the role attaches to a director or manager who does.
- What the articles of association actually say about the role, since Article 10 defers to them.
- The exit route, and the 30-day replacement obligation, agreed in advance rather than negotiated at departure.
- Whether decisions are in practice made by the appointee or elsewhere, given the extension of duties to those who in fact execute company affairs.
- Indemnity and insurance arrangements, and whether they respond to the exposures the statute actually creates.
- A change filing made promptly on any replacement, since the register is what third parties rely on.
How we support the role
Legal representative and director duties work is making the position properly understood before it is accepted and properly maintained afterwards: what the articles provide, what the holder is personally exposed to, how the exit works, and whether the entity's actual decision-making pattern matches its formal one. Where it does not, the same gap usually shows up in the substance position, and the two are best fixed together rather than separately.
This is general commentary on published law, not legal advice to any individual or company, and the position of a particular office-holder depends on facts this note does not address. Positions were verified against published sources in September 2026.