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Czech Republic: Company Forms |
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Czech Republic Introduction
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:
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Annual turnover
exceeds CZK80m;
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Assets total CZK40m; and/or
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The average number of employees
is more than 50.
More detailed information is shown below about
the legal requirements for each type of company.
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Czech Republic 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.
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Czech Republic 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.
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Czech Republic 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).
Czech Republic 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.
Czech Republic 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.
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Czech Republic 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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