Setting up a company

Setting up a company

Establishing a company is more difficult and more time consuming than obtaining a Trade Licence for a Self-employed person. Entrepreneurs make use of lawyers or specialised accounting companies. Here we shall just mention the main points to provide basic orientation.

Types of companies

In the Czech Republic, there are 4 types of companies:

  • Public company (veřejná obchodní společnost);
  • Limited liability company (společnost s ručením omezeným);
  • Limited partnership company (komanditní společnost);
  • Joint-stock company (akciová společnost).

Each of the above-mentioned types of companies have some advantages and disadvantages (eg. number of business partners, share capital, liabilities etc.). Before finally choosing the type of company, you might like to consult your decision with a consulting agency.

Limited liability company

Limited liability company (= společnost ručením omezeným, s.r.o., OR společnost s ručením omezeným, spol. s r.o.). The limited liability company is still the most widespread and popular form of business in the Czech Republic. All rights and obligations are governed by the Civil Code and the Business Corporations Act. The main advantage is that the company partners are not liable for their liabilities with their entire property, but only up to the amount of the outstanding deposits. In practice, this means that if a company goes bankrupt there is a lower risk of execution of personal property. If bankruptcy happens to a self-employed person, the personal property could be seized, which is not the case in the case of s.r.o. However, liability cannot be waived by members of company bodies (executive directors) if it is proved that they breached the law and caused the company to fail due to the way the company was managed.

Who can establish a company?

The right to establish a company in the Czech Republic belongs to all people regardless of whether they are from EU or non-EU countries. The right to be a partner/director is not subject to having a permanent/temporary residence or visa. You can also authorize Czech lawyers and tax advisers to do the paperwork with the Governmental Authorities for you.

How to establish a company?

Establishment of a company is only possible via the notary office where you will write up the notarial record of the Founding of the Company. It must include:

  • name of the company,
  • company address,
  • designation of shareholders,
  • scope of business,
  • the amount of registered capital and the amount of the contribution of each shareholder including the method and period of repayment of the contribution,
  • the names and places of residence of the first executive director/s of the company (=jednatel/é společnosti) and the way they will act on behalf of the company,
  • the names and residence of the members of the first Supervisory Board (if any),
  • designation of the deposit manager,
  • determining the amount of the reserve fund and the method of its creation.
What to do next?

Next steps:

  • Opening a special bank account based on the registered capital (the bank requires the original of the Memorandum of Association to be consulted), and the bank then issues a written statement of the repayment of the deposit.
  • Notifying the Licenced Trade at the Trade Licensing Office or applying for the  License,
  • Within ninety days of its establishment, an application for registration in the Commercial Register must be submitted. The proposal shall include the following attachments:
    • Memorandum of Association in the form of a notarial deed,
    • Declaration by the Deposit Administrator about the repayment of the company’s share capital (the Deposit Administrator is usually the company’s executive).
  • proof of the deposit issued by the bank,
  • certified copies of the Extract from the Trade Register,
  • proof of the legal title of the use of the property,
  • extract from the Land Register,
  • Statutory Declaration of Executives and their sample signatures,
  • stamp (=kolek) of 6.000 CZK value,
  • verified signatures of all the first executives.

Within 30 days from the Entry in the Commercial Register, the newly formed company must register with the Tax Authority (=Finanční úřad). There are three Tax Authorities in Ostrava. From 2014 the minimum amount of registered capital for the Company has been 1 CZK.

Buying an already existing company

You can buy a ready-made company which can save you some time. However, you will still need to deal with paperwork when changing the name of the company, the number of the executive directors (=jednatelé) etc. You can check the offer of the companies mentioned below:

Need more information?
  • More ideas, programmes and support for the start-ups can be found at MSiC and Impact Hub Ostrava. The latter also provides a co-working space in case your offices are only to be furnished and opened.
  • Also, there is a Czech Business and Investment Development Agency CzechInvest, please check their factsheet about Moravian-Silesian region.
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