Headquarters and Branch Concept For a Business Organization

A business organization may either perform its business activities from a certain place or establish work places in accordance with the necessity of the business activity. Some of such business organizations may perform similar activities of the headquarters within the directions of the headquarters. (e.g. banks) Others are not permitted to perform similar activities of the headquarters even though they are necessary. The ones who are permitted to perform similar activities of the headquarters are called branch.

In line with the Turkish Commercial Code (“the TTC”); each merchant is obliged to register and announce his business organization and title in 15 days following the establishment of the business organization. A merchant may own more than one business organization and more than one branch accordingly. It is an obligation to perform in the same field of activity with the headquarters. In the event that a merchant owns more than one business organization, he shall locate a separate headquarters for each branch and register them.

In the event that a merchant owns more than one business organizations that are separate from each other, every organization shall be in full independency and there shall be not headquarter-branch relationship among organizations. Therefore, it is possible to determine separate business organizations and separate headquarters. In light of the all above, we may list the facts of a branch as follows;

1) To be Dependent to the Headquarters: The branch shall be subject to the headquarters. Since the branch is subject to the headquarters, it does not have the authority to act for and on behalf of itself.

2) Independency on External Affairs: Even though the branch acts within the authority granted by the headquarters, it is independent on external affairs namely with its relationship with the third parties.

a) Profit and loss of the branch belong to the headquarters.

b) Assets of the branch are owned by the headquarters, the branch does not own a separate asset.

c) The branch is dependent on the headquarters in terms of management policy.

d) The organization of the branch is subject to the headquarters.

3) Similarity of the Activities: The activities of the branch and headquarters shall be similar to each other.

4) To be owned by the Same Party: the branch and the headquarters shall be owned by the same individual or the legal entity.

5) Separation of the Location: Locations of the branch and the headquarters shall be separated.

6) Same Commercial Title: The branch shall use the same commercial title of the headquarters.

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