In common-law countries, once a company is incorporated, it automatically becomes a legal person or legal entity. Here, the term refers to the company itself, not an individual.

In the process of establishing companies across borders, many Chinese enterprises often encounter misunderstandings due to the fundamental differences between the corporate systems of China and common-law jurisdictions. One of the most common misconceptions is the belief that overseas companies must also provide information for a “legal representative,” leading businesses to prepare documents based on Chinese corporate concepts. In reality, common-law countries do not have a legal representative system. During the incorporation stage, authorities typically require only information about directors or ultimate beneficial owners (UBOs)—not a “legal representative.”

Another frequent misunderstanding is the assumption that shareholders automatically possess managerial authority or external representation rights in overseas companies. However, in common-law jurisdictions, shareholders only hold ownership rights. They do not participate in daily management and do not bear external representative responsibilities similar to those of a legal representative in China.

A further widespread misconception is equating directors with a “legal representative.” In overseas systems, a director is simply a position within the corporate governance structure. When directors sign documents on behalf of the company, they do so based on the authority delegated by the company, and legal liability is borne by the company as an independent legal entity—not by the director personally.

Therefore, directors are not equivalent to China’s legal representatives, nor do they carry the mandatory statutory representative responsibilities imposed by Chinese law.

These misunderstandings can lead to practical risks, such as incorrect incorporation filings, bank account applications being rejected due to mismatched information, delays in the registration process, and even compliance issues later on. For enterprises engaged in cross-border expansion, it is therefore crucial to understand the key differences between the corporate systems of common-law jurisdictions and China in order to ensure smooth incorporation, proper compliance, and efficient ongoing operations.

At the core of the overseas corporate system is the principle that “the company itself is the legal person.” This is the most fundamental distinction from China’s corporate framework. Understanding this difference enables businesses to better manage cross-border incorporation, compliance operations, bank account opening, and subsequent corporate governance.