Branch Offices in Liechtenstein

Josef Bergt
2023

In the Principality of Liechtenstein, the formation and management of branch offices are governed by a set of regulations, as outlined in Article 236 and inter alia in Article 291b of the Liechtenstein Persons and Companies Act (PGR). This article aims to provide a detailed examination of these regulations, highlighting the nuances of branch office management in Liechtenstein.

A branch office is a commercial enterprise that, while legally part of a main company upon which it depends, permanently exercises a similar activity as the main company on its own premises. It enjoys a degree of economic and business independence. A legal entity may have one or more branch offices in addition to its (principal) registered domicile. A distinction is drawn between branch offices of a domestic enterprise, an enterprise with registered domicile in the European Economic Area (EEA), and an enterprise with registered domicile outside the EEA.

Independent branch offices must be recorded in the Commercial Register at the place where their business premises or management are located, with reference to the entry of the principal branch office. Only branch offices of commercial enterprises may be entered in the Commercial Register. This consequently means that branch offices of legal entities that do not engage in activities of a commercial nature may not be entered in the Commercial Register.

The name of the branch office must contain, in addition to the unchanged name of the head office and its registered domicile, the express designation as a branch office and the registered domicile of the branch office. No separate management may be appointed for a branch office. The persons who are authorized to represent the principal registered domicile are also entitled to represent the branch office.

Liechtenstein law applies to the establishment, amendment and dissolution of the branch of a foreign legal entity in Liechtenstein. However, the relationship of the branch to the head office is governed by the law of the head office. In the case of the domestic branch office of a non-domestic legal entity, the persons who are authorized to represent the head office are entered in the Commercial Register. The authority to represent a branch office is, however, based on Liechtenstein law: At least one person with the authority to represent the branch office must be an EEA citizen domiciled in an EEA member state, or an equivalent person under a state treaty, and must be entered in the Commercial Register.

Non-domestic legal entities that have a branch office in Liechtenstein may be held liable for all claims at the place of the branch office. A special bankruptcy (so-called branch office bankruptcy) may be conducted for the branch office. A branch office registered in the Commercial Register is deemed to have legal capacity and capacity to act for the obligations entered into or to be performed domestically, even if this is not the case under the law applicable to the head office.

If a domestic branch office of a non-domestic legal entity is closed, liquidation shall be carried out in the same way as for a domestic legal entity, unless the Office of Justice grants exceptions. Notification of the deletion of a branch office is made in the same way as the notification of changes. Proof must also be provided that business operations have ceased. Branches of non-domestic legal entities must also provide evidence that the domestic creditors have been secured or satisfied.

Domestic branch offices of non-domestic enterprises are subject to the regulations concerning account rendering and disclosure obligations. In the case of a domestic branch office of a corporation having its registered domicile abroad, its legal representatives must disclose its annual and consolidated financial statements and audit reports prepared, audited, and reported in accordance with the law applicable to the main office, i.e., must submit them to the Office of Justice.

Source: Factsheet AJU/ h70.019e.01

Executive Summary:

• A branch office is a commercial enterprise that, while legally part of a main company upon which it depends, permanently exercises a similar activity as the main company on its own premises.
• Independent branch offices must be recorded in the Commercial Register at the place where their business premises or management are located, with reference to the entry of the principal branch office.
• The name of the branch office must contain, in addition to the unchanged name of the head office and its registered domicile, the express designation as a branch office and the registered domicile of the branch office.
• In the case of the domestic branch office of a non-domestic legal entity, the persons who are authorized to represent the head office are entered in the Commercial Register.
• Non-domestic legal entities that have a branch office in Liechtenstein may be held liable for all claims at the place of the branch office. A special bankruptcy (so-called branch office bankruptcy) may be conducted for the branch office.
• If a domestic branch office of a non-domestic legal entity is closed, liquidation shall be carried out in the same way as for a domestic legal entity, unless the Office of Justice grants exceptions.
• Domestic branch offices of non-domestic enterprises are subject to the regulations concerning account rendering and disclosure obligations. In the case of a domestic branch office of a corporation having its registered domicile abroad, its legal representatives must disclose its annual and consolidated financial statements and audit reports prepared, audited, and reported in accordance with the law applicable to the main office, i.e., must submit them to the Office of Justice.