Taihe Information | Shanghai No. 2 Intermediate People’s Court: Symposium on Cutting-Edge Issues in the Removal of Legal Representatives
Release Date:
2026-07-15
Practical Issues Seminar
Discussion Question 1: Does the company’s involvement in a criminal offense constitute an impediment to the removal of its legal representative?
Basic Facts of the Case
Plaintiff Wang was a director, general manager, and legal representative of Defendant Asset Management Company. In June 2025, Wang submitted a notice of resignation to the company; in July 2025, Wang requested termination of the employment contract. However, neither request received any response, and the company failed to convene a board meeting to elect new directors. In July 2025, the asset management company was subject to criminal proceedings for alleged fundraising fraud, and the related criminal case is currently under investigation.
In this case, Wang has petitioned the court to order the removal of his status as legal representative. The central issues in dispute are: whether the conditions for Wang’s resignation have been met; and, if those conditions are satisfied, whether the company’s involvement in criminal offenses constitutes a ground for barring the removal of the legal representative from the register of directors.
Clash of Opinions
Wu Weikuan, Judicial Assistant of the Commercial Division of the Chongming People’s Court: Criminal offenses, in and of themselves, do not constitute an absolute ground for excluding liability.
Article 10, Paragraph 2 of the Company Law provides that “if a director or manager who serves as the legal representative resigns, such resignation shall be deemed to constitute simultaneous resignation from the position of legal representative.” As the legal representative possesses attributes of public law, if the registration of the legal representative is immediately canceled upon resignation, it may result in a vacancy in the company’s legal representation, thereby undermining transactional security and the continuity of corporate governance. Whether Wang’s status as legal representative should be removed depends on whether the conditions for his resignation as a director have been satisfied; insofar as those conditions have not yet been met, his request to cancel the registration should not be granted.
Accordingly, a request for removal must be predicated on the exhaustion of internal remedies. Under Article 70 of the Company Law, a director’s resignation must be notified to the company in writing, and even when the board falls below the statutory quorum or when the term has expired without re‑election, the former director remains obligated to perform his duties. In this case, since the company has not yet conducted a re‑election, Mr. Wang’s directorship has not been terminated, nor does his agency relationship with the company automatically lapse upon the termination of his employment. Criminal offenses per se do not constitute an absolute ground for disqualification; however, if there is a risk that the resigning party may seek to evade his fiduciary responsibilities, such circumstances must be assessed with due caution.
Song Shuhan, Judicial Assistant of the Commercial Division of the Chongming District People’s Court: A company’s involvement in criminal proceedings may serve as a temporary ground for suspension.
The reason is that the roles of director and legal representative are not merely matters of private‑law agency; they also bear on the company’s internal governance and external transactions, and thus possess attributes of public law and organizational law. Internally, when a company becomes involved in criminal proceedings, it enters an abnormal operating state, making it practically difficult to appoint a new legal representative or directors. Externally, the status of legal representative implicates the legitimate expectations of an indefinite array of creditors and the stability of procedures for recovering assets and mitigating losses; erasing such status could create a disconnect between the appearance of authority and actual liability, thereby complicating criminal investigations and encouraging malicious attempts at evasion.
Accordingly, at the level of the hierarchy of legal interests, public legal interests in criminal cases should take precedence over private legal interests arising from an individual’s need to step down from their official position. Consequently, a company’s involvement in criminal proceedings may serve as a ground for barring such action; however, this constitutes a prudent, case‑by‑case discretionary measure, rather than a denial of the right to resign or of substantive rights—provided that, upon conclusion of the subsequent criminal proceedings and if the legal representative, Mr. Wang, is found not liable, he may still assert his rights separately.
Practical Integration
Pan Weiwei
Chongming People’s Court
Commercial Division Trial Team
Person in charge
Each case must be reviewed to determine whether the legal representative has a substantive connection to the company’s operations, and requests for removal should be granted only with due caution.
Following the implementation of the new Company Law, the approach to removing a legal representative has shifted from “principally disfavored” to “cautiously supported.” However, when criminal liability intersects with failures in corporate self‑governance, it becomes necessary to strike a dynamic balance among individual liberty, corporate interests, creditors’ rights, and criminal prosecution. Criminal involvement does not constitute an absolute bar to removal, but it should be treated as a significant factor weighing against such relief. A court may grant relief only if all four of the following conditions are met: the resignation is genuine and valid; there is no substantial connection between the individual and the company or the underlying crime; there is no malicious intent to evade responsibility; and internal remedies are objectively unavailable (e.g., the company has ceased operations, or relevant personnel are in custody). The central criterion for review is “substantial connection”: if the applicant is merely a nominal figure—without any operational participation, without remuneration, not a shareholder, and unconnected to the crime—the court may approve removal; by contrast, if the applicant is the de facto controller, a controlling shareholder, or an active participant in the criminal conduct, the court should reject the request. Overall, the guiding principle should be “strict scrutiny and prudent support,” so as to avoid mechanical adjudication.
