Legal forms of business in the Czech Republic
Here you can find general information on the legal forms of companies in the Czech Republic.
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Since 01.01.2014 the new law for corporation came into force. According to this law a company is not founded by the day of its founding, but by the day of its registration in the commercial register. Every company must be registered in the commercial register.
1. Foreign individuals
There is no difference between Czech and foreign individuals (from EU countries) in terms of company foundation (in the Czech Republic). Foreigners from countries outside the EU can normally found a company without any problems. In certain circumstances there can be a few limitations. According to the commercial code, foreign individuals are natural persons or legal persons with residence or location outside the Czech Republic. Business activity of foreign persons in the territory of the Czech Republic means that a company or an organizational unit does business in the Czech Republic. Czech law applies for any company which was founded in the Czech Republic. The company form goes by the law of the state where the company was founded.
Foreign persons can be involved in company foundations in the Czech Republic or can participate as a shareholder.
According to Czech law following companies can be founded: general partnership (v.o.v.), limited partnership (k.s.), limited (s.r.o.), stock company (a.s.) and cooperative.
2. General partnership
A general partnership is a partnership which is founded by at least two partners. The partnership is liable for its liabilities with its total assets. All partners are liable with their total assets. All partners can act on behalf of the partnership.
3. Limited partnership
The limited partnership is a partnership which is founded by one ore multiple general partners and one or multiple limited partners. The general partners are liable with their total assets, the limited partners are liable with the amount of their deposit. The management can only consist of general partners. (Only general partners are authorised to manage the partnership)
The limited is a partnership which is built by the deposits of its shareholders. The deposit of a shareholder must be at least 1 CZK. The share capital must be at least 1 CZK as well. The shareholders are liable with their deposit for the liabilities of the company. The company can be founded by only one shareholder.
The highest body of the Limited is the partners’ general meeting. The managing directors are chosen by the general meeting. The partnership can also form a supervisory board. The supervisory board must consist of at least three members of the general meeting.
5. Stock company
The stock company is a partnership whose capital stock is divided into a certain number of shares with a certain nominal value. The stock must be at least 2.000.000 CZK which equals about 80.000 €. The company can also be founded by only one partner, in this case the partner must be a legal person. The company must have a constitution.
The highest body of the stock company is the shareholders’ general meeting. Each shareholder has the right to participate in the general meeting. The board is responsible for the management of the company. The board can be selected by the general meeting or the supervisory board. The stock company must have a supervisory board. The supervisory board must consist of at least 3 members which are elected by the general meeting. The employees have the right to elect one third of the members of the supervisory board, if there are more than 50 employees in the company.
The annual accounts of the stock company must be confirmed by an auditor.
The cooperative is a community of an unlimited number of persons (at least 3) which is founded to do business or to satisfy other needs of the members. The members are not liable for the liabilities of the cooperative. The cooperative must have a constitution.
The highest body of the cooperative is the general meeting where every member has the same voting right. The general meeting elects the board and the members of the control commission. The board manages the cooperative. The control commission controls the activity of the cooperative and deals with member complains. The control commission must consist of at least three members which are elected by the general meeting.
Publication date 27.10.2019 Last updated date: 31.10.2019