By STARTUPS.CH, January 13, 2016

What is a branch office?

A branch office is a business which is commercially independent from a head office. The branch office is legally dependent on the main company.

The branch is a commercial operation which, from a legal perspective, is a dependent part of a head office. It carries out the same type of activities as the headquarters and, in doing so, has commercial independence. Example: A Swiss retailer has their headquarters in the city of Zürich. The chain operates other sites in Winterthur, Bülach and Birmensdorf.

From the viewpoint of the head office, the branch’s role is to carry out the business activities in locations other than that of the head office. From a legal point of view, the prevailing opinion is that the other site is a branch if there is a geographical separation from the head office site. The business activity must also be carried out for a longer period of time and the branch must be under constant independent management (cf.Forstmoser/Meier-Hayoz, Schweizerisches Gesellschaftsrecht or Swiss Civil Law, Pg.741). According to this definition, depots, fabrication sites and similar, for example, are not branches in the legal sense.

Setting up a branch office

Swiss companies can set up branch offices in Switzerland and abroad. The Swiss branch must be entered in the commercial register (Art. 935 Para. 1 OR, cf. blog entry). Foreign companies can set up a branch office in Switzerland which must be entered in the commercial register in the branch’s location (Art. 935 Para 2 OR).

A subsidiary is legally independent

The branch office is not a subsidiary, as it remains legally part of the total company, and does not constitute a legal person. In contrast, a subsidiary has its own legal personality and is legally independent, but is commercially dependent on the parent company.