The Branch Office as a Strategic Instrument for Growth

Companies that expand their business activities frequently face the question: subsidiary or branch office (Zweigniederlassung)? The latter offers a flexible and efficient way of opening up new markets without establishing a legally independent entity. The branch office remains part of the overall enterprise.

Questions concerning the branch office arise in particular when it is newly established or when a business is acquired that is to be continued as a branch office. In the case of branch offices, too, the choice of the company name (Firma) is in principle a matter for the body that adopts the articles of association. If a business is to be acquired and continued under a company name that differs from that of the main enterprise and with a branch office suffix, this should be prepared in advance by way of provisions in the articles of association. Provisions in the business purchase agreement alone are not sufficient for this purpose.