In the Czech Republic, business activities are regulated through a licensing system. Various forms of legal entities can participate in business, each with its own specific features and requirements for registration and management.
| Entity Type | Description |
| Branch | Is an organisational unit of a foreign or domestic legal entity.
It has no independent legal capacity and acts within the limits set by the parent company. Must be registered in the Czech Commercial Register. |
| General Partnership | At least two persons carry on business under a common name.
The members are jointly and severally liable for the company’s obligations with all their property. |
| Limited Partnership | Combines elements of a general partnership and a limited liability company.
Limited partners are liable to a limited extent, while general partners are liable with all their property. |
| Limited Liability Company (s.r.o.) | The most popular form for doing business in the Czech Republic.
The authorised capital consists of contributions from shareholders. Shareholders shall be liable to the extent of their contributions. |
| Joint Stock Company (a.s.) | The authorised capital is divided into shares.
Shareholders are not liable for the company’s obligations. Managed by a board of directors. |
| European companies | Can be set up in the form of a European Company or a European Economic Interest Group.
Allow for EU-wide action using a single legal form. |
In addition to choosing the right form of legal entity, foreign investors should pay attention to licensing and registration requirements, which includes obtaining trade licences and registering with the Commercial Register. These processes require precise compliance with all legal regulations and may include various administrative steps, such as notarisation of documents for s.r.o., appointment of managing directors, and, in the case of joint stock companies, compliance with public offering rules.
the time required to set up a business in the Czech Republic has been reduced to approximately 30 days.
10 steps to set up a limited liability company in the Czech Republic
Setting up a limited liability company in the Czech Republic involves the following steps:
Obtaining extracts from police records for all future managing directors to confirm their integrity before commencing operations.
Obtaining a tax certificate to confirm that future partners have no debts to the tax authorities.
Preparation of statutory documents (company charter) to be notarised, including specimen signatures of managing directors.
Organisation of the company’s registered office, including conclusion of a lease agreement and registration of property ownership.
Constituent meeting of participants to approve the company’s articles of association and have them notarised.
Opening a bank account for the company and depositing the authorised capital, after which the bank issues a confirmation of contributions.
Applying for a trade licence from the Trade Licensing Bureau, usually available through online resources.
Registration with the Commercial Registry within 90 days of company formation, including submission of all required documents and certified copies.
Registration with the tax office and social funds within 30 days of company formation, including social security and health insurance.
Maintaining current registration and licence documentation, updating data in the Trade Register and other government authorities when there are changes in the structure or management of the company.
These steps ensure the legal functioning of a limited liability company in the Czech Republic, allow for transparent business conduct and ensure that the rights and interests of all business participants are protected.
The most common forms of business in the Czech Republic
In the Czech Republic, the most common legal forms for doing business include the following types of companies:
| Entity Type | Description |
| Limited Liability Company (OOO, společnost s ručením omezeným) | The LLC is the preferred form for small and medium-sized businesses because of its flexibility and relatively simple management and share capital requirements.
The founding capital for an LLC is at least CZK 1. Shareholders are liable for the company’s obligations up to the amount of their contributions. |
| Joint Stock Company (JSC, akciová společnost) | It is used for large companies that require large investments and offer their shares on the public market.
The minimum authorised capital for a joint stock company established without a public offering is CZK 2 million (approximately EUR 80,000). If a company is established through a public offering, the minimum authorised capital must be CZK 20 million. Shareholders are not personally liable for the company’s debts. |
| Czech Trust Fund (svěřenský fond) | Used to manage and preserve assets and to transfer assets to heirs or other beneficiaries.
A trust can be used to protect assets from future financial risks and to ensure the confidentiality of asset ownership. |
| Branch of a foreign company (odštěpný závod zahraniční osoby) | A branch of a foreign company is not a separate legal entity and acts on behalf of the parent company.
The branch must be registered with the Commercial Register and operate within the scope of the activities set out by the parent company. The main difference from a subsidiary is that all legal obligations of the subsidiary are those of the foreign company. |
These forms of companies allow foreign investors to enter the Czech market flexibly and choose the structure that best suits their business objectives and risk management strategy.
Company registration in the Czech Republic
Registering and forming companies in the Czech Republic involves several important steps that potential investors and entrepreneurs should be aware of:
Steps for registering an LLC or JSC
- Preparation of Constituent Documents:
- For LLC: Memorandum of Association or deed of incorporation, which must be notarised.
- For JSCs: Articles of Association of the company, which must also be notarised.
- Opening a bank account:
- It is necessary to open a bank account to deposit the authorised capital.
- Registration in the Commercial Register:
- Filing an application with the relevant regional court to enter the company’s details in the Commercial Register.
- A company is deemed to be incorporated when it is registered in the registry.
- Obtaining a Trading Licence:
- A licence or other permit must be obtained to carry out the planned activity.
- Registration with the Tax Authority:
- Registration for taxation purposes and obtaining a taxpayer identification number.
