November 15, 2021

Branches and representative offices: difference and features

  1. Legislation of the Republic of Kazakhstan on the registration of branches and representative offices
  2. Difference and features of branches and representative offices
  3. The procedure for state registration of branches and representative offices

          3.1. The procedure for state registration of branches and representative offices of Kazakhstani legal entities

          3.2. The procedure for state registration of branches and representative offices of foreign legal entities

1.    Legislation of the Republic of Kazakhstan on the registration of branches and representative offices

When doing business, foreign companies are often faced with the choice of a form for further development on the territory of the Republic of Kazakhstan. What is promising and attractive to open: a branch or a representative office?

Registration of branches and representative offices of a limited liability partnership in the territory of the Republic of Kazakhstan is regulated by the following laws:

– Civil the code Of the Republic of Kazakhstan dated December 27, 1994.

Law Of the Republic of Kazakhstan dated April 22, 1998 No. 220-I “On limited and additional liability partnerships”.

Law Of the Republic of Kazakhstan dated April 17, 1995 No. 2198 “On state registration of legal entities and registration of branches and representative offices.”

Rules provision of the public service “State registration of legal entities, registration of their branches and representative offices” (Appendix 1 to the order of the Minister of Justice of the Republic of Kazakhstan dated May 29, 2020 No. 66).

2. Differences and features of branches and representative offices

Branches and representative offices:

  • are not legal entities, but are a separate subdivision of a legal entity located outside its location;
  • activities and powers are regulated in the provisions approved by the legal entity;
  • managers are appointed by the authorized body of the legal entity and act on the basis of its power of attorney;
  • are endowed with property by the legal entity that created them.

A distinctive feature of two seemingly identical divisions of a legal entity is the empowered authority or functionality.

A branch is a separate subdivision of a legal entity located outside its location and performing all or part of its functions, including the functions of a representative office.

A representative office is a separate subdivision of a legal entity located outside its location and performing protection and representation of the interests of a legal entity, performing transactions and other legal actions on its behalf, with the exception of cases provided for by legislative acts of the Republic of Kazakhstan.

It follows from this that a branch is endowed with broader powers than a representative office. Thus, a branch has the right to carry out any activity regulated by the regulations on the branch, but without going beyond the activities of a legal entity. In addition, on the basis of a power of attorney issued by the legal entity that created the branch, the branch is entitled not only to conclude contracts and other transactions on behalf of the legal entity, to represent its interests in court and other state and non-governmental bodies, but also to negotiate with potential clients of the legal entity. In other words, a legal entity, together with its branch, pursue a single goal – making a profit.

A representative office, in comparison with a branch, is vested exclusively with the authority to represent and protect the interests of the legal entity that created the representative office. Thus, a representative office is not entitled to engage in industrial or other commercial activities. Logistics are provided directly by the head office.

In addition to branches and representative offices, legal entities have the right to create other separate structural divisions, with the exception of cases established by laws.

Another separate structural subdivision of a legal entity is a territorially separate subdivision, at the location of which stationary workplaces are equipped that perform part of the functions of a legal entity. A workplace is considered stationary if it is created for a period of more than one month.

Another separate structural unit of a state institution is created in cases directly provided for by laws.

3.    The procedure for state registration of branches and representative offices

According to the Rules for the provision of public services “State registration of legal entities, accounting registration of their branches and representative offices” (hereinafter referred to as the Standard), the registration of branches and representative offices is carried out by the Ministry of Justice of the Republic of Kazakhstan jointly with NJSC State Corporation “Government for Citizens” (hereinafter referred to as PSC).

3.1. The procedure for state registration of branches and representative offices of Kazakhstani legal entities

To register a branch or representative office of a Kazakhstani legal entity, the following documents are required to be submitted to the PSC:

  1. Application for registration (can be issued in the PSC itself, you can download and fill out yourself in advance).
  2. A receipt or other document confirming the payment to the budget of the registration fee for the registration of a branch (representative office) of legal entities related to non-profit organizations or a document confirming payment to the State Corporation “Government for Citizens” for a branch (representative office) of legal entities related to commercial organizations. At the same time, the service is free for small and medium-sized businesses.
  3. For branches (representative offices) of legal entities that do not belong to private entrepreneurship, as well as joint-stock companies, an additional provision on the branch (representative office) in three copies in Kazakh and Russian languages, approved by the legal entity, copies of the charter (regulations) and the power of attorney of the legal entity shall be submitted. persons (with the exception of public and religious associations), issued to the head of a branch (representative office).

The application is signed by a person authorized by a legal entity creating a branch (representative office) and sealed with the seal of the legal entity (if any).

If the head of a legal entity is the head of a branch (representative office), no power of attorney is required to the registering authority.

3.2. The procedure for state registration of branches and representative offices of foreign legal entities

To register a branch (representative office) of a foreign legal entity, the following documents must be submitted to the PSC:

  1. Application for registration.
  2. Regulations on the branch (representative office), approved by the body of the legal entity.
  3. Power of attorney issued by the body of a legal entity to the head of a branch or representative office, with a notarized translation into Kazakh and Russian.
  4. Decision of a legal entity to establish a branch (representative office) with a notarized translation into Kazakh and Russian.
  5. Legalized extract from the trade register or other legalized document certifying that this entity opening a branch (representative office) in the Republic of Kazakhstan is a legal entity under the laws of its country, with a notarized translation into Kazakh and Russian.
  6. A copy of the constituent documents of the legal entity with a notarized translation into Kazakh and Russian.
  7. A receipt or other document confirming the payment to the budget of the registration fee for registration of a branch (representative office) of a foreign non-profit organization or a document confirming payment to the State Corporation “Government for Citizens” for a branch (representative office) of a foreign commercial organization.

** The term for the provision of the service is: for commercial organizations – 1 working day, for non-commercial organizations – 10 working days.

Thus, the procedure for registering a branch or representative office is as follows:

  1. Development of a single decision on opening a branch or representative office (Minutes of the general meeting / decision of the sole participant) and approval of the Regulations indicating the address of the branch or representative office and determining the head, as well as reflecting other necessary information.
  2. Development of the Regulations on the branch or representative office in triplicate in the Kazakh and Russian languages.
  3. Preparation on behalf of a legal entity of a power of attorney for a person authorizing to provide documents to the PSC and receive the necessary documents for this.
  4. Payment of the state registration fee (if necessary).
  5. Filling out the Application for registration.
  6. Submission of documents to the PSC and waiting for the result of the service (within 10 working days).