Representation of branch offices in submitting tenders in public procurement procedures
A branch office is not a legal person but it may perform some or all operations which may otherwise be performed by a foreign company. Article 679 of the Slovenian Companies Act (‘ZGD 1’) stipulates that as a branch office acts in the name of and on behalf of a foreign company, it should use the parent company’s name, the parent company’s registered office and its own name. If a branch office fails to comply with the aforementioned provision, its parent company will be fined for the offence (Article 687 of ZGD-1).
The Slovenian Public Procurement Act (‘ZJN-3’) defines a public contract as one concluded for pecuniary interest and concluded in writing between one or more economic operators and one or more contracting authorities. An economic operator is defined as a natural or legal person or group of such persons (paragraph 1, Article 2 of ZJN-3).
Decision no. 018-134/2018 of the National Review Commission for Reviewing Public Procurement Award Procedures (the ‘NRC’), dated 29 August 2018, aids interpretation of these provisions. The NRC took the view that, in the case of public procurement procedures, when a bidder is a branch office of a foreign company, it must complete all tender documentation in such a way that it is evident that the bidder is not acting independently or in its own name (i.e. on behalf of a branch office), but rather in the name of and on behalf of the foreign company.
In doing so, the bidder must present itself in a manner compliant with Article 679 of ZGD 1. This means that it must use the name of the parent company, the parent company’s registered office and its own name in the tender, and also provide appropriate documentary evidence regarding the parent company (for example, a regular extract from a foreign court or companies register).
We can illustrate this with an example:
Let us suppose there is a company with the name ‘Foreign Company Ltd’, registered in London. It has a branch office in Slovenia named ‘Foreign Company, London, poslovno svetovanje, podružnica v Sloveniji’*, registered in the Slovenian Court Register.
Under Article 679 of ZGD-1 and the aforementioned NRC decision, when submitting tenders in public procurement procedures, the branch office would have to include its entire name as registered in the Slovenian Court Register (Foreign Company, London, poslovno svetovanje, podružnica v Sloveniji), as well as the name (Foreign Company Ltd) and the registered office (London) of its parent company. It would also have to clearly indicate in the tender that the branch office is acting on behalf of the foreign company and not independently.
Finally, it should be noted that, in accordance with paragraphs 5 and 6, Article 89 of ZJN-3, the contracting authority does not have a duty to call for the clarification, updating or correcting of tenders. Rather, this is an option which the contracting authority may or may not choose to pursue. It is therefore all the more important that, when submitting tenders in public procurement procedures, branch offices duly and appropriately complete the tender and provide all necessary supporting documents.
*meaning »Foreign Company, London, business consulting, branch office in Slovenia«.