“The Parent Company’s Alter Ego”
A branch of a foreign company does not have a separate legal existence independent of the parent company. On a legal and organizational level, it is an integral part of the parent company and is therefore subject to the laws governing its operation.
The parent company’s alter ego represents the parent company at the place where the branch is located. Relationship of dependence between the Parent Company & the Branch (as a single entity), in absolute connection, the latter following the former in terms of corporate type, areas of activity, available capital.
“In branches no new capital is invested, as well the absence of shareholder is the typical characteristic. The investors build their financial relationship with the Mother Company ex tunc.”
Such capital is deemed to be the capital already held by the parent company, from which the financial transactions for the subsidiaries are approved and carried out. Therefore, the Parent Company accounts on behalf of the branch as well as claims against third parties before courts and courts of law.
However, under the new Greek law on immigration L.5038/2023 changed by L.5162/2024, regarding the tightening of the conditions for granting a residence permit, the turnover required refers to that of the Greek branch and not the parent company, circumventing the legal and financial connection between the parent company and the branch. The Business Lawyer could provide you with further clarification on the legal requirements for granting a residence permit to shareholders, investors and shareholders of the parent company.
This connection is also reflected in the process of setting up its Branch, which requires excellent & responsible coordination of actions by the person concerned and his/her partners, so that it has been preceeded:
– Gathering a set of legal documents, recently certified, of the Parent Company.
– Ensuring the pre-commitment of the name, until it is definitively committed by the decision of the competent Chamber of Commerce for the establishment of a branch in Greece
– Obtaining a tax identity card in Greece for the person appointed as Manager of the branch.
– The responsible preparation of the file and its valid submission before the competent Chamber of Commerce will speed up the completion of your project.
Two stages of the Chamber’s reviewing of your company’s file:
STAGE A:
– Pre-checking of the documents of the Parent Company
– Between the 2 phases, additional documents or corrections may be sought, but with the guidance of an experienced consultant, this possibility is greatly reduced and the fulfillment of your project is accelerated.
STAGE B:
– Reviewal by the legal department for final approval and establishment of a branch office.
It is important to mention that Greek companies can also maintain branches within the territory, but the process is more simplified since the parent company already has a tax presence & recognized legal status.
The branch manager(s) is considered to be the chief executive who is involved to a limited & proportional extent to the same extent as is generally applicable to managers of companies operating in the Greek market (criminal liability due to culpability).
The choice of the Manager is not unrestricted if he/she is a non-EU citizen. In this special case, the Manager candidate needs to show the residence permit of which he/she is the holder, in order to be approved by the Chamber of Commerce for the selection of the Manager and the establishment of the branch.
In general, residence permits giving access to work are accepted.
Exceptionally, issues of licensing their operation (in areas of activity that are required) are treated differently under the law of the place of establishment and therefore the scope of licensing should be approached separately and the conditions for obtaining it should be considered in good time.
Branches operate under the full supervision of their Parent and obviously exist as long as their Parent exists, as they must fulfill the corporate purpose of the Parent.