FOREIGN COMPANY/BRANCH

A branch company is a type of subsidiary company that is formally incorporated and registered in one country, but conducts business operations through a local office or division in another country.

Some key things to know about branch companies:

• The branch is not a separately legal entity – it is legally part of the parent company in the country of incorporation.
• They allow a company to have a permanent business presence in another country without needing to form a new legal subsidiary company.
• Branch companies provide an international sales/service network for the parent.
• All branch liabilities and obligations are the legal responsibility of the parent company.
• Used when a full-fledged foreign subsidiary is not yet warranted due to smaller scale of operations.
• Can be a first step before later transitioning branch operations into a formal local incorporation.

So in summary, branch companies extend a parent company’s international reach through local branch office presences.

What are the advantages?

Here are some key advantages of using a branch company structure:

• Lower setup costs compared to establishing a wholly new foreign subsidiary. Branches don’t require separate incorporation.
• Quicker market entry into a new country without as much licensing/compliance work as a full foreign company.
• Greater control and oversight by the parent company since the branch has no separate legal status.
• Easier administration and consolidated financial reporting since profits flow directly to the parent.
• Flexibility to scale up branch operations over time into a dedicated subsidiary if business grows sufficiently.
• Ability to leverage the parent company’s reputation and brand recognition locally.
• Centralized functions like procurement, IT, HR etc. can be managed from the parent.
• Tax reporting is consolidated for the parent company rather than being separate for each entity.
• Redeployment of branch managers/resources is simpler without the rigidities of separate company borders.
• Lower risk profile initially than a foreign direct investment requiring more capital commitment.

Requirements for registering a Foreign Company/Branch

• C