7 Simple Steps in Formation of a Company
You have your business idea and you checked our steps on 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 to you the process and give the answers to your questions!
1.Which type of company should your business be?
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 is 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 a 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.
2.Choose a catchy company name!
Your company name is a really important step and it can be a very important key to the 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.
3.To prepare the company’s Memorandum of Association
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:
- The commercial name, which must not be interchangeable with the name od the existing company
- Registered seat of the company in the Czech Republic
- Identification of the shareholder/s, including its/their commercial name and registered seat or name and residential address (in case of individuals)
- Description of the company’s scope of business (corresponds to the trade licenses)
- Company’s registered capital-minimum capital requirement from CZK 1
- The amount of contribution/s related to ownership interest/s-minimum amount is CZK 1
- Identification of the company’s first statutory representative
- The founder’s/founders duty to pay its/their contribution
- Identification of the administrator of the contribution
4.Paying up the Company’s Registered Capital
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 a company’s registered capital by either monetary or non-monetary contribution. Difference between contributions is the amount of the contribution which has to be paid before registration in the Commercial Register.
5.Which Business Licenses do I need?
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.
6.Registration in the Commercial Register
This is the main step in the 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 paid 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.
7.Representation of the Company
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 the Executive Director or other authorized person represent it and all its rights and obligations in front of other entities or institutions.
Because company establishment or company formation process is the very important task and you can always find out some problems, we hope our guide with simple steps in the formation of a company has been helpful for you. More, here you can find our application form for company establishment. Clearly, what exactly you need for company formation process.YeYe Agency has relevant experience in establishing several Limited Liability Companies. So, If you still have some questions about company formation process, YeYe is your trustworthy partner who guides your business on the road to success!
