Subsidiary branch execution – can the head office be sued or prosecuted?
A subsidiary branch has insufficient legal personality to have legal action to execute against it, so it cannot be sued or prosecuted at its own offices. However, the entry of a subsidiary branch into the Commercial Register means that an action can be brought against the main branch.
Definition of subsidiary branch
A subsidiary branch is a commercial operation that, from a legal viewpoint, is a dependent part of a main branch. It is engaged in the same or similar activities as the main company on a long-term basis at its own premises. It is therefore commercially independent.
Bringing an action against a subsidiary branch
A subsidiary branch is legally dependent on the main company and has no legal personality of its own. It therefore has no capacity to be a party to legal proceedings or act before a court of law, and therefore cannot be sued or prosecuted. However, its entry in the Commercial Register means that the main branch can be sued or prosecuted for the commercial activity of the subsidiary branch. A Swiss company can therefore not be sued or prosecuted at the offices of its subsidiary company, but can be sued or prosecuted at its head office.
One exception to this rule concerns subsidiary branches of foreign companies in Switzerland (Art. 50 of Switzerland’s Debt Collection and Bankruptcy Act [SchKG]). Even if the main company’s office is not in Switzerland, it is still liable for the commercial activity of its Swiss branch. If these subsidiary branches are entered in the Commercial Register, legal action can be brought at the company’s Swiss offices.