BUSINESS
Business Companies in the Czech Republic The theme of this article is the legislation applying to business companies in the Czech legal order. It will focus on the individual types of business companies in the Czech Republic, their definitions and basic characteristics. At the same time, the principal steps that must be taken for the establishment and incorporation of these business companies are mentioned. TYPES OF BUSINESS COMPANIES
The legislation concerning business companies in the Czech legal order is governed mainly by the following legal regulations: the Act on Business Corporations, the Civil Code, and the Act on Public Register of Legal Entities and Individuals. The Business Corporations Act determines the different types of business companies in the Czech Republic, namely the General Commercial Partnership and the Limited Partnership (known as personal companies), and the Limited Liability Company and the Joint Stock Company (known as capital companies). In the Czech legal order, we can also find the European Company and the European Economic Interest Grouping. The most widespread forms of business companies in the Czech Republic are the Limited Liability Company and the Joint Stock Company.
ESTABLISHING AND INCORPORATING BUSINESS COMPANIES
Business companies in the Czech Republic are established on the basis of a Memorandum of Association. A Memorandum of Association establishing a capital company (a Limited Liability Company and a Joint Stock Company) requires the form of a public deed, i.e. it must be written in the form of a notarial record. In establishing a Joint Stock Company, the adoption of the Articles of Association is required. Where the law permits the establishment of a company by a single founder, the company is established by the founder´s deed having the form of a public deed. A Czech business company is then incorporated by entry in the Companies Register (known as a constitutive entry), which is decided by the Regional Court relevant with regard to the company’s registered office. With a view to shortening the time of registration and entry of a business company in the Companies Register, and also to saving public finances in the judicial sector, it is possible for a Notary to carry out a direct entry in the Companies Register under certain situations, namely in cases where the data being entered are based on the notarial record and when the Notary has been 18 C z e c h R e p u b l i c – Yo u r Tr a d e Pa r t n e r
provided with all the documents required to be submitted for entry in the Register or for filing in the Collection of Deeds, and the person authorised to propose the entry makes such a request. However, entry in the Companies Register may be performed only by the Notary who has written the basic notarial record or all the existing basic notarial records and notarial records on certifications. This possibility is only optional, i.e. the founders can always apply to the relevant Registration Court. The Companies Register is one of the public registers governed by the Act on Public Registers of Legal Entities and Individuals. It is a system of public administration maintained in electronic form, and conducted by the Registration Court (i.e. the competent Regional Court) relevant for the company’s registered office. Open to the public, it contains the most important information about business companies (the company name, company registered office, the names of members of the statutory bodies of the company and their number, the amount of contributions, registered capital, etc.) and other data determined by the Act on Public Registers of Legal Entities and Individuals. At the same time, information on business companies is available on the websites: http://portal.justice.cz/Justice2/Uvod/uvod.aspx (where deeds entered by the companies in the Companies Register can also be found in electronic form), or www.obchodnirejstrik.cz. The proposal for entry in the Companies Register must be filed only by means of an electronically completed form, which is normally available at: https://or.justice.cz/ias/ui/podani. The proposal for entry must be sustained by documents on the facts which are to be entered in the Companies Register, and by deeds to be filed in the Collection of Deeds in connection with this entry (especially the documents on establishment – Founder´s Deed, Memorandum or Articles of Association, documents on the object of the business activity, documents on the payment of contribution – e.g. the declaration of the contribution manager on the payment of the contribution, documents on the company’s registered office, etc.) An essential condition for having a company entered in the Companies Register is the payment of the court fee. The amount of the court fee depends on whether the entry in the Companies Register is made by the notary or the court. In case the entry in the Companies Register is made by the court, the fee is CZK 12 000, in the case of a joint stock company and other types of trading companies it is CZK 6 000. In case the registration is carried out through the intermediary of the notary, after all the required terms and conditions have been met, the court fee shall be CZK 8 000 for the joint stock company and CZK 2 700 for other types of companies. If the registration of a limited liability company is carried out by the notary, the entry may be exempted from the obligation to pay the court fee, provided the following conditions are met: the registration is made on the basis of a notarial deed proving the founding of the limited liability company and comprising all the requisites provided for by the Civil Code and the Business Corporations Act, where the obligations to be met in the case of pecuniary payment are stipulated.
