Company formation in the Czech Republic
Updated: Jan 5, 2019
The following article shortly introduces the steps for Limited Liability Company formation in the Czech Republic.
The most common legal form for conducting business in the Czech Republic is a Limited Liability Company. The company exists independently of its members and it can be established by one or more persons with the minimum contribution of 1 CZK for each shareholder.
Collecting company details
A Limited Liability Company (LLC) can be established by one or more shareholders – both natural and legal entities.
In case of a single natural person founder, an LLC is created by signing a Memorandum of Association.
In case of two or more founders – both natural and legal entities, the company is established through Instruments of constitution between the founders.
Both the Memorandum of Association and Instruments of constitution must be in the form of an Authentic Instrument.
The Memorandum of Association or Instruments of constitution (The foundation document) must include at least the following:
Unique company name
Registered headquarters alongside a document proving the ownership of the property or a lease agreement and consent of the owner of the property with the location of the company's registered office
Names of the founders, their permanent address and declarations of clean criminal records
Subject of business (area of conducting business)
Shares of each partner and the rights/obligations associated with them
The amount of registered capital deposit attributable to each shareholder,
The number of executive directors and the procedure of representation
The foundation document also contains the following information, which can be deleted after the company is created and after fulfilling the capital deposit obligation
The deposit obligation of the registered capital, including the deadline for its fulfillment
Executive directors and their obligations
The deposit administrator – information about the person who administers the deposits before the company is fully established.
In case of non-cash deposit i.e. if you plan to pay your share of deposits with a real estate, you must include the description, the valuation, the issue rate, and the appointment of an expert making a non-cash contribution valuation.
The social contract can be later altered by an agreement of all the partners or by a decision of the General Assembly of Shareholders
The first meeting with a notary to make a notarial deed
As soon as you collect all the relevant information, a notary will prepare a notarial deed for the Memorandum of Association/Instruments of constitution in the form of a notarial deed. It is recommended to create copies of the notarial deeds to be used in further steps.
Obtaining a confirmation from the bank stating the deposited capital
With the notarial deed, the company is technically created, however, it will be fully operational only after registering into the Commercial Register. Before registering the company into the Commercial Register, the entire registered capital deposit must be paid at the selected bank institution. After the registered capital is paid, the bank and deposit administrator will provide a confirmation document for the company.
The deposit obligation must be fulfilled within the term stipulated by the foundation document and no later than five years from the date of establishment of the company. This obligation cannot be waived for any of the founders, unless the share is reduced.
If a partner is in delayed with fulfilling the deposit obligation, the company has the right to demand interest for late payment, unless the foundation document states otherwise.
A member can be excluded from the company by the General Meeting due to a delayed payment of the deposits for his shares.
Getting a trade license for the company
The last step before the company can be registered into the Commercial Registers is getting a trade license at the Trade License authority. A trade license for a company is different from a Trade License for a natural person – OSVČ.
The second meeting with a notary for registering into the business register
After collecting the confirmations stating the deposit of capital and the trade license, a proposal for the registration of a limited liability company in the Commercial Register is submitted by all the founders. If the application for registration is filed in paper form, the authenticity of all the signatures must be super-legalized. The application for registration in electronic form must be signed by a recognized electronic signature or sent via the data box of the signers.
The application for registration is filed and registered in the Czech language. However, the entry in the public register can be additionally added in any foreign language upon request. Founders may authorize other people, such as attorneys, to prepare and file the registration, through a power of attorney with a super-legalized signature.
After the registration in the Commercial Register is finished, the company should receive a unique ID within 24 hours and be publicly visible on www.justice.cz.
A brief summary of the documents needed to create the company
A Memorandum of Association or Instruments of constitution in the form of a notarial deed
Proof of property ownership/ lease agreement and consent of the owner of the property with the location of the company's registered office
Declarations of clean criminal records
Confirmation of the deposited capital from the deposit administrator
The bank's confirmation stating the payment of the registered capital
Company trade license
Proposal for the registration of the company in the Commercial Register (submitted electronically via - www.justice.cz)
Other documents: e.g. power of attorney
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