You have your business idea and you checked our steps how to start up a successful company, but now you need to do the official legal procedure- company registration or company formation. Does the company formation process take a long time? What are the steps of a company formation in the Czech Republic? In the 7 simple steps, we are going to explain you the process and give the answers to your questions!
Firstly, you need to decide which type of company should your business be. The Czech Republic allows different types of business entities to be established according to the Czech law, with its registered office in the Czech Republic and being registered in the Commercial Register: Limited Liability Company (S.R.O), Joint-stock company (A.S), General Partnerships (V.O.S), Limited Partnership (K.S), Cooperative and Branch. Limited Liability Company is the most common type of company established in the Czech Republic. Is this type of company for your business? The Czech Limited Liability Company is usually preferred by small and medium-sized business.The company exists independently of its shareholders, who are liable for the company’s debts only up to the total amount of unpaid contributions are registered in the Commercial Register. It can be established either by one founder(person or legal entity) or by an association of maximum 50 people. From 2014, it is possible to set-up a Limited Liability Company with the minimum capital requirement from CZK 1.
Your company name is a really important step and it can be very important key to future success of your company. So, find your time to think about it! You can check guides according to this topic, or if you’re not sure in your choice, you can always ask some professionals to help you. But, the most important legal rule is that it’s needed to be different from any company that already exists. A new Limited Liability Company has to get approval from Companies House of any name that’s proposed.
The company in the Czech Republic is founded by signing its Memorandum of Association/ Founder’s Deed in the form of a notarial deed drawn by a Czech notary public. More, the Founder’s Deed may be executed and signed on a behalf of the founder/s on the basis of a Power of Attorney granted to one of the attorneys.
The Founder’s Deed includes:
So, after you prepare and sign the company’s Memorandum of Association, it’s time for paying up the company’s registered capital. A Limited Liability Company’s minimum capital requirement is CZK 1 and the ownership interest represents the shareholder’s share in the rights and obligations in the company. it’s possible to pay company’s registered capital by either monetary or non-monetary contribution. Difference between contributions is an amount of the contribution which has to be paid before registration in the Commercial Register.
Every business activity to be performed by the company requires specific authorization. It means, the activities cannot be legally carried out or registered in the Commercial Register before obtaining authorization. Generally, the most common business authorizations are trade licenses or concessions under the Czech Trade Licensing Act. The trades are divided into two main categories: notifiable trades and concession trades.
This is the main step in company formation process. Even though the company has been founded by a notarial deed, it comes into legal existence only after it has been registered in the Commercial Register. It usually takes no more than 5 business days after filing the application with all documentation required by the law and the registration court. So what documents do I need to submit?
You will need to submit: Memorandum of Association, confirmation from the administrator of the Company’s Registered Capital, a certificate from the bank about payed Capital, a list with the company managers and their signatures and consents to the registration in the Commercial Register, clean Criminal Records for all representatives and members and extract from the Trade Licenses Register.
During the period between its founding and registration anyone may act on behalf of the company. These rights and obligations pass to the company once its registered and Executive Director or other authorized person represent it and all its rights and obligations in front of other entities or institutions.