Accountancy in the Czech Republic

>> Choice of Legal Form in the Czech Republic

The Act on Business Corporations recognizes the following types of  business entities:

  • limited liability company
  • joint-stock company
  • general partnership
  • limited partnership
  • co-operative
  • Societas Europaea (SE, European Company)
  • European Economic Interest Grouping (EEIG).

Foreign legal entities may also establish  a branch in the Czech Republic.

Limited liability company  (společnost s ruč ením omezeným – spol. s r.o. or s.r.o.)

  • This is the most frequent used type of business entity;
  • CZK 1 of registered capital is sufficient;
  • The list of shareholders, the amount of each shareholder’s contribution and the names of the members of the supervisory board (if one is established) must be recorded in the Commercial Register;
  • Limited liability companies may also appoint legal entities as executives.

Joint-stock company  (akciová apolečnost – a.s.)

  • Registered capital has to be at least CZK 2 million or EUR 80,000;
  • Non-cash contributions to registered capital must be valued by an independent expert;
  • The company may decide between two internal structures: either a supervisory board and a board of directors (dualistic organization of corporate bodies) which is very common, or an executive director and a managing board (monistic organization of corporate bodies);
  • The chairperson of the managing board may be the same person as the executive director (i.e., one person can secure the entire operation of a joint stock company);
  • A legal entity may also be appointed as a member of the board of directors of a joint stock company;
  • The executive director has to be a natural person.

General partnership (veřejná obchodní společnost – veř. obch. spol. or v.o.s.)

  • A general partnership is formed by two or more persons (individuals or legal entities);
  • The partners in a general partnership are liable for the debts of the company;
  • The names and addresses or the registered offices of the partners must be registered in the Commercial Register;
  • All partners are entitled to act on behalf of the partnership and are jointly and severally liable for the partnership’s obligations to the extent of their entire property.

Limited partnership (komanditní společnostt – kom. spol. or k.s.)

  • A limited partnership is formed by two or more persons (individuals or legal entities);
  • At least one of the partners must be a general partner. The general partner has unlimited liability for the debts of the partnership;
  • At least one partner must be a limited partner. The limited partner is liable for the partnership’s debts only up to the amount of unpaid contributions recorded in the Commercial Register;
  • The names and addresses or registered offices of the partners, a statement on whether they are limited or unlimited partners, the amount contributed by each limited partner and the amount of their paid-up contributions, all must be recorded in the Commercial

Register;

  • Only unlimited partners are permitted to manage the partnership.

Co-operative (družstvo)

  • Co-operatives are formed by at least three members, either legal entities or individuals, to undertake business activities for the economic or social benefit of their members;
  • Members are not liable for the obligations of the co-operative; however, the co-operative may demand contributions from its members to cover losses.

Branch of a foreign entity (odštěpný závod zahraniční osoby, formerly organizační složka)

  • Foreign legal entities may also establish a branch in the Czech Republic. Foreign legal entities are defined as legal entities having their registered office outside the Czech Republic;
  • A branch is not considered a legal entity, but must nevertheless be registered in the Commercial Register;
  • Branches of foreign businesses can conduct business activities in the Czech

Republic if they are registered in the Commercial Register;

  • The liability of a founder of a branch is not limited since a branch is not an independent entity.

Latest version updated 25th October 2017

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