Setting up a Business in the Czech Republic

Overview by Globlatrade.net:

Legal Forms of Companies

Types of Companies and Capital (Max/Min) Number of Partners/Shareholders and Liability Registration Fees
Private Limited Company
 
 
Minimum CZK 100,000.
No minimum.
Maximum 5.
 
 
Partners' liability is limited to the amount contributed.
Registration certificates: CZK 70 / page; Notarial act: CZK 30 / signature + 19% VAT; Registration to the Land Registry Office: CZK 500.
Public Limited Company
 
 
Minimum CZK 1 million, at least 30% must be released before the constituting general meeting.
No minimum; can be a sole proprietorship.
 
 
Liability is limited to the amount contributed.
Registration certificates: CZK 70 / page; Notarial act: CZK 30 / signature + 19% VAT; Registration to the Land Registry Office: CZK 500.
The general partnership
 
 
No minimum capital.
No minimum
 
 
Liability is unlimited.
Registration certificates: CZK 70 / page; Notarial act: CZK 30 / signature + 19% VAT; Registration to the Land Registry Office: CZK 500.
The limited partnership
 
 
No minimum capital.
Two types of partners: active partners and sleeping partners.
 
 
Liability of active partners is unlimited. Liability of sleeping partners is limited to the amount contributed.
Registration certificates: CZK 70 / page; Notarial act: CZK 30 / signature + 19% VAT; Registration to the Land Registry Office: CZK 500.
 
 

Business Setup Procedures

Administrative Formalities
Registration procedure is regulated by the Trading Act the latest changes of which came into effect on January 1st 1996.
All documents must be drawn up in Czech, and translations and signatures must be certified by a notarized deed.
All companies must register with the local Trade License Office where the company is located. The competent Trade Register is the one where the company is located, the district Court or the regional Court. Branches of foreign companies must be registered and provide full details on the activities they intend to develop, under penalty of not being able to carry them out.

A company is founded on the basis of a deed of association, signed by all of the founders. If there is only one founder, the founding document is a founding deed. The founding document of a limited liability company or a joint stock company must be in the form of a notarial deed. A company officially comes into being on the day it is entered in the Commercial Register. A petition for entry in the Register must be filed (with the registration court) within 90 days of the company's formation, or within 90 days of the date on which a trade licence or similar business authorisation is obtained. The following documents are required for registration of a company:
- Founding document;
- An original of the excerpt of the Commercial Register of the founder;
- A document showing legal title for the use of the premises by the company (for instance, proof of ownership of the premises or, in the case of leased premises, consent for the company seat to occupy the premises);
- Trade licences or other relevant licences;
- Documents proving payment of the registered capital (usually bank confirmation);
- A declaration through a sworn affidavit by the company's executive that legal requirements have been met;
- Signature of the company's executive;
- Clear criminal register extract (police statement) of the company's executive;
- Other documents in particular cases.

Signatures on most of the above documents must be notarised.

The Competent Organization
Ministry of Industry and Trade (in Czech and English)

Database of the Commercial Register (in Czech)

Forms of offices, e.g. the Financial Authorities and Trade Licence Offices Trade License Offices – on the web sites of municipal authorities
Time Necessary for Registration
It takes 40 days to start business.
 

Recovery Procedures

Principle
Basic principle of recovery is equal conditions for all creditors (par conditio creditorum). For a bankruptcy, there are three basic conditions: decay, many creditors and enough assets for covering the costs of bankruptcy procedure. More information is available in the Act. No182/2006 Coll.
Minimum Debt-to-Capital Ratio Triggering Liquidation
Not specified.
Bankruptcy Laws
Act. No 182/2006 Coll.
Reorganization and Rehabilitation Laws
Act. No 182/2006 Coll.

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