Branching Out - DAC Beachcroft

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Branching Out

Published On: 13 June 2016

Landlords should be wary of a potential trap when granting leases to an overseas company (i.e. any company not registered in England, Wales, Scotland or Northern Ireland) with a registered 'branch office' or 'establishment' (an "Establishment") in the UK. An overseas company is required to register an establishment when it has some degree of physical presence in the UK through which it carries on business.

The Establishment will be given a separate company registration number starting with the prefix FC, and can be registered under a different name to the overseas company. However, it is important to note that the Establishment does not have its own legal personality, but rather is an extension of the overseas company. This means that the Establishment cannot execute documents (e.g. leases, licences, agreements, etc) in its own name, and the correct transacting party is the overseas company.

Accordingly, when transacting with an Establishment, the overseas company must execute the relevant documentation. This, in turn, will give rise to a requirement that the overseas company provide an opinion letter from a law firm practising in the jurisdiction of the overseas company's registration. The provision of the opinion letter should be addressed as early as possible, as these are potentially costly, and can cause delay if not addressed at an early juncture.