Foreign branch offices – which legal norms are applicable?
Foreign companies can found branch offices in Switzerland. These are subject to Swiss law in accordance with Art. 160 Para. 1 IPRG (international private law). However, some legal matters are subject to the foreign law of the head office. This article will show which legal norms are applicable to foreign branch offices.
Foreign companies can found branch offices in Switzerland and these must be entered into the commercial register (see blog entry). A branch office is a commercially independent business operation of a major company upon which it depends in a legal sense (for more on the concept, see blog entry).
Legal treatment of foreign branch offices
Foreign branch offices are subject to Swiss law in accordance with Art. 160 Para. 1 IPRG. However, this applies to only a portion of legal issues. External legal relationships are governed by Swiss law, i.e. what representative powers a managing director of a branch office should have (Art. 160 Para. 2 IPRG). Foreign law generally governs internal relationships, such as corporate law requirements for founding and liquidating a branch office.
There are also special additional rules for foreign branch offices operating under Swiss law.
- The company name of the branch office must contain the name of the head office location, the location of the branch office in Switzerland and specifically stipulate that it is a branch office (Art. 952 Para. 2 OR).
- A special place of jurisdiction is established at the location of the branch office for contractual disputes (Art. 112 Para. 2 in conjunction with Art. 21 Para. 4 IPRG).
- The branch office of the foreign company is subject to bankruptcy proceedings for receivables that it has assumed on its own account.
- An authorised representative resident in Switzerland must be entered into the commercial register for foreign branch offices (for more on representation, see: blog entry).
The entry in the commercial register has merely a declarative effect (see blog entry). This means that the above effects come into force as soon as the requirements for a branch office in Switzerland have been satisfied in accordance with Swiss law.
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