Do not become a nominal shareholder or hold shares in your name for someone else
In China, the registered shareholder bears shareholder obligations. Promised capital must be paid on schedule; default can require both payment and compensation for company losses. If another founding shareholder fails to contribute, you can share liability for the gap. Someone else may run the business while obligations remain in your name.
What it takes
Free. Decline requests to lend your identity card for shareholder registration or temporarily hold someone else's shares.
What you may gain
Registered shareholders must pay their full subscribed capital by the dates in the articles of association. Default requires payment and compensation for resulting company losses. Other founding shareholders can be jointly liable for unpaid founding contributions. If the company cannot meet due debts, contributions not yet due can be accelerated. The actual operator may be absent from the register while you bear the recorded obligation. These Chinese rules apply from July 2024.
Context & considerations
Validity and allocation of responsibility under nominee-shareholding agreements are addressed in Supreme Court Company Law Interpretation (III). TODO: verify the interpretation number and original text of Articles 24 and 25; the official page could not be opened in this review. This uncertainty accounts for grade B. For nominal legal representatives, see Chapter 8, entry 28.
Research & references
NPC Standing Committee (2023). Company Law, 2023 revision, Articles 47, 49, 50 and 54. https://www.gov.cn/yaowen/liebiao/202312/content_6923395.htm