Don’t be a “nominal legal representative” — don’t lend your ID to register a company
The law assumes the legal representative is the person actually managing the company; claiming “I’m just a figurehead and know nothing” does not serve as a valid excuse to avoid liability. If a legal representative causes harm to others while performing duties, the company must compensate first, then may seek reimbursement from the negligent representative. For those already serving in this role, company law allows them to resign, provided the company appoints a new legal representative within 30 days.
There’s no cost involved. If someone asks you to “just be…
The legal representative is held by the director or manager who actually executes the company's affairs;
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 held by the director or manager who actually executes the company's affairs; the law presumes you are the person in charge. If the legal representative causes damage to others while performing their duties, the company shall first provide compensation. After the compensation is paid, the company may seek recourse (recover this money) from the legal representative who was at fault. Directors and senior management owe a duty of loyalty and a duty of diligence to the company (being loyal to the company and performing duties with care). If damage is caused to others while performing duties, and the individual has acted with intent or gross negligence, they must also pay compensation out of their own pocket. In the eyes of the law, "lack of knowledge" is not a valid reason to be exempted from liability. Article 10 of the Company Law states: "Where a legal representative resigns, the company shall determine a new legal representative within 30 days from the date of the legal representative's resignation." (China, effective from 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
Open source linkCompany 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. If someone used your name to take out a loan, see item 45 (help with a face scan).