Li Feiyi
Shanghai No. 2 Intermediate People’s Court
Deputy Chief Judge of the Commercial Division
Avoid summarily rejecting requests for expungement on the ground of “criminal involvement”; instead, assess, on a case-by-case basis and in light of the specific circumstances, whether such requests meet the statutory requirements.
Pursuant to Article 10 of the Company Law and the currently published draft for public comment on interpretations of certain provisions of the Company Law, the legal representative’s exercise of the right to resign is lawful; however, whether such resignation meets the statutory threshold for judicial intervention requires a comprehensive assessment of numerous factors.
First, did the plaintiff “exhaust all internal remedies”? In the case of Chen Moufei v. a Shanghai decoration company and third party Zhang Moulin, concerning a dispute over the company’s registration amendment, the internal governance mechanisms of the decoration company were unable to effect the removal of the legal representative’s status, thereby rendering judicial intervention necessary. In practice, the legal representative’s issuance of a letter of resignation to the company does not equate to having exhausted all internal remedies; the standard for “exhaustion of remedies” must be assessed dynamically. Even a nominal legal representative may still possess the right and capacity to request the convening of a meeting. Only upon reviewing the factual circumstances—such as the design of the internal procedures for electing a new legal representative and the available internal avenues for addressing the legal representative’s resignation—and making a comprehensive determination can it be decided whether the threshold of “exhaustion of internal remedies” has been met.
Second, whether the resignation of the legal representative violates special provisions under the Civil Code, the Company Law, the Enterprise Bankruptcy Law, and other relevant statutes. In accordance with the fundamental principle of Article 132 of the Civil Code, which prohibits the abuse of rights, if the plaintiff has exploited the mechanism for removing a legal representative to evade debt, such resignation constitutes an abuse of the right to remove the legal representative. Pursuant to Article 3 of the Judicial Interpretation on the General Provisions of the Civil Code, such an act is legally ineffective. Furthermore, in line with Article 3 of the Company Law… Corporate independence The fundamental principle is that the exit mechanism for a legal representative hinges on the company’s independent legal personality and sound management. If, however, the company has been reduced to a mere instrument of crime and has become virtually hollow, it is highly questionable whether its legal representative can still enjoy the protection afforded by the corporate law’s exit mechanisms. Furthermore, pursuant to Article 15 of the Enterprise Bankruptcy Law, which defines the “liquidation obligor,” when a company finds itself in a state of “having grounds for bankruptcy” or “being unable to pay its due debts,” it is deemed to have met the statutory conditions for bankruptcy. Once such a company enters bankruptcy proceedings due to insolvency, its legal representative is required to cooperate with the liquidation process; this liquidation obligation of the legal representative constitutes a ground for barring discharge.
In summary, on the basis of a systematic review of the legality of requests for removal, applications by legal representatives that meet the statutory requirements should be supported with due diligence.
Discussion Question Two: “The signature on the business registration is authentic; however, when the party claims to have been fraudulently appointed as the company’s legal representative, how should the validity of the business registration be determined?”
Basic Facts of the Case
Plaintiff Wu signed multiple documents at a designated location and subsequently received remuneration. Later, Wu discovered that his identity had been fraudulently used to register him as a shareholder, executive director, and legal representative of Defendant Zhen’s company. Accordingly, he took various remedial measures: he reported the loss of his ID card to the public security authorities and filed a criminal complaint regarding the identity theft, which was accepted for investigation. Subsequently, he applied to the Market Supervision Administration to revoke the change of registration. However, the registration authority issued a decision refusing to revoke the registration, on the grounds that “the existing evidence is insufficient to establish that the registration was fraudulently altered.” Consequently, Wu brought suit before the court, asserting that the equity transfer and appointment documents at issue are all false, that he never intended to invest nor participated in the company’s management, and requesting a judicial determination that he is not a shareholder, executive director, or legal representative of the company, as well as an order to remove the relevant registration.
The central issue in this case is: when the signature on the business registration document was indeed executed by the party concerned, and that party contends they assumed the role of legal representative under duress, how should the validity of the business registration be assessed?
There are two divergent views on this issue: one holds that it constitutes registration under a false name, while the other maintains that it amounts to registration by proxy. Although these two perspectives have little impact on the outcome of a request for removal, they carry distinct implications for how the parties involved bear external debts and liabilities during their tenure.
At present, the prevailing view holds that the key to determining whether a case constitutes impersonation in registration lies in whether the party concerned was aware of being registered as the legal representative. If there is consent, ratification, or acquiescence, such conduct does not amount to impersonation. Moreover, the authenticity of the signature should not be the sole criterion for assessment; rather, a comprehensive evaluation should take into account factors such as the imposter’s possession of identity documents and the specific circumstances surrounding the impersonation.
