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Company Formation Czech Republic

Company Formation Czech Republic

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Articles

Types of Czech Companies

Updated on Friday 17th March 2017

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types of companies in czech republic.jpgForeigners willing to set up a business in Czech Republic can choose from one of the four main types of companies: branch office, partnership, limited liability company and joint stock company.

The limited liability company is generally met among small and medium-sized businesses. It requires up to 50 individuals or legal entities to form an association based on a memorandum or a founder’s deed. The papers in both cases must be notarial deeds.

The most common types of companies in Czech Republic

A registered capital of at least CZK 1 (5 euro cents) is needed for a limited liability company in Czech Republic and 30% of the share capital must be paid before the registration at the Commercial Register. For non-monetary contributions, they have to be clearly settled in the statutory papers. For a company with one stakeholder, the full registered capital must be paid before the company is registered in the Commercial Register.

Below, investors can find out further details on the Czech company types

The joint stock company is the other popular type of company in Czech Republic. It is commonly used for large companies. To set up a joint stock company, there must be either a founder’s deed by one shareholder (a legal entity) or an association of individuals or legal entities through a memorandum. For companies with more than one shareholder, the statutory body is the board of directors with no fewer than three members. The joint stock company must establish a supervisory board of at least three members.

The minimum share capital required by the Czech law is CZK 2 million (78,000 EUR). If the joint stock company is set up by public offering, the minimum share capital must be CZK 20 million. An audit is compulsory if at least one of the criteria is met: a net turnover over CZK 80 million, over 50 employees or a balance sheet over CZK 40 million.

Types of partnerships in Czech Republic

Individuals or legal entities can form a general partnership to function under a trading name. They are all liable for debts to the extent of their investment or contribution. This form of business functions under a signed agreement.

Another type of company that can be set in Czech Republic is the limited partnership. In a limited partnership, the liability of one or more partners is limited by the amount of contribution, paid or unpaid. Regardless the type of contribution, it must be recorded in the Commercial Register. This applies for the limited partners. There are also the general partners liable for obligations with all their assets. They can make management decisions and can decide the future of the company. This type of partnership requires a signed agreement.

The legal requirements for branches

A branch office is not a Czech legal entity, but represents a foreign company and must fully list the business activities in the application for the Commercial Register. It can only engage in the business activities listed. An appointed director of the branch office is entitled to act on behalf of the foreign company and he must be registered in the Commercial Register.

You may contact our specialists in company formation in Czech Republic for more details about starting a business in this country.

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