Creation of a subsidiary branch

The creation of a subsidiary branch is an important legal procedure that has a significant impact on business activities and the legal status of the organization.

So let’s take a look at the procedures, requirements, and legal aspects of setting up a subsidiary branch.

This process is a strategic decision for companies that intend to expand their activities into new territories or new sectors.

A branch of a subsidiary is one of the methods for increasing the volume of production, sales of products, and increasing competitiveness.

However, the process of creating a branch must be carried out by the legislation and legal norms regulating the activities of enterprises.

Concepts and definitions

A branch of a subsidiary is a separate unit that operates based on the founding documents of the parent company.

It carries out its activities within the limits of the powers granted to it by the parent company and by the current legislation of the country in which it is located.

Registration procedure

• Preparation of documentation

The first step in registering a branch is the preparation of the necessary documentation.

This documentation may include:

• Statutory documents of the parent company: copies of the founding documents of the parent company, such as the articles of association, the decision to establish a branch, and others.
• Branch documents: request for branch registration signed by the applicant, branch charter, and other documents confirming the structure and activities of the branch.
• Power of Attorney: A power of attorney may be required if a branch representative or person representing the interests of the branch is acting on behalf of the company.

The next step will be the submission of prepared documents.

• Submission of documents to the registration body

After deciding on the establishment of a branch, it is necessary to carry out registration according to the requirements of the country’s legislation.

This includes submitting the necessary documents to state registration authorities and obtaining relevant permits and licenses.

It can be a state enterprise registration body, a local administration, or another competent body in the country of registration.

• Review and registration of documents

After submitting the documents, the registration body reviews them.

If all the necessary documents are submitted correctly and they meet the requirements of the law, then the branch can be registered.

If deficiencies or missing documents are discovered, they may need to be revised or submitted additionally.

• Obtaining a registration certificate

After the successful registration of the branch, the registration authority issues a certificate of registration. This is a document confirming the legality and legality of the existence of a subsidiary branch.

• Establishment of authorized capital

A branch of a subsidiary must have its authorized capital, which is established taking into account the financial capabilities of the parent company and the requirements of the law.

It will also be necessary to conclude an agreement that clearly defines the rights and obligations of the branch before the parent company, as well as the terms of cooperation between them.

Legal status of a subsidiary branch

A branch of a subsidiary has its legal status, which is determined by the legislation of the country of its registration.

It may have the right to participate in court proceedings, conclude agreements, open bank accounts, etc.

However, it is also obliged to comply with all rules and requirements that apply to its activities, including taxation, reporting, and other aspects.

Features of a subsidiary branch

One of the characteristics of a branch is that it operates within the limits of authority given to it by the parent company.

It can perform certain functions, but cannot make strategic decisions without the consent of the management of the parent company.

In addition, the branch usually does not have the right to create subsidiaries or spin-off units without the consent of the parent company.

Therefore, the creation of a subsidiary branch is an important strategic action for a business that intends to expand its activities and increase its competitiveness.

However, it is important to remember the need to comply with all legal norms and requirements when carrying out this procedure to avoid possible problems and risks in the future.