Legal Advice on Opening New Business Units

What to keep in mind

The starting point is understanding the new activity and its relationship with the existing business. It may be a new service offered by the same company, an alliance with third parties, an investment project or an operation using existing facilities and staff. Each case presents different obligations.

From a corporate perspective, the business activity should be compared with the company's registered purpose and its officers' authority. It must also be determined whether management, shareholders or both must approve the project, taking account of legal form and commitment size.

A recurring question is whether to use the existing company or incorporate a dedicated entity. The former can simplify administration; the latter may facilitate investor participation or separation of a project. But a new entity brings costs, records and the need to allocate contracts, resources and liability genuinely.

Agreements with customers, suppliers, partners and funders should reflect the new unit's actual operations. The scope of services, quality levels, use of trademarks and technology, payment arrangements and remedies for breach must be clear. Shared infrastructure with group companies should also be documented appropriately.

Business launch may involve sector permits, authorizations or registrations that cannot be satisfied merely by changing the bylaws. Planning may require technical specialists and contact with the relevant authorities.

Governance and control should match the unit's scale. Clear decisions about who contracts, who approves significant expenditure and who maintains documentation help the project run more predictably.

Distinctions often confused

Frequently asked questions