Opening Affiliates and Representative Offices
Why this is a good idea?
Having an affiliate or representative office can be a great way for companies to expand and grow their operations without having to worry too much about the burden on their resources. An affiliate or representative office is structurally detached from the main company and has the ability to run its affairs, meaning it can manage and grow a new local operation without the mother company having to intervene and micro-manage.
What are the differences between affiliates and representative offices?
Affiliate. The law allows granting all the rights held by the company to its affiliate, but no more than the company itself has.
Representative office. A representative office has the complete list of rights defined by the laws, including to represent the company’s interests and to defend them, to conclude transactions and to carry out other actions on behalf of the company, as well as to carry out import and export operations under appropriate conditions.
What do you need to know before opening affiliates and representative offices abroad?
When it comes to affiliates and representative offices, it’s essential to know that they are governed by the laws of the country in which they are incorporated. This means that when a foreign legal entity (organization) opens an affiliate or representative office in Lithuania, the legislation of the Republic of Lithuania applies.
Founding procedure in Lithuania
Founding an affiliate or representative office is fairly straightforward. You need to follow these four steps:
- Governing body of a company (board or head) adopts a decision on founding an affiliate or representative office.
- Statute of the affiliate or representative office is drawn, which among other things, establishes the competence of the affiliate or representative office.
- Statute together with other additional documents is submitted to the notary for certification.
- Documents certified by the notary are included into the Register of Legal Entities.
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