Before incorporating a company in Greece, it is important for us to understand what your business goals are. Below we highlight the differences between Subsidiary and Branch companies:
A subsidiary is an extension of the same business in another country. However, a subsidiary company acquires separate legal personality, operating independently from the parent company and adhering to the regulatory environment of the host county. Control of the subsidiary by the parent company is secured by a major percentage of the shares and capital of the business.
A branch is a secondary establishment to that of the parent company which is simply located in another jurisdiction. Like the parent company, the branch carries out the same activities and is subordinate to the parent company since it cannot function standing alone. A branch of a foreign company may be established in Greece through registration with the General Commercial Registry. For this purpose, certain documents, including the Articles of Association of the foreign parent company, must be filed with the General Commercial Registry.
Legal Personality
Subsidiary companies are independent of the parent company, having their own legal identity and name. In this way subsidiaries retain their autonomy and independence from that of the parent company.
A distinguishing characteristic of the branch is its dependence on the parent company. Branches are not considered separate companies and are not independent from the parent company.
Responsibilities and Management
Due to the separate and independent legal identity, it has the autonomy to carry out business activity different to that of the parent company. As such the subsidiary is liable for its own debts and can sue and be sued in its own name, while having no effect of the day-to-day business operations of the parent company. The subsidiary is administered by a general Shareholders meeting.
In contrast, branches have unlimited liability. This means that the debts of the branch are compulsorily assumed by the parent company without limitation. Administration of the branch is carried out by the Manager of the branch office who is the legal representative of the parent company in Greece.
Lastly, it is worth mentioning a company established under Law 89/1967 (as amended by Law 3427/2005). This company type is for the sole purpose of providing to their head offices or to their foreign affiliates (companies not established in Greece) consulting service, centralised accounting support, quality control of production, processes and services, project planning services, advertising and marketing services and data processing services.