The Czech Republic company incorporation process:
The Czech Republic incorporated companies are deemed as registered from the date of entry into the Commercial Register.
Limited liability companies (s.r.o.):
Following the adoption of new regulations in 2014 the incorporation procedure has been amended significantly.
The issue of incorporation documents now requires the personal presence of members and directors. The newly enacted Civil Code has cancelled the need of share capital (the contribution of CZK1 is just symbolic). The new legislation provides for liability of members on the debts of the company by their entire estate (unlike earlier regulations whereby only the company was liable with its capital and the value of the fixed assets).
The Law sets the following criteria for information to be stated in the Articles of Association:
- the name of the company with reference to its legal form;
- the registered office of the company;
- business operations;
- members of the company and their residence addresses;
- directors with names, residential addresses and descriptions of their duties;
- the amount of authorised capital;
- the interest of each member (subscriber) in the equity;
- the rights and obligations of the members.
The following documents are to be presented for registration of the company:
- Memorandum and Articles of Association;
- notarised minutes of the meeting of the members (shareholders);
- the resolution of the members to appoint officers of the company;
- confirmation of the registered office.
The Business Organisations and Companies (Business Companies) Law, passed on 1st January 2014, introduced the following main regulations governing this legal corporate form:
- the minimum authorised capital is set at CZK1 (previously CZK200,000);
- the formation of reserves in the s.r.o. is no longer required;
- the subscriber may have several isolated shares in the capital;
- one person may be a member of an unlimited amount of s.r.o. companies;
- termination of the requirement for auditing of contributions of members to the capital of the company;
- subject to certain conditions, the members may resign from the company at their own discretion.
Minimum 1 and maximum 50. Members may be private individuals or corporate entities and there are no residency qualification requirements. One member may own and manage the company.
A minimum of one director is required.
S.r.o. companies have no secretary requirements.
By Law the minimum share capital is CZK1 (previously CZK200,000). However, members should note that the share capital may have a potential material impact on the perception of the company by any future partners.
S.r.o. companies do not issue shares. Articles of Association fix the interests of each member (subscriber) in the capital.
Companies incorporated in The Czech Republic are required to have a registered office which is stated on the certificate issued by the Registrar. According to the Law the registered office address should correspond with the physical address of the company and official notices will be served at this address.
Companies limited by shares (A.S.):
“Companies limited by shares” is the main legal form of a business with a large investment.
An A.S. company, being a corporate entity, may be set up by just one member or by two or more private individuals and there are no residency requirements. Statutes of the company are executed in the form of a notarised deed.
The shareholders meeting has the final say in the running of the company.
The board is the executive body of a company and is made up of at least three members vested with the powers to manage the business of the A.S. and act on its behalf. Details of members of the board are registered in the Commercial Registrar.
The supervisory board is a mandatory body of the company made up of at least three members to control business operations of the A.S. and the exercise of duties by the board of directors.
Companies must have a minimum of 1 shareholder who may be a private individuals and/or a corporation. The company must maintain a register of shareholders. Shareholders do not personally participate in the business of the company and are not liable for any obligations of the company but they undertake the risk of losses to the extent of the value of shares held. Meetings of shareholders are held on an annual basis.
Share capital of an A.S.:
The initial capital of the company is divided into a number of shares with a nominal value which distinguishes the rights of the shareholders. Minimum authorised capital of the company limited by shares (with no entitlement for public offering of the shares) is CZK2,000,000 (around €80,000). At least 30% of the share capital must be paid by the date of registration of the A.S. with the Commercial Registrar.
Only registered shares can be issued.
Bearer shares in the Czech Republic are prohibited by Law.
European company limited by shares (S.E.):
Being a country with advanced legislation and a clean reputation, the Czech Republic provides comfortable conditions for businesses and is a perfect option for the establishment and registration of a European company (S.E.).
The operation of an SE company is regulated by The Czech EU Council European Company Regulation No. 2157/2001 and The Czech European Company Status Law No. 627/2004.
There are a number of options for the incorporation of a European company limited by shares such as: a merger of companies with different legal forms and organisational structures, the registration of branches, the setting up of subsidiaries, the re-registration and restructuring of companies, incorporation by an existing European company of another company, etc.
Incorporated S.E. companies are available on EU Registrars’ websites and their details are registered in the national bulletins.
SE companies can be established by corporate entities only.
- Meeting of Shareholders.
- Management Board.
- Supervisory Board.
With the one-tier structure the management board operates alongside general meetings, the members of the board are appointed by the general meeting and the board is represented by one managing director.
With the two-tier structure the management board operates alongside the supervisory body, the members of the management board are appointed and removed by the supervisory body and the supervisory body controls the functions of the management board.
The minimum share capital is CZK120,000.
The board of shareholders fixes the value of the shares and allocates them to shareholders according to their contributions.
The address of the registered office of the incorporated European company limited by shares must be the same as the address of the head office of the company.
Around 2 weeks. Shelf companies are available.
Accounting and auditing:
Czech companies are required to maintain accounts and submit financial statements according to National Standards and IFRS. The financial statements are to be submitted to the local tax office of the registered office by 31st March (inclusive).
Large companies are required to submit quarterly financial statements.
By the newly enacted Czech Taxation Law, VAT registered companies are required to submit monthly reports.
Financial statements of Czech companies are subject to financial auditing provided that the business of the company meets two out of the three following criteria:
- the value of the company assets exceeds CZK40,000,000;
- the annual turnover is in excess of CZK80,000,000;
- the average number of staff exceeds 50.
Companies that do not meet the above criteria are exempt from the requirement to submit an auditor’s report to the annual financial statements.
Failure of or late submission of the financial statements will result in the imposition of significant penalties and fines.
Open information in the registers:
The Commercial Registrar of The Czech Republic is open to the public. Information such as the name of the company, its registered office, its registration number, its share capital and details of all members, shareholders and members of the management board are accessible to third parties upon request.
This information is available on the official website of the Ministry of Justice of the Czech Republic.