Clash of Opinions
Li Aoran, Judicial Assistant of the Commercial Division of the Chongming District People’s Court: In this case, the legal representative was impersonated; therefore, the request for removal may be granted.
The core constituent elements of fictitious registration are as follows: the person whose name is registered never, from the outset, manifested the intent to become a shareholder or to serve as the legal representative. Although the signature on the business registration document was indeed that of the party concerned, at the time of signing, the party was unaware that they would be registered as the company’s legal representative, thus lacking the requisite intention; moreover, the party promptly took remedial measures thereafter—reporting the loss of their ID card, applying to the administrative authorities for the revocation of the change of registration, and filing a lawsuit with the court—without ever subsequently ratifying the registration. Furthermore, the party has never participated in the company’s management. Accordingly, even though the business registration is factually accurate, it should still be deemed fictitious registration, and the party’s request for its removal should be granted. As for the administrative decision not to revoke the registration, such a decision constitutes merely documentary evidence; it does not preclude the court from independently making a substantive determination regarding identity based on the totality of the case’s evidence.
Yu Siyuan, Judicial Assistant in the Commercial Division of the Chongming District People’s Court: In this case, the legal representative borrowed another’s name rather than assuming a false identity; therefore, the request for removal cannot be granted.
The distinction between impersonation and nominal registration lies in whether the registered party was aware of and consented to the arrangement; such determination should be made as of the time the act was performed. In this case, Wu, as a person with full civil capacity, ought to have foreseen the legal consequences, and by voluntarily signing and accepting remuneration, he should be deemed to have been both aware of and consenting to the arrangement. Accordingly, the situation constitutes nominal registration, and the request for removal of the registration should not be granted; one cannot overturn the true intention expressed at the time of the act by later denials or remedies.
Practical Integration
Shi Yun
Chongming People’s Court
Commercial Division Trial Team
Person in charge
In this case, the legal representative borrowed another person’s name rather than assuming a false identity; provided certain conditions are met, the request for removal may be granted.
From the perspective of the public notice effect of business registration, once a signature is registered, it acquires such effect; a subsequent unilateral assertion of fraud cannot readily override the validity of the registration, as doing so would undermine the legitimate reliance interests of bona fide third parties in commercial transactions. With regard to the duty of care, since the party concerned is a person with full civil capacity, its failure to exercise reasonable care means that its own fault cannot be shifted onto a bona fide third party. As for the legal force of administrative decisions, when the market supervision and administration authority issues an administrative decision refusing to revoke the registration, this is not merely the result of procedural review but reflects a substantive assessment of the facts of the case and the relevant evidence. Accordingly, such an administrative decision serves as an important reference in civil proceedings for determining whether a case of fictitious registration has been established. Moreover, administrative decisions are the outcome of an administrative agency’s exercise of its statutory powers and enjoy a certain degree of official authority; absent the submission of new evidence by the party concerned and prior to the decision being lawfully revoked or declared unlawful, civil courts should refrain from reaching a contrary conclusion. Therefore, in the present case, no fictitious registration exists, and the request for removal should not be granted.
However, the relationship between the legal representative and the company is one of agency; in cases where no impersonation is involved, the parties have already reached a mutual agreement on this agency relationship, and its termination requires only a unilateral expression of intent. The court may clarify to the plaintiff that, even if it finds no case of impersonation, the plaintiff may still, pursuant to the rules governing the removal of a legal representative’s registration, seek such removal after exhausting all internal remedies. If the plaintiff persists solely in asserting that the registration constitutes impersonation, the claim should be dismissed. Alternatively, if, following such clarification, the plaintiff reverts to seeking removal and submits evidence demonstrating that all internal remedies have been exhausted, the court may then examine, in accordance with the law, whether to grant the request for removal.
Han Xiao
Chongming People’s Court
Presiding Judge of the Commercial Division
In this case, the legal representative was impersonated; therefore, the request for removal may be granted.
The central issue in this case is whether the registration‑change act should be regarded as a regular civil act or as an unlawful, even void, civil act. Although the plaintiff alleges that it was induced by fraud, there are circumstances—such as the plaintiff being a professional business‑closure operator, or evidence of collusion between the parties that undermines public order and good morals, or the use of a person without capacity to perform obligations as a nominal registrant—under which the legal relationship ought to be deemed void ab initio. While this situation does not constitute a typical case of identity‑theft registration, it nonetheless aligns more closely with the underlying legal rationale of such cases; accordingly, the liability should rest with the entity that held the registration prior to the change. The civil liability of a professional business‑closure operator may be assessed separately, but this does not affect the determination that its registration act does not qualify as a normal registration‑change.
