What is the director of a Chinese company?
A director of a Chinese company has responsibilities for leading and supervising the business activities and operations of one or more areas of the company or enterprise.
Understanding a Chinese company’s director structure can help you make informed decisions around a company’s scope, business operations, and potential problems that company may have faced in the past.
As is common in many countries, a director of a Chinese company has responsibilities for leading and supervising the business activities and operations of one or more areas of the company or enterprise, such as marketing, human resources, technology, or compliance. The company director’s primary role is to ensure the company meets its stated business objectives and that they, as directors, act in the best interest of the company. Breaches to these duties can result in a range of civil, administrative, or criminal liabilities.
Chinese companies can have as few as one executive director (for very small to small companies) or range from 3 to 13 depending on the size, scale, and type of business.
Chinese company directors do not need to be Chinese nationals or residents. This is especially common in wholly-foreign-owned enterprises (WFOE) and joint ventures (JV). Restrictions that would prevent an individual from becoming a director of a Chinese company include minors; criminals who have been stripped of political rights due to crimes committed in the previous five years; mentally challenged individuals; individuals with corruption or bribery criminal records in the previous five years; previous directors and legal representatives who were liable for the bankruptcy or liquidation of another company; and individuals with substantial outstanding personal debt.
Any changes to a company’s director structure (including changes to that company’s ultimate beneficiary owner) must be recorded and registered on several documents and with several entities responsible for regulating commerce in China, including the annual return, business license, and with the State Administration for Industry and Commerce (SAIC).
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