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Doing Business in Czech Republic
 
 
 

All new companies that wish to trade in the Czech Republic must be registered in the Companies Register. The courts maintain the register and until a company has been granted the required legal status, it cannot commence trading. An entry in the Companies Register must include specific information about the name and type of the business entity. Mandatory audits are required for companies where two of the following conditions are met:

• annual turnover exceeds CZK80m;
• assets total CZK40m; and/or
• the average number of employees is more than 50.

Forms of Business Organisation

Joint-Stock Company

A Joint-Stock Company has registered share capital and is run by a Board of Directors and a Supervisory Board. Shareholders have no liability for the company’s debts. The entity must have Articles of Association and the appropriate trade licence. Details of the share capital must be recorded in the Commercial Register, which must also include:

• an extract from the criminal records of the home country of each director or member of the Supervisory Board;
• a certificate, showing the signatures of the directors;
• confirmation of the contributions that have been made by each shareholder;
• details of shareholders’ meetings to be held (meetings must be held at least annually).

The minimum registered share capital for a Joint-Stock Company is CZK2m, although this increases to CZK20m if share capital is via the offer of shares to the public. In addition, a reserve fund must be established – a minimum of 20% of the first year’s net profit.

Limited Liability Company

As with a Joint-Stock Company, a Limited Liability Company exists as a separate entity from its shareholders, who in turn have no liability for the company’s debts. An Executive is responsible for the management of the company, and the company may also have a Supervisory Board. Details of shareholders’ contributions must be recorded in the Commercial Register. The law requires that there must be a minimum of 50 shareholders. The Commercial Register must also show details of the Supervisory Board (where relevant) and the amount of registered capital per shareholder. A Limited Liability Company must operate with the initials “s.r.o.” or “spol. s.r.o”. A minimum of CZK200,000 in registered capital is required, with a minimum of CZK20,000 per shareholder.

As with a Joint-Stock Company, an extract from criminal records of the home country of each person serving on the executive must be supplied. A trade licence must be obtained from the Trade Licence Office and the Memorandum of Association must be made available.

Limited Partnership

Two or more individuals or legal entities may form a Limited Partnership and at least one of the partners must be held liable for the debts and other obligations of the company. A partnership agreement must be prepared. Partners are only liable up to the limit of their contributions to the business. The Commercial Register must contain details of the partners (names, addresses, extent of liability, and amount of capital paid by each partner).

General Commercial Partnership

A General Commercial Partnership may be formed by two or more individuals (or other legal entities). Partners are liable for the debts of the partnership and a partnership agreement must be drawn up. Details of the partners must be recorded in the Commercial Register.

Co-operative

A Co-operative can be formed by at least five members. A minimum of two legal entities may also form a Co-operative. There is a minimum requirement of CZK50,000 for each member and details must be lodged with the Commercial Register. Members have no liability for the debts or obligations of the Co-operative. There is a requirement to establish a reserve fund (indivisible fund) of 10% of the registered capital.

Branches

A Branch does not have the status of a separate legal entity. However, details must still be recorded in the Commercial Register stating the foreign parent company and details of the location of the Branch and the type and scope of the business activities. A Branch also requires a trade licence, but has no limited liability.

 

 
 


 



 


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