You may be asked to register as a company's legal representative while someone else runs the business. In law, however, this is more than simply "lending your name".

What is the role of a legal representative?

Under the Law on Enterprises, a legal representative is an individual who represents the company in exercising rights and performing obligations arising from its transactions, represents it before arbitral tribunals and courts, and exercises other rights and performs other obligations prescribed by law.

Once registered, a legal representative holds a recognised legal role with corresponding rights and duties. Being named in the company's registration documents is not merely a formality.

Does a nominee arrangement remove responsibility?

No. An internal agreement that a person merely lends their name while someone else makes all decisions or assumes responsibility does not remove the rights and duties that the law attaches to the position of legal representative.

A legal representative must exercise assigned rights and perform duties honestly, prudently and to the best of their ability to safeguard the company's lawful interests. They may be liable under the law for losses caused to the company by a breach of those duties.

Is a legal representative liable for everything the company does?

No. A registered legal representative is not automatically liable for every company obligation or breach of the law.

Specific responsibility must be assessed by reference to:

  • The role and scope of assigned rights and duties.
  • Actual conduct and the extent of involvement in management and operations.
  • The signing or approval of transactions and documents.
  • Knowledge, intention and degree of fault in each matter.
  • The legal provisions applicable to the conduct concerned.

What should you consider before accepting the role?

Before agreeing, an individual should understand the business activities, governance structure, access to records and transaction-control arrangements. They should not sign blank documents, hand over complete control of digital signatures or seals, or accept the title without access to company information.

In short, what is being "lent" is not merely a name, but a legal position carrying statutory rights, duties and responsibilities.

This article provides general legal information, not advice on a specific matter. Responsibility in each case must be assessed against the records, actual conduct and relevant legal provisions.