Branch of a non-public joint-stock company: what functions a separate subdivision fulfils

May, 08 2024


Today, when opening a company, a businessman can himself choose the organisational and legal form for work. Each of them has its own features and advantages. One of such methods is the creation of a branch of a non-public joint stock company (NPJSC), which allows companies to expand their presence in the market, optimise business processes and improve customer service. Here we will look at all aspects of opening a NPJSC branch office.

Specifics of NPJSC branches

A branch of a non-public joint stock company (NPJSC) is an organisational unit of a company that operates in accordance with the charter and strategy of the main legal entity. NPJSC branches are components of the parent company.

The functions of branches may vary depending on the company’s strategy and the industry in which they operate. However, the main objective in all cases is to expand the NPJSC’s activities beyond the region where the main office operates. Branches can be opened domestically and internationally, allowing companies to reach new markets and increase their customer base.

An important feature of branches is that they operate under the unified direction and control of the main company. This means that all strategic decisions, as well as management and financing issues, are taken centrally at the NPJSC level. However, branches may have a certain degree of autonomy in dealing with a number of issues. This is prescribed at the level of rules and local acts.

Advantages of establishing NPJSC branches:

A branch of a non-public joint stock company (NPJSC) is a significant element of its corporate structure that has a number of advantages. In more detail, these are:

  • Market Expansion. One of the main advantages of NPJSC branches is the possibility of expanding the geographical coverage of the company. Establishing branches in different regions or countries allows the company to penetrate new markets and attract more customers.
  • Optimisation of business processes. NPJSC branches can be customised to operate efficiently in specific regions or market segments. This allows the company to adapt its processes to local conditions, legislation and customer needs, which helps to optimise business processes.
  • Greater management flexibility. NPJSC branches can have a certain degree of management autonomy, allowing them to react quickly to changes in the market or within the company. This contributes to more flexible and efficient management overall.
  • Brand strengthening. The presence of NPJSC branches in different regions creates an impression of the company’s scale and reliability. This helps to strengthen the brand and increase the trust of clients and partners.
  • Saving resources. In many cases, NPJSC branches can use common resources and infrastructure of the parent company, which helps to reduce costs at the initial stage of operation.
  • Scalability of the business. This is possible without creating new legal entities, which allows companies to retain a single brand identity and quality standards. In addition, branches can use common resources and infrastructure of NPJSC, which contributes to cost savings and optimisation of business processes.
  • Diversification of business and reduction of risks associated with dependence on a single region or market segment. This increases the company’s resilience and promotes long-term growth.

How to manage a NPJSC branch?

Managing NPJSC branches requires special attention and coordination with the parent company. It is important to ensure a clear understanding of the company’s objectives and strategy, and to establish effective monitoring and feedback mechanisms. Key aspects of branch management include:

  • Information sharing. The parent company should maintain regular communication with the branches, sharing information and coordinating activities.
  • Staff training and development. It is important to invest in the training and development of branch staff to ensure compliance with company standards and quality.
  • Working in compliance with regulations. NPJSC branches must strictly comply with local laws and regulations, which may vary from region to region.
  • Performance evaluation. The parent company should regularly assess branch performance and adjust its strategy in line with identified needs and market requirements.


NPJSC branches are a powerful tool for expanding a company’s market by establishing a presence in different regions or countries. They allow the company to adapt its operations to local conditions and needs, which helps to strengthen its brand and attract new customers.

An important aspect of NPJSC’s branch management is maintaining clear communication and coordination with the parent company, as well as ensuring compliance with local legislation and quality standards. Regular assessment of branch performance allows the company to respond quickly to changes in the market and adjust its development strategy.

In general, NPJSC branches represent an important link in the company’s development strategy, which contributes to its competitiveness and sustainable growth. Proper branch management allows the company to maximise the efficient use of its resources and achieve its goals.

Questions and answers

What do I need to open a branch of NPJSC? 

First of all, the parent company must make a decision to establish a branch. Next, a regulation on the branch must be drafted. It includes data on the address, objectives, management and financial operations to be conducted. Next, the branch is endowed with intangible assets and other funds that are needed to carry out activities.

How do I select a branch manager? 

The branch manager is selected from the available applicants. A power of attorney must be executed for him. Branch managers act on the basis of this document. The power of attorney to the head of the branch is issued on behalf of the legal entity, signed by the head or other authorised person. If the power of attorney does not specify its validity period, it remains valid for one year from the date of its signing. After one year, the head of the NPJSC may choose another head.

How to legalise the work of the branch? 

NPJSC must notify the Federal Tax Service at its location within 3 working days from the date of establishment of the branch. If the opening of a branch does not require changes to the company’s Charter, it is sufficient to submit an application to the Federal Tax Service to make changes to the Unified State Register of Legal Entities. Violation of the procedure is punishable by a fine. The branch will be placed on the tax register at its location automatically after the parent company submits an application.

Author of the article
Branch of a non-public joint-stock company: what functions a separate subdivision fulfils
Valentina Khlavich
Managing Partner
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