Based on our case analysis in “Legal Representative in China: Remedies for Failed Change of Registration after Resignation (I)”, we offer the following suggestions for legal representatives who have already resigned and for whom the company is reluctant to handle the procedures of change of registration with the market supervision administration from the perspective of Chinese lawyers engaged in the foreign investment field for a long time.
1. Requesting for the change of legal representative in writing
Where the legal representative is the chairman of the board of directors or the executive director, he can convene a shareholders’ meeting for the change of legal representative. Where the legal representative is the manager of the company, he shall submit a written request to the board of directors or the executive director for convening a shareholders’ meeting to change the legal representative or terminating the labor contract between the manager and the company, after which he shall be relieved of the relevant duties to the company.
2. Notifying the other party of the change of legal representative in writing
By notifying the other party of the change of legal representative in writing, the company will be under pressure to register the change as soon as possible and the legal representative can use such written notice as a piece of evidence for reducing his liability. For example, the legal representative may notify the registration authority of the change and request the registration authority to urge the company to handle the procedures as soon as possible; or the legal representative may use online media to declare that he is no longer the legal representative of the company.
3. Filing a lawsuit with the court
After the legal representative has exhausted all the private remedies, he may resort to legal action provided that he has formally separated from the company. For example, if the legal representative is a shareholder, he transfers all his shares to other shareholders or third parties; or the labor relationship between the legal representative and the company no longer exists. From a practical point of view, a natural person who has no actual connection with the company cannot represent the company externally, and should not be the legal representative of the company.
Another premise for such legal action is that relevant conditions for the change of legal representative are met. For instance, the court are more likely to rule in favor of the legal representative if the new legal representative has been appointed by the shareholders’ meeting or the board meeting through passing a resolution thereon. The main reason is that if the court makes the ruling to support the change of registration without a candidate for the replacement, the judgment will be unenforceable.
As Chinese lawyers experienced in the field of foreign investment for a long time, we have assisted many foreign invested enterprises in their legal issues related to legal representatives. If you have any legal questions regarding the legal representative, please feel free to contact us via firstname.lastname@example.org.