2021-06-10 09:06

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Legal Person, Legal Rep, Authorized Rep and Their Liabilities


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Author: Chelsea WangGeorge Washington University Law SchoolJ.D. expected, May 2023

Supervised by Heidy Haijiao Han

Licensed in China and California, USA 

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According to Article 57 of the PRC Civil Code, a legal person is an organization that has the capacity for enjoying civil-law rights and the capacity for performing civil juristic acts, and that independent enjoys civil-law rights and assumes civil-law obligations in accordance with law. By defining a legal person as an organization, the law indicates that a legal person could be a corporation, a company, an association, or even a school, but never an actual person. The definition of legal persons should be distinguished from that of legal representatives of a legal person. Unlike a legal person, a legal representative of a legal person is an actual natural person. According to article 61 of the PRC Civil Code, a legal representative of the legal person is the person with the responsibility of representing a legal person in conducting civil activities in accordance with law or the legal persons articles of association. Lastly, an authorized representative usually refers to a person appointed by the legal person or authorized in accordance with the legal persons regulations to conduct civil activities. In contrast to a legal representative, an authorized representative is not an independent legal concept.


In China, a limited liability company refers to a company that is set up by no more than fifty shareholders, and it comes in three forms known as a normal limited liability company, a one-person limited liability company, and a wholly State-owned company. A normal liability company has two to fifty shareholders, whereas a one-person limited liability company has only one natural person shareholder or one legal person shareholder. A wholly State-owned company does not have a board of shareholders, the functions and powers of which are exercised by the State-owned assets supervision and administration authority.


With respect to a legal person, a legal representative and an authorized representatives legal liabilities in a limited liability company, a legal person usually assumes all risks. For example, Article 3 of the PRC Company Law stipulates that all limited liability companies are enterprise legal persons, where a shareholder is liable to the company to the extent of the amount of the shareholders capital contribution, and the company is liable for the debts of the company with all its assets. For a one-person limited liability company, pursuant to Article 63 of the PRC Company Law, if the shareholder of a one-person limited liability company is unable to prove that the property of the company is independent from the shareholders own property, the shareholder shall bear joint and several liability for the debts of the company. 


Additionally, Article 61 and Article 62 of the PRC Civil Code provides that the legal consequences of the civil activities conducted by the legal representative in the legal persons name and the civil liability arising out of the damages caused by a legal representative of a legal person to others while performing his or her responsibilities shall be assumed by the legal person. However, Article 62 of the PRC Civil Code also provides that the legal person has the right to indemnification against its legal representative who is at fault. In other words, while a legal person assumes the consequences of a legal representatives unlawful civil conducts, it still has the right to indemnify the legal representative for all or part of its losses.



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