The director of a company is the individual in charge with the leading and supervising an area of the company or the general business activities of that enterprise. Directors can be assigned different business roles (such as human resources or marketing) or they can be general directors of that company. Chinese company directors may have different roles, but their main objective is to ensure that the company meets its objectives and they act in the best interest of the enterprise.
Our Chinese law firm can help you with information about the duties and responsibilities of a company director in China.
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A brief description of the company director
The Chinese Company Law does not provide a comprehensive description of the term “director”. However, the individual occupying this position is described as a member of the board of directors and an individual who has an authorized relationship with the company (carries out business under the authorization of the company). A person who acts as the director of a Chinese company is bound to have duties of loyalty towards the company as well as observe the duty of care. Liabilities may arise from failure to do so or for breaching any duties. These liabilities include civil liability, administrative liability and criminal liability.
Chinese companies can appoint nominee directors. They can be appointed to protect the identity of the actual company director or to represent the interests of a shareholder or a creditor. The company shareholders choose the future director based on a set of capabilities and skills needed for the particular business field in which the company activates. Our Chinese attorneys can give you more information about the types of directors in this country and the liabilities and responsibilities that derive from this position.
The director of a company in China
Business owners in China can open several types of companies and a popular business form for foreign companies is the foreign invested enterprise. The directors of a company in China do not need to be Chinese nationals or residents. However, some restrictions do apply and certain types of individuals cannot become company directors, including:
– children or mentally challenged individuals;
– individuals convicted of corruption, bribery and other crimes within the last five years;
– persons who have no political rights as a result of a crime committed within the last five years;
– a person who was the director/general manager/legal representative of a company that was bankrupt of liquidated and who is liable for the bankruptcy or liquidation of that company;
– individuals who have outstanding personal debts.
We invite you to watch the video below regarding the directors of companies in China and their responsibilities:
Depending on their size and type, companies in China can have between three and 13 members on their board of directors. Small companies typically have a single executive director.
For more information about the role and powers of a company director in China, you can contact our Chinese law firm.