The following text responds to the frequent question of readers that would like to start business in the Czech Republic in various area of media law. The procedure is however applicable to all types of industry.
One can run a business as a natural person or set up a legal entity in one of prescribed legal form. The most common is limited liability company and joint-stock company. With the new civil code and especially with the new Act No. 90/2012 Coll. on commercial companies and cooperatives, the procedure is due to the reduced required costs – 1 CZK more simple. Also, if the foreign company do not want to set up Czech company, it may establish a branch office registered in the Czech.
What to do to establish Limited liability company (LLC in UK Ltd)?
Two main Acts:
Act No. 90/2012 Coll. on commercial companies and cooperatives (Zákon o obchodních korporacích) Spec. § 132 – 241
Act No. 455/1991 Coll., on The Trade Licensing (Živnostenský úřad)
And Act. No. 304/2013 Coll., on Public registers
There are two stages to complete the process – to found the company and to establish it – this is a formal requirement and comes with the date when the company is registered into the registrar.
- To found the company one needs:
- Create company name (must be unique and not against public morals)
- Choose the seat of the company
- Get criminal record statement for Executive Director
- Honest statement of Executive Director not being in bankruptcy (insolvency) or in 3 previous years
- Confirmation of bank that the capital contribution was paid – according to the law 1 CZK is enough, recommended is however at least 1.000 CZK
- Notarize the Partnership Agreement (The social contract or Articles of Association) if there are more founders or Founding Charter in case of one founder – must be made by public notary. The Act states legal requirement what the Agreement/Charter has to contain:
- the name of the company,
- the subject of business or operations,
- determination of shareholders the name and residence,
- determine the types of shares each shareholder and the rights and obligations associated with them, allows the creation of the social contract of different types of shares
- the amount of the deposit or deposits per share or shares,
- the amount of capital and
- the number of directors and how they act in society
- Get the consent of the owner of the premises to have a seat there
- Obtain a trade license from Trade License office according to the seat
To establish company one needs:
- Fill the application for entry in the Commercial Register (Regional Court according to the seat – in Prague Municipal Court)) available on justice.cz and send it or use the services of public notary. All above documents must be send together.
- After that there is a duty to register by Tax office, Social Security Administration and Insurance Office if the company has employees
5 – 10.000 CZK notarial record of Partnership Agreement/Founding Charter
1.000 CZK Trade License Fee
6.000 CZK Court fee for application to Business Register
1 CZK or more for capital contribution
Other costs and fees are minor – 200 CZK for verification of documents or signatures
Duration of the process: 3 weeks
www.justice.cz (Czech ministry of justice)
http://www.praha1.cz/cps/odbory-a-oddeleni-odbor-zivnostensky.html (Trade office Prague 1)
http://www.czechpoint.cz/web/ (verification offices)
http://www.financnisprava.cz/ (Tax office)
For more information see Attorney website www.ondrejova.cz