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How to Register a Liability Company (S.R.O.) inthe Czech Republic

by | May 5, 2022 | Corporate Structuring

How to register a limited liability company in Czech Republic

Czech Republic is a member state of the European Union strategically located at the center of Europe, with well-developed infrastructure  and financial services. The country boasts a stable political and regulatory frameworks supporting business activities from local and foreign investors. It is one of the top locations to open a company. The limited liability company (S.R.O) is the most common type of business entity that foreign investors establish in the Czech Republic. 

For foreign investors looking to set up a company in the Czech Republic, it is imperative for foreign investors to choose a type of company that meets their individual business plans and personal preferences of the founders. Let’s look at the process of establishing a limited liability company (S.R.O) in the Czech Republic. 

Here are some of the fundamental legislations that supports the business incorporation process for foreign investors in the Czech Republic:

Step-by-Step Guideline in Setting Up a Limited Liability Company in the Czech Republic

Step 1- Draft a Memorandum of Association 

  • It is important to meet with a notary to draft a memorandum of association or deed of foundation for a single member company. The memorandum of association will be checked by a notary and drawn up in the form of a notarial deed. 
  • A company is governed by its memorandum of association, signed by all of its founders and future shareholders. The memorandum of association must include basic company details as required by law. 
  • Required information include the company name, registered seat, scope of business, amount of share capital, personal identification of shareholders, type of shares, total amount of contributions, and total number of executives. The notary fee typically does not exceed CZK 10,000 plus VAT.
  • When choosing a company name, the name must not create any confusion with an already existing corporate entity. Additionally, it must not give a misleading impression. 
  • To verify if the name is already being used, founders must visit www.justice.cz to verify if the proposed name is already taken. If the company name contains the name of a natural person, you must first obtain consent to use his or her name. 

Step 2- Meet Contribution Obligations 

  • One great advantage of setting up a limited liability company is that shareholders need not invest a large sum of money into its share capital. 
  • The minimum contribution amount is CZK 1 for each shareholder. 
  • Shareholders must appoint a contribution administrator in their memorandum of association who will be receiving and administering the contributions, which may be in cash or in kind. 
  • Contribution administrator opens a designated bank account for the purpose of depositing monetary contributions. 
  • As of 1 January 2021, it has not been required for companies to open a special account to deposit monetary contributions if the share capital exceeds CZK 20,000. 
  • Contributions in kind may be valued by an expert. 
  • Before submitting an application to the Commercial Register, all contributions in kind must be paid in full, with at least 30 percent of each monetary contribution must be paid, unless the memorandum determines more. This is then proven by a statement of the contribution administrator and a bank certificate. 

Step 3- Secure a Trade License

  • In most cases, a company must obtain a specific license to operate its business or any other activity. 
  • A company must submit an application along with the required documents to the Trade License Office, which will then issue an extract from the Trade Licensing Register within a few days. 
  • The administrative fee is around CZK 1,000. 
  • Depending on the business activity of a company, it may need a special license or permit to operate. 

Step 4- Gather All Remaining Required Documents

  • Additional required documents must be submitted to successfully register a limited liability company. 
  • It is a pre-requisite for a company to hold a fair title for the use of premises where the company’s registered office is located. 
  • A fair title is typically proven with permission from the owner of the property with an official and verified signature. 
  • The natural person to be registered with the Commercial Register, such as the company executive, must provide a written consent to their registration with an officially verified signature. 
  • Additionally, members of the company mist declare that they meet all conditions set forth by Czech Law to perform its many functions. 
  • It may also be a pre-requisite to submit a power of attorney, a document from the public register, or an equivalent document issued by the relevant authority. It may also be an extract from the criminal record or equivalent document issued by a relevant foreign authority. 
  • Documents in foreign languages mist have a certified translation. 
  • For certain types of legal documents, a special form of higher authentication is required. 

Step 5- Submit your Application for Company Registration 

  • Once you have completed the necessary documentation, you may then submit the application for entry of the company into the Czech Republic Commercial Register kept by a relevant court.  
  • It is easier to register the company directly through the notary since the fee amounts to CZK 2,700, otherwise the fee is CZK 6,000. 

Damalion is a reliable consulting firm in establishing a new business in the Czech Republic. Our global service network consists of seasoned service providers, advanced tools, and efficiency with company registration and incorporation process. We apply our expertise in opening a bank account, management, accounting, bookkeeping, auditing services, and more. To learn more about the process of setting up a limited liability company (S.R.O) in Czech Republic, reach out to a Damalion expert today.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.