Transferring Ownership Of a Business
The text outlines two basic methods of transferring a business share - transfer of a share in the company and transfer of a certain part of company`s business. The text also includes other information and useful links related to this issue.
Legal requirements
The transfer of a business share can be completed in several different ways. With respect to the extent of this topic we will only focus on the most usual methods and the most typical legal forms of business conducted by foreign persons in the Czech Republic – a limited liability company and a joint stock company. There are two basic methods of transferring a business share; the first form is the transfer of a share in the company – transfer of a business share in a limited liability company or transfer of stock or other participation securities in a joint stock company. The second method represents a factual transfer of a certain part of a company''s business without changing its ownership structure, by a contract for the transfer of a company. Both methods have been regulated by the Commercial Code.
- Commercial Code(in Czech language only)
Changes related to the structure of the company that occur during the acquisition of a share in the company are entered into the Commercial Register.
- Commercial Register(in Czech language only)
The Transfer of a business share is a difficult process for non-professionals which requires, for the safety of both parties, the conclusion of appropriate contracts. Therefore, the parties to the transaction are typically represented by their legal representatives, most frequently attorneys, whose list, including relevant specialisation, is available on the pages of the Czech Bar Association.
- Czech Bar Association(in Czech language only)
Transfer of a business share in a limited liability company
This is the most frequent type of participation in a company. The current partner transfers his/her business share to another partner and/or a person outside of the company, in the form of a contract for the transfer of a business share.
- Information on transfer of a business share (in Czech language only)
Transfer of a business share in a joint stock company
Participation in a joint stock company is implemented based on a contract on transfer of stock, or other participation securities (if the shares have not been issued, yet). With respect to the fact that a share represents a security, the specific conditions of a transfer are based on the form and type of such securities and their other characteristics. With respect to the stock legislation, aside from the Commercial Code, there is also another important legal regulation: Act No. 591/1992 Coll. on Securities, as amended, which regulates some requisites of securities and requirements of their transfer.
- Act on Securities(in Czech language only)
Transfer of ownership of a company (sale of a company)
The second option of transferring a business to another person is the transfer of a company as an economic-functional unit without an effect on the ownership structure of the company. The sale of a company is a paid transfer of a set of tangible, personal, and non-tangible parts of business that, as a whole, serve the business, i.e. make up a company in the sense of the Commercial Code. A business also consists of items, rights, and other property values, that belong to the entrepreneur and serve, or are intended to be used for operating a business.
A company is transferred based on an agreement of the sale of a company. The legal provisions in dealing with an agreement of the sale of a company are cogent in their nature and the contractual parties may not deviate from them.
- Agreement on Sale of a Company(in Czech language only)
Resources
The following governmental and non-governmental institutions and web portals offer further information and useful services related to a transfer of participation in a company.
- Official portal for business and export (in Czech language only)
- Portal of public administration of the Czech Republic(in Czech language only)
- The Czech Chamber of Appraisers(in Czech language only)
Personalised help and advice
The Enterprise Europe Network is an extensive network (with 600 host organisations and 4 000 full-time staff) providing information and advice to entrepreneurs through its local partners.
Legal texts
- Act on the Protection of Competition (Act No. 143/2001 Coll., as amended) (in Czech language only)
Document created in co-operation between Your Europe - Business (EU portal for companies) and BusinessInfo.cz.
