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Corporate law Registration of a branch of a legal entity

Taras Miroshnychenko

Head of practice

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miroshnychenko@prikhodko.com.ua

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Head of Corporate Law and Fintech Practice. Expert in the creation and reorganization of companies, support of M&A transactions, as well as legal support for opening and running a business in the EU, Asia, and North America.

Registration of a branch of a legal entity

A branch is an organizationally and legally separate unit of a legal entity (company) that performs part of its functions. A branch operates on the basis of a specially developed regulation and is not fully autonomous from the main company. Registration of a branch legalizes its activities and gives the legal right to officially act on behalf of the main company. We will describe in more detail in the article below how the process of entering information about a branch into the register and what documents are required for this.

A branch of a legal entity: what are the features of the legal status?

A branch has a specific legal status that distinguishes it from the main legal entity. A branch can act as an independent participant in legal relations, but carry out its activities on behalf of and at the expense of (and with the consent of) the main company. In addition, the company bears full responsibility for all actions, inactions and decisions of the branch, which also:

first, acts as a party to a transaction concluded between the branch and another person;
second, approves the regulations on the branch;
third, appoints the head (director) of the branch to the position;
finally, provides the branch with its own property for use (by entering it on a separate balance sheet).

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When is the decision to create a branch of a legal entity made?

The specified decision is made before the actual operation of the unit begins and is approved within the framework of the General Meeting of Participants (Founders). It is formalized either by the minutes of the management body or by the decision of the sole founder, respectively.

What does the process of registering a branch of a legal entity look like?

The procedure for entering information about a newly created unit into the unified state register is as follows:

adoption and registration of the decision on creation (if necessary – notarization);
development and approval of the regulation on a new structural unit;
submission of documents for state registration through the Central Registration Service, notary;
registration with tax authorities;
opening a bank account and transferring management of the property of the parent company.

Important! You need to submit an application (Form 4), a decision (minutes) on the creation of a separate unit, a power of attorney for the director, another authorized person to the state registrar. Within two business days, data about the branch is entered and, if necessary, additional documentation or information is requested. To learn more, we suggest ordering a consultation with one of our corporate lawyers.

It will also be useful: BUSINESS SCALING, MIGRATION TO EUROPE, OPENING A COMPANY ABROAD

Special cases of registering a branch of a legal entity: what are the key points?

Registration of a branch of a foreign legal entity in Ukraine

The main feature and at the same time the complexity of this procedure is that documents for a foreign company will need to be translated and properly legalized. In particular, a notarized translation of the constituent documents and the decision to establish a branch will be required, and if necessary, an apostille. Most often, extracts from the trade, banking, and court registers for a non-resident company are required. And in order to submit all documents properly and go through the entire procedure with a notary, it is necessary that the head of the company, authorized to represent its interests, be personally present at the registration, or prepare a general power of attorney for another person in Ukraine.

Registration of a branch of a Ukrainian legal entity abroad

The specifics of this process will depend on the legislation of each individual country. Thus, in some countries it may be prohibited to create separate divisions for companies that carry out certain types of activities. In addition, most countries require updating information about the branch every few years. For example, the registration period of a division of a Ukrainian company in Poland is only 2 years, after which this period will need to be constantly renewed. The director of a branch in Poland must also be a person who is a resident of this country or has received a work permit here.

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Why should you contact a corporate lawyer from Prikhodko & Partners Law Firm?

A corporate lawyer can help not only with advice, but also with the preparation and submission of documents for state registration. At the client’s request, he can also check the legal purity of a separate company, its structural unit both in Ukraine and abroad. The main services of our lawyers in this area include: