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Company Formation Czech Republic



Changing the Company Type in the Czech Republic

Updated on Tuesday 28th February 2023

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Businessmen interested in operating on the Czech market are allowed to change the type of the legal entity under which they carry their operations, if this procedure is necessary or recommended at a certain moment. The legislation prescribes the framework for the procedure, which is generally applicable when the current type of legal entity no longer fulfils the development plans of the investor.
At the same time, a different type of legal entity can provide other benefits to the company and to its shareholders. Entrepreneurs interested in changing the business form of a Czech company can receive assistance from our team of company formation representatives in Czech Republic

Steps to changing a business type in Czech Republic

The specific procedures involved in changing a business structure in the Czech Republic may vary based on the type of change and the type of business involved. It is advised to consult with our legal team specialized in company incorporation in Czech Republic  to ensure that all necessary steps are taken. Here are a few details about the procedure involving changing your business structure:
  • - Determine which type of business you want to change into
  • - Prepare the necessary documentation, such as articles of incorporation or partnership agreement, for the new business structure
  • - Submit the documents to the Trade Register and to other relevant authorities
  • - Update contracts, notify additional contacts, and obtain possible required permits and licenses


It is best to consult with a legal advisor to ensure that you understand the implications of changing your business structure and to receive advice on the specific procedures involved. Changing the company type in the Czech Republic and there are legal requirements and formalities that must be followed.


Changing a sole proprietorship in Czech Republic 

The sole proprietorship, the simplest form of doing business in Czech Republic, is a type of entity recommended for natural persons who want to start a small company on their own. A sole trader is set up by a self-employed person who is not required to submit the company’s accounts at the local authorities, as it is the case of other types of legal entities
The investor has unlimited liability for the company’s debts and there is no distinction between the founder and the business. The sole proprietorship can be changed in any other business form, and in order to do so, the investor will have to close down the current entity and re-register under a new type of company. The registration procedure is performed at the Commercial Court; our team of Czech company formation agents can offer assistance on the set of documents necessary in this situation. 
Have you decided on business and need a team of accountants in Czech Republic? We suggest you contact us and find out which services you can benefit from. Payroll and bookkeeping are among the essential procedures for a company, as well as audits and preparation of annual financial statements. Donations, charities, retirement plans, and stock options can be excellent methods of tax minimization for the company you own. We can also deal with tax advice and compliance, so contact us for a personalized offer.

Changing a limited liability company in Czech Republic 

Czech Republic offers numerous business forms for those who want to invest here. One of the ways to operate on the local market is through a limited liability company (LLC), the most common type of company set up here. 
A LLC can be changed in a corporation, a procedure which is performed through the transfer of shares from the current company to the future one. The procedure is performed under the rules of the Act No. 89/2012 Coll. 

Company types in Czech Republic

There are several types of bussiness you can choose from if you wish to open a company in Czech Republic. The most common types are the following:
  • - Limited Liability Company (SRO)
  • - Joint Stock Company (AS)
  • - General commercial partnership 
  • - Cooperative
  • - Sole proprietorship 
The limited liability company (SRO) combines elements of both a corporation and a partnership. The members are protected from personal liability for the debts and obligations of the company. Their personal assets are typically not at risk in the event of the company's bankruptcy or other financial difficulties. You can change the company type in the Czech Republic from limited liability company any time.  
A Joint-Stock Company (AS) is owned by shareholders, which have limited liability to the amount of capital they have invested in the company. This business structure has shares that can be bought and sold on the stock market. The management is typically controlled by a board of directors elected by the shareholders, and the profits are distributed to the shareholders in the form of dividends.
A General Commercial Partnership is a type of partnership where one partner has unlimited liability and is responsible for the debts of the partnership, while the other partnershave limited liability.
A Cooperative is owned and operated by its members for their mutual benefit. In a cooperative, each member has one vote, regardless of their financial contribution to the company. Changing the company type in the Czech Republic from cooperative to a limited liability company or a joint-stock company needs to have its assets valued by an expert as of the date when the project of changing the legal form was drawn up. This valuation is typically necessary to determine the share capital of the new legal form of the company or cooperative.
A sole proprietorship means only one individual is responsible for all aspects of the business, including debts, obligations, and profits. Their personal assets are at risk in the event of the business's financial difficulties. To change the company type in Czech Republic from a sole proprietorship to an LLC, you will need to follow the legal process for creating an LLC, including obtaining a trade license, depositing the minimum share capital, registering the company with the Commercial Register, and obtaining any necessary permits and licenses. It is recommended to consult with a lawyer or a specialist who can guide you through the process.
If you are at the beginning of setting up a company in Czech Republic, kindly contact our legal team for professional advice and guidance. We will help you choose what business structure is best for your activity and help you with the required documents and procedures. 

Why it is a good idea to invest in Czech Republic

Opening a business and investing in Czech Republic has plenty advantages. One of the main reasons is the strategic geographical position the country benefits from. The Czech Republic is located in the middle of Europe, making it an excellent point to access other European markets.
In the last decades, the Czech Republic has developed strong growth in the automotive, technology, and renewable energy sector. These sectors are considered to be key industries for the future and great investment opportunities. The Czech workforce is well-educated and highly skilled, which is a good business asset in these industries. All these factors are in favor of setting up a company in Czech Republic. Foreign investors have the same legal rights and obligations as local investors when it comes to changing the business type in Czech Republic. This may require the assistance of a lawyer or specialist in Czech corporate law to ensure that the process is carried out correctly.
If you are interested in discovering more economical statistics about Czech Republic, consider the following data and figures:
  • - In 2021, the GDP of Czech Republic was evaluated at USD 281.78 billion;
  • - The unemployment rate is one of the lowest in Europe, at approximately 3.5% in 2022;
  • - The Czech Republic is a highly export-oriented economy, with exports accounting for over 70% of its GDP in 2021;
  • - The automotive industry is a particularly important sector, with major global automakers such as Škoda Auto, and Toyota Peugeot Citroën Automobiles having significant operations in the country
Businessmen interested in receiving further information on the procedure referring to the change of the legal entity in Czech Republic can address to our team of Czech company incorporation consultants for assistance. 

Meet us in Brno

Call us at +420 721 565 868 to set up an appointment with our specialists in company formation in Brno. Alternatively you can incorporate your company without traveling to Czech Republic.

As an CorpexLab client, you will benefit from the joint expertize of local experts and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Czech Republic.

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