Don’t be a “nominal legal representative” — don’t lend your ID to register a company

There’s no cost involved. If someone asks you to “just be a figurehead with no responsibilities,” you can simply refuse.

The legal representative is intended to be the director or manager who actually runs the company’s affairs, meaning the law regards this person as the true manager. Should such a representative cause harm to others while on duty, the company pays compensation first and then can recover those funds from the responsible representative. Directors and senior executives also owe duties of loyalty and diligence to the company — they must act in its best interests and with due care. If they cause harm to others through intentional acts or gross negligence, they must personally bear the financial responsibility. “Lack of awareness” is not a legally valid defense against liability (nationwide, effective July 2024).

全国人大常委会 (2023). 公司法（2023 年修订，第十、十一、一百八十、一百九十一条）. https://www.gov.cn/yaowen/liebiao/202312/content_6923395.htm

Company law itself only specifies who bears liability. More commonly, being a nominal legal representative leads to further consequences: when a company faces court enforcement actions, the representative may be restricted from high-end consumption, and may also face tax-related penalties or administrative sanctions. These consequences stem from other laws and enforcement regulations; since this section does not verify their direct basis in company law text, it is rated as grade B. As noted earlier, existing legal representatives may resign under company law, with the company required to appoint a replacement within 30 days.