Branch
An operating presence without its own legal personality, opened in another state under freedom of establishment. A branch is legally dependent on its head office: unlike a subsidiary, it needs no separate authorization from the host country.
Key points
- Permanent presence without its own legal personality, dependent on the head office.
- Opened in an EEA host country under freedom of establishment.
- No local license required: the head office's European passport suffices.
- Distinct from a subsidiary, which is an independent company with its own license.
Frequently asked questions
Why choose a branch over a subsidiary for establishing abroad?
A branch is easier to set up and less costly: it requires no own capital, no autonomous governance and no separate local license. In return, the head office remains legally and financially liable for the branch's commitments, without the protection that a separate legal personality would offer. For a brokerage firm exploring a new market, a branch is often the fastest option to implement.
Can a broker's branch sign contracts in its own name?
No, since a branch has no legal personality of its own, contracts are always concluded in the name and on behalf of the parent company. In practice, a representative authorized by the head office may sign locally, but the legal commitment falls on the main company. This must be clearly reflected in all contractual documents given to clients.
What is the difference between a branch and a simple representative office?
A representative office is limited to non-commercial activities: promotion, market monitoring, initial contact. It may not conclude contracts or collect commissions. A branch, by contrast, is authorized to carry out the full commercial activity, presentation and referral, which justifies the notification procedure under freedom of establishment.
In practice
A Lyon-based brokerage network opens a branch in Barcelona to support French retirees buying a secondary residence in Spain: mandate contracts are signed in the name of the Lyon head office, and the branch operates under the ACPR license notified to the Spanish regulator.
Official sources
- Opening a secondary establishment · Entreprendre.Service-Public.gouv.fr
- Article L519-1 of the Monetary and Financial Code · Légifrance
- Prudential supervision and resolution authority · ACPR (Banque de France)