Forms Of Corporation

There are seven basic forms a business can take in the Czech and Slovak Republics. Listed below is a very brief highlight of the legal entities. This is not comprehensive. Please consult a lawyer for a detailed explanation of each.

Joint stock co = akciova spolecnost - a.s.

- shareholders are not liable for incurred debts and obligations of company

- must have capital stock of 1 million Kc (Sk) or more

- reserve fund is created by allotment from the after tax profits up to at

least 20% of equity

- annual financial statements must be audited by authorized auditor

- company must have a Board of Directors of at least 3 members, each of whom must be

Czech nationals or residents of the Czech Republic (similarly Slovak nationals or

residents in the Slovak Republic).

2. Limited Liability Co = spolecnost s rucenim omezenym = spol. s r.o.

- members are liable for incurred debts or obligations of company up to their

unpaid deposits

- must have registered capital of at least 100,000 Kc (Sk)

- each member must contribute at least 20,000 Kc (Sk), maximum of 50 members

- reserve fund is created by allotment from the net profits up to at least 10% of equity

- company director must be Czech national or resident in the Czech Republic

(similarly Slovak

nationals or residents in the Slovak Republic)

- need not appoint auditor unless turnover exceeds 40 million Kc (Sk) or capital exceeds

20 million Kc (Sk) or required by another regulation

3. General Commercial Partnership = verejna obchodni spolecnost - v.o.s.

- Partnership formed by two or more persons

- Must include v.o.s. in the name, unless it includes the surname of at least one of the

partners, then a spol. is sufficient

- Each partner is entitled to act on behalf of the partnership and is jointly and severally

liable for the partnership obligations

- Existence is dependent of the partners

4. Limited Partnership = komanditni spolecnost = kom. spol. or k.s.

- Similar to v.o.s. except that at least one partner has liability limited to the amount of the

registered investment

- Only the unlimited partner is entitled to manage the partnership

5. Coops = druzstvo

- formed by at least five members to undertake business activities or for the economic and

social benefits of its members (only 2 if both are legal entities)

- members are not liable for the debts and obligations of the coop

- must have registered capital of at least 50.000 Kc

- initial indivisible fund of at least 10% of registered capital

6. Branches of Foreign Business = zastoupeni, pobocka zahranicni firmy

- must be registered in the Corporate Register

- branch manager must be a national or a resident of Czech Republic or Slovak Republic

- branch must usually obtain a trade authorization from regional Trade Office.

7. Sole proprietors = podnikatel

- existence is wholly dependent on proprietor

- proprietor must be a Czech national or a resident of the Czech Republic (similarly Slovak

nationals or residents in Slovak Republic). If not, he must appoint a responsible representative.

- must register with the local small business office, and if a non-resident also with the

Corporate Register.