Business corporations are commercial companies and cooperatives. The commercial companies are unlimited partnership (veřejná obchodní společnost – v. o. s.), limited partnership (komanditní společnost – k. s.), limited-liability company (společnost s ručením omezeným – s. r. o.) and joint-stock company (akciová společnost – a. s.). All corporations are registered in a Commercial Register. No corporation can exist without such registration.
First of all, it is essential to choose a type of corporation that is convenient to the business plan or preferences of the founders. It depends especially on requirements of minimum number of founders, minimum registered capital, financial liability of members and internal structure system of a corporation. The most common form of entrepreneurship in the Czech Republic is the limited-liability company.
The fundamental legislation that falls upon business corporations includes:
- Business Corporations Act (Act No. 90/2012 Coll., on Commercial Companies and Cooperatives) available in English, French, German and Russian and in Czech language.
- Civil Code (Act No. 89/2012 Coll.) available in English, French, German and Russian and in Czech language.
- Public Registers Act (Act No. 304/2013 Coll., on public registers of legal and natural persons) available in Czech language.
|Type of corporation||Czech name, abbreviation||Minimum required start-up capital||Minimum required number of founders||Financial liability||Management and internal structure system of a corporation|
|Unlimited partnership||veřejná obchodní společnost„v.o.s.“, „veř. obch. spol.“ or a name of a partner + „a spol.“||CZK 0||2||Unlimited liability||No obligatory management bodies; all partners are managers as a default rule.|
|Limited partnership||komanditní společnost„k.s.“, „kom. spol.“||CZK 0||2(at least one unlimited/general partner and at least one limited/special partner)||General partners have unlimited liability for the partnership’s obligations; special partners have limited liability to the extent of their unpaid contribution||No obligatory management bodies; all general partners are managers as a default rule.|
|Limited-liability company||společnost s ručením omezeným„s.r.o.“, „spol. s r.o.“||CZK 1||1||Partners have limited liability to the extent of their unpaid contribution||General Meeting, statutory body – one or more Directors (Executives), supervisory board (optional), others according to the partnership agreement.|
|Joint-stock company||akciová společnost„a.s.“, „akc. spol.“||CZK 2 000 000 or EUR 80 000||1||Shareholders are not personally liable for the company’s obligations||Monistic system:General Meeting, statutory body – Statutory Manager, Administrative BoardDualistic system:General Meeting, statutory body – Board of Directors, Supervisory Board, others according to the statutes|
|Cooperative||družstvo||CZK 0||3||Members are not personally liable for the cooperative`s obligations||Members meeting, statutory body – Board of Directors, Auditing Committee, others according to the statutes (small cooperative – only Members Meeting and President)|
Licensed trade is a specific area of business in manufacturing, trade and services. Trade means a continuing activity carried out independently in one’s own name and at one’s own responsibility in order to achieve a profit and under the conditions laid down by the Trades Licensing Act. A trade may only be conducted on the basis of a trade license.
All information about licensed trades, relevant legislation and guides to acquiring a trade license can be found on the Ministry of Industry and Trade website.
Procedures for registering a business corporation in the Czech Republic and legal requirements
Firstly, it is important to distinguish establishment (1) and incorporation (2) of a corporation. These two steps of founding a corporation are common for all the types.
Step 1: Establishment
Corporations are established by memorandum of association (společenská smlouva or stanovy). In the event a capital company is established, i.e. a limited-liability company or a joint-stock company, the memorandum of association must have a form of a notarial deed. A company is by a sole member by a deed of foundation.
Every notary prepares a notarial deed based on the documents and facts submitted to him by the members. The cost of preparing the notarial deed is charged according to the notarial tariff (the Regulation of Ministry of Justice No. 196/2001 Coll., notarial tariff, as amended – available in Czech language).
Find your suitable notary office.
The memorandum of association or deed of foundation must always include at least the legal person’s name, registered office, objects of activities, the type of statutory body and the manner of its establishment. It shall also specify the first members of the statutory body. Other requirements depend on the type of corporation.
All legal acts governing the establishment, incorporation, modification, dissolution or winding up of a business corporation must be in written form with certified signatures. This certification can be made at municipal office or at post office with the Czech POINT.
Step 2: Incorporation
When the corporation is established, then it must be registered in the Commercial Register, accessible on www.justice.cz. An established corporation acquires legal personality by the incorporation. The corporations are incorporated as of the date of their registration in the Commercial Register.
The other legal requirements of establishment (e. g. other memorandum of association or deed of foundation requirements, contributions) depend on the type of corporation.
Registration to the Commercial Register
The Commercial Register is a register of all types of legal persons which have been established in accordance with the Czech legislation and also (under certain conditions) of sole traders. The Commercial Register is administrated by Register Courts. Submission of an application for incorporation to the Commercial Register is a subject to the court fee (Article 11 of Enclosure of the Act No. 549/1991 Coll., on court fees, as amended – available in Czech language).
Registering a company through a Register Court
The application for incorporation to the Commercial Register must be submitted on a special form, which is available on the website www.justice.cz – Veřejný rejstřík – Podání do veřejného rejstříku (formuláře) – Inteligentní formulář. It can be submitted in paper or electronic form. The signature on the paper form must be certified and signature on the electronic form must be signed by qualified certificate (electronic signature).
The application must be accompanied by documents that ascertain the information that should be recorded in the Commercial Register and by the documents that form the collection of documents in connection with the registration. The application must be submitted to the competent Register Court. The competent Register Court is a Regional Court (krajský soud), wherein district is the registered office of the corporation.
Registering a company through a notary
It is also possible to choose a direct registration by a notary. The notary shall arrange the incorporation in the Commercial Register, if the recorded information is based on a notarial deed. This option is often used and also recommended in event of establishment a limited liability company and joint-stock company because these companies must obligatorily have the memorandum of association in the form of a notarial deed. The record in the Commercial Register is cheaper and also usually performed in a shorter time.
The application for incorporation to the Commercial Register must be submitted to the competent Register Court within 6 months (unless the memorandum of association provides a different period) of establishing the company, otherwise, the memorandum of association is no longer valid.
From the date of registration of the company in the Commercial Register the following deadlines are imposed on the company:
- 8 calendar days to register with the District Social Security Administration, if the company has employees,
- 8 days to register with health insurance companies, if the company has employees,
- 15 days to register with the tax authority.