Winding Up a Business
The subject of dissolution and winding up of commercial companies is described in detail in the Commercial Code (Act No. 513/1991 Coll., as amended). There are two different basic terms – dissolution of a company and winding up of a company. A commercial company ceases to exist as a legal entity on the day of its erasure from the Commercial Register. However, before a company can be erased from the Commercial Register, it is usually necessary to go through a special cancellation process. The entire process is carried out with different variations according to whether or not the company is dissolved with or without liquidation.
Legal requirements
- Commercial Code(in Czech language only)
The general reasons for the resolution on dissolution of a company are regulated in the relevant provisions of the Commercial Code. There are three basic groups of reasons: voluntary dissolution of a company based on a decision of the company''s partners, forced dissolution - caused by a court order, and, finally, dissolution not depending on the will of the entities, which includes the following: meeting the goal for which the company was established, or expiration of the period for which it was established. However, the last category of reasons will be used in practice only exceptionally, as the vast majority of companies are established for an indefinite period of time. Also, voluntary resolution on dissolution can be withdrawn until the completion of the liquidation, while the liquidation would end and the company would return to its normal existence.
- General legislation regarding dissolution of a company(in Czech language only)
Dissolution of a company without liquidation
Dissolution of a company without liquidation generally means that the assets and obligations of a company are transferred to its legal successor.
Dissolution of a business company without liquidation means its smooth transition to a legal successor, for instance in case of a merger, transfer of assets to a partner, or division of the company based on the Act of Transformations of Commercial Companies (Act No. 135/2008 Coll., as amended). These operations are difficult, however, and need thorough contractual safeguards; therefore, they are carried out by professional attorneys. Another case of dissolving a company without liquidation is a situation when a bankruptcy petition is denied due to lack of property.
- Act on Transformations of Commercial Companies(in Czech language only)
Dissolution of a company with liquidation
A company enters liquidation as of the day of its dissolution; the company''s entry into liquidation is entered into the Commercial Register and for the period of time of liquidation the company uses the addendum of „company in liquidation“. The administration of a company at the time of liquidation is carried out by the so called liquidator, who practically assumes most of the powers of the company''s statutory body.
- Detailed information on dissolution of a company with liquidation (in Czech language only)
- Erasure of a company from the Commercial Register (in Czech language only)
Administrative procedures
The course of dissolution of a company may be slightly different for different types of companies. The following links inform about the specific steps that need to be taken.
- Dissolution of a limited liability company (in Czech language only)
- Dissolution of a joint stock company (in Czech language only)
- Dissolution of a public owned corporation (in Czech language only)
- Winding up of a limited partnership (in Czech language only)
Special forms for entering the individual facts regarding companies and their changes into the Commercial Register.
- Forms for entering changes into the Commercial Register(in Czech language only)
In order to minimise the risks related to dissolution of a company, and above all in order to provide for compliance with the legal conditions related to protection of the company''s creditors and related legal responsibility of the statutory body, or the company''s partner, it is advisable to delegate such issues to expert attorneys.
- Czech Bar Association(in Czech language only)
Resources
The Commercial Register can provide information on what phase of its existence the company is in, whether it has been dissolved or whether it is in liquidation. The Commercial Register is a public list administered by relevant register courts where the legally required information on entrepreneurs is entered. The Commercial Register is also accessible through electronic access.
- Commercial Register – electronic access (in Czech language only)
The following governmental and non-governmental institutions and web portals offer further information and useful services related to dissolution of commercial companies.
- Portal of the Ministry of Justice – Justice (in Czech language only)
- Chamber of Notaries of the Czech Republic (in Czech language only)
- Official portal for business and export (in Czech language only)
- Portal of public administration of the Czech Republic (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
- Decree of the government on forms for an entry into the Commercial Register (No. 250/2005 Coll., as amended)(in Czech language only)
Document created in co-operation between Your Europe - Business (EU portal for companies) and BusinessInfo.cz.
