Understanding Senior Executive Liabilities In China

At Horizons, we often encounter many senior executives, who overlook the role. Though the legal representative of a company in China holds full liabilities. Senior executives of a company in China, who do not simultaneously hold the legal representative role, can face civil or criminal liabilities. Furthermore, Senior foreign executives are subject to the same liabilities as their local counterparts. Underestimating the role and responsibilities of senior executives can raise risks for both the individual and the company. This article highlights the main takeaways for senior executives based in China.

Accountability of the senior executive

A three-tiered corporate governance for limited liability companies including foreign companies ('companies') in China is outlined under The Company Law of the People's Republic of China ("Company Law") - as demonstrated in figure 1. For senior executives, they are accountable to the board of directors or executive director,