In most cases, the authenticity of a signature is sufficient to distinguish between impersonation and borrowing another’s name. However, when the facts of the case give the judge reason to suspect unlawful conduct such as malicious collusion, greater caution should be exercised in individual adjudication, and non‑standardized approaches may be adopted.
Wang Xi
Shanghai No. 2 Intermediate People’s Court
Commercial Division Trial Team
Person in charge
In this case, the legal representative’s appointment constitutes a paid‑for nominal arrangement and, in principle, should not be subject to removal. However, if there is a manifest imbalance between rights and obligations, relief may be granted on grounds of “loss mitigation” or “equitable adjustment.”
This case primarily concerns the negative confirmation of shareholder status—both as a director and as the legal representative—which warrants discussion, particularly given that the majority of enterprises in China are small, medium, or micro-sized, and these three roles often overlap. Concerns about disentangling the legal representative from liability and creating disorder stem from the concurrent holding of these three identities; however, such concerns do not necessarily hold. On the one hand, each role is governed by distinct legal norms. The civil liability borne by the legal representative by virtue of that position is limited to the internal indemnification obligation set forth in Article 11 of the Company Law and bears no relation to the shareholder or director liabilities commonly asserted by creditors. In other words, removing the legal representative’s status does not affect their corresponding shareholder or director liabilities. On the other hand, the post‑corporate‑event issues encountered in typical cases are already addressed by existing legal provisions and considerations. For instance, the obligations related to dissolution, liquidation, bankruptcy, and other post‑corporate matters are clearly prescribed by law. Where state‑owned enterprises are involved, or when a company enters bankruptcy proceedings or is designated as a discredited person subject to enforcement, the resignation of the legal representative must be handled in accordance with special regulations. As for the phenomenon of resignations being undertaken by individuals who operate as “professional closure practitioners,” this can be identified and addressed by leveraging big data from digital courts, drawing on the framework applied to “professional loan sharks.”
Business registration is an administrative act; once issued, it is presumed valid. The revocation of such registration does not negate the registered status, and the court should conduct a substantive review. If the signature on the registration documents was not made by the person concerned, yet the administrative authority nonetheless revoked the registration, the core issue in judicial review lies in whether the person was aware of the registration. Even if the signature was not that of the registrant, if the person consented to or acquiesced in the registration, they should clearly bear the corresponding consequences. In this case, since the relevant documents were signed by the person themselves, the administrative authority did not revoke the registration; however, from the perspective of judicial review, this constitutes a paid‑for nominal registration, and the person was fully aware that they had been registered as a shareholder, director, and legal representative. Although they may have recognized that assuming these roles could entail legal risks disproportionate to the compensation received, Recognition The claim is erroneous; therefore, in principle, the request for removal should not be granted. However, if the balance between rights and liabilities is indeed severely skewed, and the parties have already taken proactive remedial measures, granting the removal may help to “limit losses” and achieve “equitable relief.” In such cases, the balancing of interests underlying the judicial decision merits further examination.
Discussion Question 1: Does the company’s involvement in a criminal offense constitute an impediment to the removal of its legal representative?
Plaintiff Wang was a director, general manager, and legal representative of Defendant Asset Management Company. In June 2025, Wang submitted a notice of resignation to the company; in July 2025, Wang requested termination of the employment contract. However, neither request received any response, and the company failed to convene a board meeting to elect new directors. In July 2025, the asset management company was subject to criminal proceedings for alleged fundraising fraud, and the related criminal case is currently under investigation.
In this case, Wang has petitioned the court to order the removal of his status as legal representative. The central issues in dispute are: whether the conditions for Wang’s resignation have been met; and, if those conditions are satisfied, whether the company’s involvement in criminal offenses constitutes a ground for barring the removal of the legal representative from the register of directors.
Wu Weikuan, Judicial Assistant of the Commercial Division of the Chongming People’s Court: Criminal offenses, in and of themselves, do not constitute an absolute ground for excluding liability.
Article 10, Paragraph 2 of the Company Law provides that “if a director or manager who serves as the legal representative resigns, such resignation shall be deemed to constitute simultaneous resignation from the position of legal representative.” As the legal representative possesses attributes of public law, if the registration of the legal representative is immediately canceled upon resignation, it may result in a vacancy in the company’s legal representation, thereby undermining transactional security and the continuity of corporate governance. Whether Wang’s status as legal representative should be removed depends on whether the conditions for his resignation as a director have been satisfied; insofar as those conditions have not yet been met, his request to cancel the registration should not be granted.
