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The legal representative of a company has the authority to represent the company externally, conduct business activities, and sign contracts on its behalf, thus bearing significant legal consequences. This role is crucial in corporate governance and is often contested in the competition for control of the company. Hence, understanding the appointment and removal procedures of the legal representative, as stipulated in the company's articles of association, is essential for company operators. The recent revision of the Company Law provides new guidelines on these procedures. Below is an overview comparing the old and new laws and their practical implications:

Under the Old Company Law

Legal Representative Roles:

1. Chairman of the Board of Directors: According to Article 44, the chairman is elected by all directors or nominated by shareholders with the largest capital. This ensures majority control by capital.

2. Executive Director: In smaller companies without a board, the executive director, elected by the shareholders' meeting, can be the legal representative.

3. Manager: Appointed by the board of directors, the manager can also serve as the legal representative.

Under the New Company Law

Expanded Scope:

1. The new law allows any director involved in company affairs to serve as the legal representative, not just the chairman. However, only one legal representative is permitted.

2. Resignation Provisions: The new law respects the will of the legal representative to resign and requires the election of a new representative within 30 days. Failure to do so can severely impact the company's operations.

Deadlock Prevention:

· The new law advises incorporating deadlock prevention mechanisms in the company's articles of association. For instance, in case of a governance deadlock and the resignation of the legal representative, a director nominated by a shareholder can temporarily act as the legal representative.

Impact of Titular Legal Representatives:

· The new law aims to reduce "titular" legal representatives (ordinary employees acting as legal representatives), ensuring that the role is substantially involved in corporate governance. However, challenges remain, such as the consequences if a new legal representative is not elected within 30 days of the previous representative's resignation.

Practical Implications

The appointment and removal procedures under the new law aim to streamline corporate governance, making it more flexible and responsive to changes. The new law emphasizes substantial involvement of the legal representative in company affairs, reducing the prevalence of nominal representatives. However, practical challenges, such as handling resignation and ensuring continuous representation, remain to be addressed through personalized provisions in the articles of association.

Conclusion: The new Company Law introduces significant changes in the appointment and removal of legal representatives, reflecting a shift towards more dynamic and responsive corporate governance. Companies must update their articles of association to align with these changes, ensuring smooth transitions and minimizing disruptions in representation.