What is a Stock Corporation/ Public Limited Company?

A Stock Corporation or Public Limited Company is a company whose share capital is divided into a certain number of shares with a certain nominal value. The company’s liability for its debts is not limited, however shareholders are not liable for the company’s debts.

Please note that Czech law distinguishes two types of a Stock Corporation depending on the internal body structure of the company.

What are the two types of Stock Company recognized by Czech law?

In the Czech Republic a Stock Company can be formed as either  “Monistic” or “Dualistic”.

The internal structure of the Monistic Stock Company is comprised of the following bodies:

  • General Meeting (valná hromada) – as Supreme Body
  • Statutory Director (statutární ředitel) – as Executive Body
  • Managing Board (správní rada) – as Executive-Supervisory Body

The internal structure of the Dualistic Stock Company is comprised of the following bodies:

  • General Meeting (valná hromada) – as Supreme Body
  • Board of Director (představenstvo) – as Executive Body
  • Supervisory Board (dozorčí rada) – as Supervisory Body

Is a foreigner allowed to serve as a member of the body of a company in the Czech Republic?

Yes, either a Czech citizen, EU citizen or non-EU citizen can serve as a member of a company’s body

What is the first step when setting up a Stock Corporation company?

First of all, when the company has more than one founder you need to prepare the Statutes of the Company (stanovy) as the company’s founding document. To be legally binding and enforceable, the Statutes of the Company are subject to notary authentication. If you are setting up the company by yourself without any other participant, the founding document shall be called the Letter of Incorporation (zakladatelská listina)

How much do I pay for the notary authentication?

The cost of the notary authentication depends on the minimum registered capital.

What information shall be included in the Statutes of the Company/Letter of Incorporation?

All requirements are prescribed in § 250 of the Business Corporations Act. Founding documents shall mainly contain the following information:

  • Company name (obchodní firma), the company name must comply with all legal requirements and the name must also include designation “akciová společnost”, „akc. spol.“, or „a.s., which is either the translation or abbreviation of the term “stock company”;
  • Scope of the business (předmět podnikání);
  • Designation of the company’s registered office (označení sídla společnosti);
  • Internal structure of the company – monistic or dualistic;
  • Rules for the election of a member of the company body;
  • Number of shares, their value and designation of the type and form of the shares;
  • Number of votes per share;
  • amount of registered capital;

Solely for the purpose of incorporation of the company (after the company is incorporated, such information can be removed from the Statutes), the Statutes must mainly include the following:

  • Number of shares assigned to each founder and the issue price of the shares;
  • Designation of the amount of registered capital, which is required to be paid off to the moment of establishment of the company – at least 30% of the nominal value of the shares has to be paid before the registration of the company;
  • Designation of Administrator of the deposit (Správce vkladu);

Please note that the information stated above is a subjectively selected list of requirements and does not in any case represent a complete list of requirements, the fulfillment of which is necessary for the successful establishment of a company.

What else do I need to present to the notary for successful authentication?

  • Personal IDs of the founding shareholders or a Statement from the Business Register, in case the founder(s) is/are a legal person (company), such a statement can be acquired by the notary;
  • Consent of the property owner where the registered office is to be situated; in case the company intends to conduct its business activity in rented premises, such consent also requires the authentication of a signature.
  • Statement from the cadastre (Registry of Land and Real Estate Ownership) showing the records associated with the property (real estate) designated as the registered office, such a statement can be acquired by the notary;
  • Statement of criminal record of all future members of any body of the company (Criminal background check), such a statement can be acquired by the notary.

Acquiring of these statements is paid according to law.

What is the minimum registered capital required by law for a Stock Company?

The minimum registered capital is just 2.000.000 ,- CZK or 80.000,- EUR.

Are the shareholders obliged to pay the issue price of their shares corresponding with their share on the registered capital in cash only?

No, the issue price can be paid either in a monetary or non-monetary way. However, all non-monetary payments of the issue price shall be evaluated by an official court’s expert and deposited in full before registration of the company.

Ok, I have the Statutes authenticated, does that mean my company is ready to do business?

No, not yet. By authentication of the Statutes, the company is founded, however, there still needs to be an official recognition of the company. More precisely your stock company is not present in the Business register and has not been recognized by the official authorities yet (the Stock Company is not endowed with a legal personality as it has not been registered yet).

Also note that all founders of the company shall not be considered as the company’s shareholders until the moment of the successful registration of the company. Therefore, solely the company’s founders and not the company itself are bound by all legal actions taken, negotiations led, and agreements concluded before the moment of the company’s registration. However, the company may adopt all such actions and enter into legal relationships of its founders within 3 months from the moment of registration.

What else do I need to start my business?

You need to open a bank account where the required and agreed registered capital shall be deposited. Please note that the deposit is tied (cannot be withdrawn) until the moment of the court’s decision on the registration of the company.

What shall I do next?

Now you need to obtain a trade license according to the nature of your business. Accordingly, the process of obtaining a trade license differs based on the subject of the business as some branches of business are more regulated. The application can be filed out electronically or via mail. The administrative fee for filing an application is 1.000,- CZK.

I have had the Statutes authenticated, I have opened a bank account and the issue price of the shares of each shareholder has been paid as prescribed, what next?

Now you can proceed with the registration of your company. The registration must be made within 90 days from the moment the company was founded i.e. the Statutes were authenticated. You can file for registration either directly at the relevant Commercial court which maintains the Commercial register (such application is charged an administrative fee of 12.000,- CZK), or you can file for registration with a notary, which is quicker and less expensive (8.000,- CZK). You also need to annex most of the documents and certificates previously obtained during the process of establishing your company.

How do I find out if my company is registered and ready to do business?

The relevant Commercial court charged with Commercial registration will deliver its ruling and notify you about a successful registration. However, the easiest and the quickest way to find out is to regularly check the official webpage of the Commercial Register at www.justice.cz.

Is there something I should do after registration?

You have done it! The company is established and registered, but don’t celebrate yet. Now you need to ensure the company’s compliance with the relevant legislation. Mainly, the company is obliged to

  • issue all shares to its shareholders as prescribed;
  • prepare, fill out and maintain a list of shareholders;
  • create and maintain a website for your company where you need to present all information required by law.

Based on the scope and nature of the company’s business, your company will also need to file for the following tax and similar registrations. Beware, the registration deadline is rather short.

  • income tax (daň z příjmu) registration;
  • circulation tax (silniční daň) registration, if your company owns and uses a car(s) for its business activities;
  • VAT – value added tax (DPH – daň z přidané hodnoty) registration;
  • registration of your employees to the relevant public authorities (District Social Security Administration, health insurance).

Furthermore, you need to register your company with the Central Registry of the Identity of Beneficial Owners. A Beneficial Owner is a person who has the ability to directly or indirectly exercise decisive influence over the company. Only a natural (not legal) person is allowed to act as a Beneficial Owner.

This application is filed electronically and is charged with the administrative fee of 1.000,- CZK

Finally, please be informed that a data box will be set up for your company automatically. You are obliged to activate the data box within 15 days from the moment your login and activation guidelines were delivered. Your data box will be used mainly for official communication by public authorities as well as the submission of official applications etc.

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