What is a registered branch?
The term registered branch was introduced by the Business Corporations Act. This designation is used for a branch of a foreign company that is domiciled in a state other than the one in which the company operates.
Previously, the term organizational unit was used for this type of branch, but since 2014, when the Business Corporations Act and the New Civil Code were amended, only the term branch is used, or if the branch is registered in the Commercial Register, the aforementioned registered branch.
HOW TO SET UP A REGISTERED BRANCH?
As a registered branch is a classic branch of your company, like any other branch that your company owns, you must register it in the Commercial Register, which includes filing an application with the Commercial Court and paying the registration fee.
The registered branch bears the same name as your parent company, and establishing it is many times easier compared to the complete establishment of a company – both in terms of time and money.
Although registered in the Commercial Register, a registered branch has no legal personality, which means that it cannot be considered a legal entity as in the case of a joint-stock company or a limited liability company and must comply with the law and all obligations and rights arising from it.
REGISTERED BRANCH VS. ESTABLISHMENT
Unlike a registered branch, an establishment is only a space in which you can carry out your business activities. For this reason, it must be properly designated and reported to the Trade Licensing Office and not registered in the Commercial Register as a separate entity. You can read more about establishments by clicking on the appropriate link.
A registered branch on the other hand, is a less expensive and demanding way to set up a company elsewhere than in your home country, which can easily help you expand your reach to other countries.
Each registered branch must have a manager who acts on behalf of the company. Furthermore, each company must also have its own identification number and registered office. As regards the law, or for example bookkeeping, the law requires that the registered branch follow only the laws of the country it comes from – so if you own a parent company in the Czech Republic, you will also act according to its laws (registered branches are regulated by the Business Corporations Act, but you will also find mention of them in EU legislation).
The name of the registered branch and the name of the company it comes from may vary, but it is not good for it to be misleading or otherwise confusing.
If you have any questions about registered branches or if you are unsure about how to set one up, please contact us at contact address. We will be happy to answer all your questions and help you with any problems.