The Legal Representative acts as the “legal face” of the company and is the signatory for all company operational activities; in turn they have the legal responsibility to ensure the good operation and standing of the company.
In doing so the individual assumes certain personal legal liabilities and hence it is a position that is not taken lightly. For example, if a company fails to pay all of its the relevant corporate taxes and/or fails to act in good faith then the local authorities may chose to take legal action, civil and/or criminal against both the company as well as the legal representative directly.
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Who Can be Appointed as the Company Legal Representative?
To be appointed as the legal representative the person must be a local national or a foreign national with the legal right to live and work in the country.
While we encourage our clients to appoint someone within their business to fulfill this role, sometimes this isn’t possible due to the specified position requirements; as such Biz Latin Hub can offer this service by appointing a suitably experienced and trusted senior lawyer to act as a Legal Rep for the client.
Often clients will ask us to provide a legal representative during the timely process in which a foreign employee receives an appropriate visa and/or gained trust in a local employee who is going to take on this role.
Some Potential Problems?
The appointment of the legal representative is a very important decision for both the company and the individual, with serious implications if the wrong person is appointed as they are accorded the legal right by the shareholders to manage and to make decisions on behalf the company.
When a legal representative is appointed or elected, the powers are typically given by a formally notarized document (nominally within the company bylaws).
Nevertheless, we have encountered instances where the legal representative has acted without the prior approval of the shareholders and have completed actions such as to sell company assets, sign contracts without permission and/or to grant company resources to help friends and/or family.
Thus it is important that when selecting a legal representative that much consideration is given to confirming what powers are granted and ensure that the person selected is a trusted partner, employee, and/or contact of the companies owners.
Why Is A Legal Representative So Important?
A fundamental part of the incorporation process, and a reason for the importance of consulting legal experts in order to define the power and control handed to the legal representative.
It is crucial to ensure that the powers granted to the legal representative are adequate to allow them to complete their required professional functions, and on the other hand, are adequately restricted to ensure the risk is minimized.
For example, a legal representative might need to obtain the owners signature prior to the sale of any company assets or they might need written authorisation to complete bank transfers in excess of USD$5,000 per day.
Biz Latin Hub can be your Legal Representative
Biz Latin Hub has extensive experience with the company incorporation process; if you have any questions or concerns about the incorporation process and/or the role of the legal representative feel free to contact us.