Accordingly, a request for removal must be predicated on the exhaustion of internal remedies. Under Article 70 of the Company Law, a director’s resignation must be notified to the company in writing, and even when the board falls below the statutory quorum or when the term has expired without re‑election, the former director remains obligated to perform his duties. In this case, since the company has not yet conducted a re‑election, Mr. Wang’s directorship has not been terminated, nor does his agency relationship with the company automatically lapse upon the termination of his employment. Criminal offenses per se do not constitute an absolute ground for disqualification; however, if there is a risk that the resigning party may seek to evade his fiduciary responsibilities, such circumstances must be assessed with due caution.
Song Shuhan, Judicial Assistant of the Commercial Division of the Chongming District People’s Court: A company’s involvement in criminal proceedings may serve as a temporary ground for suspension.
The reason is that the roles of director and legal representative are not merely matters of private‑law agency; they also bear on the company’s internal governance and external transactions, and thus possess attributes of public law and organizational law. Internally, when a company becomes involved in criminal proceedings, it enters an abnormal operating state, making it practically difficult to appoint a new legal representative or directors. Externally, the status of legal representative implicates the legitimate expectations of an indefinite array of creditors and the stability of procedures for recovering assets and mitigating losses; erasing such status could create a disconnect between the appearance of authority and actual liability, thereby complicating criminal investigations and encouraging malicious attempts at evasion.
Accordingly, at the level of the hierarchy of legal interests, public legal interests in criminal cases should take precedence over private legal interests arising from an individual’s need to step down from their official position. Consequently, a company’s involvement in criminal proceedings may serve as a ground for barring such action; however, this constitutes a prudent, case‑by‑case discretionary measure, rather than a denial of the right to resign or of substantive rights—provided that, upon conclusion of the subsequent criminal proceedings and if the legal representative, Mr. Wang, is found not liable, he may still assert his rights separately.
Pan Weiwei
Chongming People’s Court
Commercial Division Trial Team
Person in charge
Each case must be reviewed to determine whether the legal representative has a substantive connection to the company’s operations, and requests for removal should be granted only with due caution.
Following the implementation of the new Company Law, the approach to removing a legal representative has shifted from “principally disfavored” to “cautiously supported.” However, when criminal liability intersects with failures in corporate self‑governance, it becomes necessary to strike a dynamic balance among individual liberty, corporate interests, creditors’ rights, and criminal prosecution. Criminal involvement does not constitute an absolute bar to removal, but it should be treated as a significant factor weighing against such relief. A court may grant relief only if all four of the following conditions are met: the resignation is genuine and valid; there is no substantial connection between the individual and the company or the underlying crime; there is no malicious intent to evade responsibility; and internal remedies are objectively unavailable (e.g., the company has ceased operations, or relevant personnel are in custody). The central criterion for review is “substantial connection”: if the applicant is merely a nominal figure—without any operational participation, without remuneration, not a shareholder, and unconnected to the crime—the court may approve removal; by contrast, if the applicant is the de facto controller, a controlling shareholder, or an active participant in the criminal conduct, the court should reject the request. Overall, the guiding principle should be “strict scrutiny and prudent support,” so as to avoid mechanical adjudication.
Li Feiyi
Shanghai No. 2 Intermediate People’s Court
Deputy Chief Judge of the Commercial Division
Avoid summarily rejecting requests for expungement on the ground of “criminal involvement”; instead, assess, on a case-by-case basis and in light of the specific circumstances, whether such requests meet the statutory requirements.
Pursuant to Article 10 of the Company Law and the currently published draft for public comment on interpretations of certain provisions of the Company Law, the legal representative’s exercise of the right to resign is lawful; however, whether such resignation meets the statutory threshold for judicial intervention requires a comprehensive assessment of numerous factors.
First, did the plaintiff “exhaust all internal remedies”? In the case of Chen Moufei v. a Shanghai decoration company and third party Zhang Moulin, concerning a dispute over the company’s registration amendment, the internal governance mechanisms of the decoration company were unable to effect the removal of the legal representative’s status, thereby rendering judicial intervention necessary. In practice, the legal representative’s issuance of a letter of resignation to the company does not equate to having exhausted all internal remedies; the standard for “exhaustion of remedies” must be assessed dynamically. Even a nominal legal representative may still possess the right and capacity to request the convening of a meeting. Only upon reviewing the factual circumstances—such as the design of the internal procedures for electing a new legal representative and the available internal avenues for addressing the legal representative’s resignation—and making a comprehensive determination can it be decided whether the threshold of “exhaustion of internal remedies” has been met.
