Do branches have legal status?

1. What is a branch?

Pursuant to Article 44.1 Law on Enterprises 2020, a branch of an enterprise is its dependent unit which has some or all functions of the enterprise, including authorized representative. The business lines of a branch shall match those of the enterprise.

Enterprises have the right to establish one or more branches in the country and abroad based on business needs and must make the announcement of branch establishment according to strict procedures as prescribed by law. The law creates favorable conditions for enterprises to expand their business activities without limiting the number of dependent units the enterprise is allowed to establish.

2. What is legal status?

Pursuant to Article 74 Civil Code 2015, an organization shall be recognized as a juridical person if it meets all of the following conditions:

• It is legally established as prescribed in the Civil Code and relevant laws;

• It has an organizational structure prescribed in Article 83 of the Civil Code.

• It has property independent from other natural and juridical persons and bears liability by recourse to its property.

• It participates independently in legal relations in its own name.

3. Does branch have legal status?

Branch does not have legal status, specifically regulated according to Article 84.1 Civil Code 2015: “Each branch is an affiliate other than a juridical person”

Thus, based on the criteria of legal status, it can be seen that a branch of an enterprise is legally established and has a tight organizational structure. However, in some cases, the branch is not completely independent in terms of assets, still has to depend on the finances of the business. Therefore, the branch has no legal status but still has the task to perform all or part of the functions of the legal entity.

4. Legal basis

• Law on Enterprises 2014.

• Civil Code 2015.