Second, whether the resignation of the legal representative violates special provisions under the Civil Code, the Company Law, the Enterprise Bankruptcy Law, and other relevant statutes. In accordance with the fundamental principle of Article 132 of the Civil Code, which prohibits the abuse of rights, if the plaintiff has exploited the mechanism for removing a legal representative to evade debt, such resignation constitutes an abuse of the right to remove the legal representative. Pursuant to Article 3 of the Judicial Interpretation on the General Provisions of the Civil Code, such an act is legally ineffective. Furthermore, in line with Article 3 of the Company Law… Corporate independence The fundamental principle is that the exit mechanism for a legal representative hinges on the company’s independent legal personality and sound management. If, however, the company has been reduced to a mere instrument of crime and has become virtually hollow, it is highly questionable whether its legal representative can still enjoy the protection afforded by the corporate law’s exit mechanisms. Furthermore, pursuant to Article 15 of the Enterprise Bankruptcy Law, which defines the “liquidation obligor,” when a company finds itself in a state of “having grounds for bankruptcy” or “being unable to pay its due debts,” it is deemed to have met the statutory conditions for bankruptcy. Once such a company enters bankruptcy proceedings due to insolvency, its legal representative is required to cooperate with the liquidation process; this liquidation obligation of the legal representative constitutes a ground for barring discharge.
In summary, on the basis of a systematic review of the legality of requests for removal, applications by legal representatives that meet the statutory requirements should be supported with due diligence.
Discussion Question Two: “The signature on the business registration is authentic; however, when the party claims to have been fraudulently appointed as the company’s legal representative, how should the validity of the business registration be determined?”
Plaintiff Wu signed multiple documents at a designated location and subsequently received remuneration. Later, Wu discovered that his identity had been fraudulently used to register him as a shareholder, executive director, and legal representative of Defendant Zhen’s company. Accordingly, he took various remedial measures: he reported the loss of his ID card to the public security authorities and filed a criminal complaint regarding the identity theft, which was accepted for investigation. Subsequently, he applied to the Market Supervision Administration to revoke the change of registration. However, the registration authority issued a decision refusing to revoke the registration, on the grounds that “the existing evidence is insufficient to establish that the registration was fraudulently altered.” Consequently, Wu brought suit before the court, asserting that the equity transfer and appointment documents at issue are all false, that he never intended to invest nor participated in the company’s management, and requesting a judicial determination that he is not a shareholder, executive director, or legal representative of the company, as well as an order to remove the relevant registration.
The central issue in this case is: when the signature on the business registration document was indeed executed by the party concerned, and that party contends they assumed the role of legal representative under duress, how should the validity of the business registration be assessed?
There are two divergent views on this issue: one holds that it constitutes registration under a false name, while the other maintains that it amounts to registration by proxy. Although these two perspectives have little impact on the outcome of a request for removal, they carry distinct implications for how the parties involved bear external debts and liabilities during their tenure.
At present, the prevailing view holds that the key to determining whether a case constitutes impersonation in registration lies in whether the party concerned was aware of being registered as the legal representative. If there is consent, ratification, or acquiescence, such conduct does not amount to impersonation. Moreover, the authenticity of the signature should not be the sole criterion for assessment; rather, a comprehensive evaluation should take into account factors such as the imposter’s possession of identity documents and the specific circumstances surrounding the impersonation.
Li Aoran, Judicial Assistant of the Commercial Division of the Chongming District People’s Court: In this case, the legal representative was impersonated; therefore, the request for removal may be granted.
The core constituent elements of fictitious registration are as follows: the person whose name is registered never, from the outset, manifested the intent to become a shareholder or to serve as the legal representative. Although the signature on the business registration document was indeed that of the party concerned, at the time of signing, the party was unaware that they would be registered as the company’s legal representative, thus lacking the requisite intention; moreover, the party promptly took remedial measures thereafter—reporting the loss of their ID card, applying to the administrative authorities for the revocation of the change of registration, and filing a lawsuit with the court—without ever subsequently ratifying the registration. Furthermore, the party has never participated in the company’s management. Accordingly, even though the business registration is factually accurate, it should still be deemed fictitious registration, and the party’s request for its removal should be granted. As for the administrative decision not to revoke the registration, such a decision constitutes merely documentary evidence; it does not preclude the court from independently making a substantive determination regarding identity based on the totality of the case’s evidence.
Yu Siyuan, Judicial Assistant in the Commercial Division of the Chongming District People’s Court: In this case, the legal representative borrowed another’s name rather than assuming a false identity; therefore, the request for removal cannot be granted.
The distinction between impersonation and nominal registration lies in whether the registered party was aware of and consented to the arrangement; such determination should be made as of the time the act was performed. In this case, Wu, as a person with full civil capacity, ought to have foreseen the legal consequences, and by voluntarily signing and accepting remuneration, he should be deemed to have been both aware of and consenting to the arrangement. Accordingly, the situation constitutes nominal registration, and the request for removal of the registration should not be granted; one cannot overturn the true intention expressed at the time of the act by later denials or remedies.
Shi Yun
Chongming People’s Court
Commercial Division Trial Team
Person in charge
In this case, the legal representative borrowed another person’s name rather than assuming a false identity; provided certain conditions are met, the request for removal may be granted.
From the perspective of the public notice effect of business registration, once a signature is registered, it acquires such effect; a subsequent unilateral assertion of fraud cannot readily override the validity of the registration, as doing so would undermine the legitimate reliance interests of bona fide third parties in commercial transactions. With regard to the duty of care, since the party concerned is a person with full civil capacity, its failure to exercise reasonable care means that its own fault cannot be shifted onto a bona fide third party. As for the legal force of administrative decisions, when the market supervision and administration authority issues an administrative decision refusing to revoke the registration, this is not merely the result of procedural review but reflects a substantive assessment of the facts of the case and the relevant evidence. Accordingly, such an administrative decision serves as an important reference in civil proceedings for determining whether a case of fictitious registration has been established. Moreover, administrative decisions are the outcome of an administrative agency’s exercise of its statutory powers and enjoy a certain degree of official authority; absent the submission of new evidence by the party concerned and prior to the decision being lawfully revoked or declared unlawful, civil courts should refrain from reaching a contrary conclusion. Therefore, in the present case, no fictitious registration exists, and the request for removal should not be granted.
However, the relationship between the legal representative and the company is one of agency; in cases where no impersonation is involved, the parties have already reached a mutual agreement on this agency relationship, and its termination requires only a unilateral expression of intent. The court may clarify to the plaintiff that, even if it finds no case of impersonation, the plaintiff may still, pursuant to the rules governing the removal of a legal representative’s registration, seek such removal after exhausting all internal remedies. If the plaintiff persists solely in asserting that the registration constitutes impersonation, the claim should be dismissed. Alternatively, if, following such clarification, the plaintiff reverts to seeking removal and submits evidence demonstrating that all internal remedies have been exhausted, the court may then examine, in accordance with the law, whether to grant the request for removal.
Han Xiao
Chongming People’s Court
Presiding Judge of the Commercial Division
In this case, the legal representative was impersonated; therefore, the request for removal may be granted.
The central issue in this case is whether the registration‑change act should be regarded as a regular civil act or as an unlawful, even void, civil act. Although the plaintiff alleges that it was induced by fraud, there are circumstances—such as the plaintiff being a professional business‑closure operator, or evidence of collusion between the parties that undermines public order and good morals, or the use of a person without capacity to perform obligations as a nominal registrant—under which the legal relationship ought to be deemed void ab initio. While this situation does not constitute a typical case of identity‑theft registration, it nonetheless aligns more closely with the underlying legal rationale of such cases; accordingly, the liability should rest with the entity that held the registration prior to the change. The civil liability of a professional business‑closure operator may be assessed separately, but this does not affect the determination that its registration act does not qualify as a normal registration‑change.
In most cases, the authenticity of a signature is sufficient to distinguish between impersonation and borrowing another’s name. However, when the facts of the case give the judge reason to suspect unlawful conduct such as malicious collusion, greater caution should be exercised in individual adjudication, and non‑standardized approaches may be adopted.
Wang Xi
Shanghai No. 2 Intermediate People’s Court
Commercial Division Trial Team
Person in charge
In this case, the legal representative’s appointment constitutes a paid‑for nominal arrangement and, in principle, should not be subject to removal. However, if there is a manifest imbalance between rights and obligations, relief may be granted on grounds of “loss mitigation” or “equitable adjustment.”
This case primarily concerns the negative confirmation of shareholder status—both as a director and as the legal representative—which warrants discussion, particularly given that the majority of enterprises in China are small, medium, or micro-sized, and these three roles often overlap. Concerns about disentangling the legal representative from liability and creating disorder stem from the concurrent holding of these three identities; however, such concerns do not necessarily hold. On the one hand, each role is governed by distinct legal norms. The civil liability borne by the legal representative by virtue of that position is limited to the internal indemnification obligation set forth in Article 11 of the Company Law and bears no relation to the shareholder or director liabilities commonly asserted by creditors. In other words, removing the legal representative’s status does not affect their corresponding shareholder or director liabilities. On the other hand, the post‑corporate‑event issues encountered in typical cases are already addressed by existing legal provisions and considerations. For instance, the obligations related to dissolution, liquidation, bankruptcy, and other post‑corporate matters are clearly prescribed by law. Where state‑owned enterprises are involved, or when a company enters bankruptcy proceedings or is designated as a discredited person subject to enforcement, the resignation of the legal representative must be handled in accordance with special regulations. As for the phenomenon of resignations being undertaken by individuals who operate as “professional closure practitioners,” this can be identified and addressed by leveraging big data from digital courts, drawing on the framework applied to “professional loan sharks.”
Business registration is an administrative act; once issued, it is presumed valid. The revocation of such registration does not negate the registered status, and the court should conduct a substantive review. If the signature on the registration documents was not made by the person concerned, yet the administrative authority nonetheless revoked the registration, the core issue in judicial review lies in whether the person was aware of the registration. Even if the signature was not that of the registrant, if the person consented to or acquiesced in the registration, they should clearly bear the corresponding consequences. In this case, since the relevant documents were signed by the person themselves, the administrative authority did not revoke the registration; however, from the perspective of judicial review, this constitutes a paid‑for nominal registration, and the person was fully aware that they had been registered as a shareholder, director, and legal representative. Although they may have recognized that assuming these roles could entail legal risks disproportionate to the compensation received, Recognition The claim is erroneous; therefore, in principle, the request for removal should not be granted. However, if the balance between rights and liabilities is indeed severely skewed, and the parties have already taken proactive remedial measures, granting the removal may help to “limit losses” and achieve “equitable relief.” In such cases, the balancing of interests underlying the judicial decision merits further examination.
Review Summary
Chen Xiaoyu, Chief Judge of the Commercial Division of the Second Intermediate People’s Court of Shanghai: This seminar focuses on the practical challenges encountered in adjudicating disputes over the removal of legal representatives. In handling such cases, it is essential to keep the following three key points in mind: First, it must be clarified that such disputes possess standing. In the past, such disputes were often dismissed on the ground that they fell outside the scope of court jurisdiction. Based on current judicial practice, there remains a divergence of views between higher and lower courts on this issue. However, the recent revision of the “Provisions on Causes of Action in Civil Cases” has introduced a separate fourth-level cause of action—“Disputes over the Removal of Company Registration (Filing)”—thereby clarifying that these matters involve a justiciable interest and should be brought within the purview of civil litigation. Second, the grounds for barring the cancellation of registration must not be determined mechanically. Disputes over the removal of legal representatives are becoming increasingly complex, and such cases should not be adjudicated through a rigid, one-size-fits-all approach. For example, Article 70, Paragraph 2 of the Company Law is intended to set forth the post‑resignation duties of directors during the interim period until a successor is appointed; it does not automatically constitute a statutory ground for refusing registration of the director’s removal. To summarily dismiss a request for removal on the grounds that the company is under criminal investigation or that a new director has yet to be appointed would be unduly arbitrary. Instead, the focus should be on ascertaining the facts, with the aim of achieving an organic integration of political, legal, and social outcomes. Third, comprehensively apply both dynamic thinking and systems thinking to examine whether the request for removal meets the statutory requirements. Although the current legal framework does not explicitly stipulate whether mass‑involved crimes constitute a ground for refusing removal, in certain corporate criminal cases, the special status of a company’s legal representative who also serves as a director may render the removal of such representative from the registration record inconsistent with other statutory provisions. Accordingly, it is reasonably justified for the court to reject the request for removal. In applying the law, judicial reasoning should integrate both dynamic and systemic approaches, thereby ensuring that judgments withstand scrutiny.
Chen Xiaoyu, Chief Judge of the Commercial Division of the Second Intermediate People’s Court of Shanghai: This seminar focuses on the practical challenges encountered in adjudicating disputes over the removal of legal representatives. In handling such cases, it is essential to keep the following three key points in mind: First, it must be clarified that such disputes possess standing. In the past, such disputes were often dismissed on the ground that they fell outside the scope of court jurisdiction. Based on current judicial practice, there remains a divergence of views between higher and lower courts on this issue. However, the recent revision of the “Provisions on Causes of Action in Civil Cases” has introduced a separate fourth-level cause of action—“Disputes over the Removal of Company Registration (Filing)”—thereby clarifying that these matters involve a justiciable interest and should be brought within the purview of civil litigation. Second, the grounds for barring the cancellation of registration must not be determined mechanically. Disputes over the removal of legal representatives are becoming increasingly complex, and such cases should not be adjudicated through a rigid, one-size-fits-all approach. For example, Article 70, Paragraph 2 of the Company Law is intended to set forth the post‑resignation duties of directors during the interim period until a successor is appointed; it does not automatically constitute a statutory ground for refusing registration of the director’s removal. To summarily dismiss a request for removal on the grounds that the company is under criminal investigation or that a new director has yet to be appointed would be unduly arbitrary. Instead, the focus should be on ascertaining the facts, with the aim of achieving an organic integration of political, legal, and social outcomes. Third, comprehensively apply both dynamic thinking and systems thinking to examine whether the request for removal meets the statutory requirements. Although the current legal framework does not explicitly stipulate whether mass‑involved crimes constitute a ground for refusing removal, in certain corporate criminal cases, the special status of a company’s legal representative who also serves as a director may render the removal of such representative from the registration record inconsistent with other statutory provisions. Accordingly, it is reasonably justified for the court to reject the request for removal. In applying the law, judicial reasoning should integrate both dynamic and systemic approaches, thereby ensuring that judgments withstand scrutiny.
( Reposted from: Supreme People’s Court Institute of Judicial Cases)
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