- Notice of Beneficial Owners:
- Registration of information on beneficial owners in the Register of Beneficial Owners.
Reporting requirements
Intra-group reports and annual reports must be filed regularly with the Commercial Register.
Financial statements may be required depending on the size of the company and the type of business.
Public availability of information
The information submitted to the Trade Register is publicly available, which ensures the transparency of companies’ activities.
Violation of registration and reporting requirements may result in various types of liability, including civil, administrative and criminal liability.
These procedures ensure that business in the Czech Republic is conducted openly and in compliance with the law, which is important for both the domestic and international business environment.
Authorised capital of a company in the Czech Republic
The authorised capital of a company in the Czech Republic is the minimum amount of assets that shareholders are required to contribute when establishing a company. Here are the main points related to the authorised capital:
Minimum amount of authorised capital:
Limited Liability Company (LLC): The minimum capital is CZK 1 per shareholder. This makes the LLC an attractive form for small and medium-sized businesses, as the initial investment can be minimal.
Joint Stock Company (JSC): The minimum authorised capital is CZK 2 million (approx. EUR 80,000). If the company is established through a public offering of shares, the minimum capital is CZK 20 million (approx. EUR 800,000).
Non-cash contributions:
Eligibility: Non-cash contributions (e.g. property, equipment) to the company’s capital are allowed.
Valuation: The contribution must be valued by an independent expert, except in certain cases.
Exceptions: Contributions in the form of work or services are not allowed as a form of payment for shares.
Rights conferred by shares:
Restrictions on rights: LLC formation documents may provide for different types of shares with different rights and capital investments.
A JSC may issue several types of shares, including:
- Common Stock.
- Shares with priority dividend rights or restricted voting rights.
- All shares of the same type must have the same rights.
Fundamental rights of shareholders:
Shares provide shareholders with certain rights:
The right to participate in the management of the company, including voting at general meetings.
The right to share in profits (e.g. dividends) and assets on liquidation of the company.
The right to participate in the capital increase of the company.
The right to receive information about the company and the transformation.
The rights and obligations of shareholders may be further detailed in the memorandum of association, articles of association or other constituent documents of the company. These legal instruments regulate the distribution of shareholder rights and the company’s governance.
Management structure of the company in the Czech Republic
The company governance structure in the Czech Republic is determined by the type of company and the corporate governance requirements differ depending on whether it is a limited liability company (LLC) or a joint stock company (JSC).
| Management Structure | Description |
| Management structure for the LLC: |
Minimum one managing director: A limited liability company must have at least one managing director (executive director) who is responsible for managing the day-to-day operations of the company. General Shareholders’ Meeting: It is the supreme governing body and makes key decisions. |
| Management structure for the JSC: |
Dualistic structure: A joint-stock company must have: Board of Directors (Board of Directors), which is responsible for managing the affairs of the company. Supervisory Board (Supervisory Board), which oversees the actions of the Board of Directors and represents the interests of shareholders. Monistic structure: In this structure, only the Board of Trustees (Board of Trustees) acts, which combines management and control functions. |
| Management constraints: |
Limitation of powers: The rights of managing directors and board members may be restricted by the company’s articles of association or by resolutions of the general meeting. These restrictions do not apply to third parties and any breach will only result in the managing directors’ internal liability to the company. Foreign managers: There are no restrictions on the appointment of foreign managing directors or residence requirements in the Czech Republic. |
| Liability of directors and officers: |
Act with care (péče řádného hospodáře): To manage the company with due diligence, loyalty and in its interests. Keeping shareholders informed: Directors should provide shareholders with full and timely information about important company matters. Directors’ Responsibilities: Personal liability: Directors may be held personally liable for damage to the company due to breach of duty, as well as for administrative and criminal offences. Limitation of liability: It is not possible to enter into an agreement with the company releasing a director from liability. Any such agreement will be void. |
| Liability of the parent company: |
Limited liability: The parent company is only liable for the debts of the subsidiary to the extent of the unpaid share capital registered in the Commercial Register. Liability for control: A parent company may be liable if it can be shown that its control has caused damage to a subsidiary, or if it has been involved in illegal acts such as criminal offences. |
These rules ensure that corporate governance in the Czech Republic is based on the principles of responsibility, transparency and protection of shareholders’ rights.
RUE customer support team
“Hi, if you are looking to start your project, or you still have some concerns, you can definitely reach out to me for comprehensive assistance. Contact me and let’s start your business venture.”
“Hello, I’m Sheyla, ready to help with your business ventures in Europe and beyond. Whether in international markets or exploring opportunities abroad, I offer guidance and support. Feel free to contact me!”
“Hello, my name is Diana and I specialise in assisting clients in many questions. Contact me and I will be able to provide you efficient support in your request.”
“Hello, my name is Polina. I will be happy to provide you with the necessary information to launch your project in the chosen jurisdiction – contact me for more information!”
CONTACT US
At the moment, the main services of our company are legal and compliance solutions for FinTech projects. Our offices are located in Vilnius, Prague, and Warsaw. The legal team can assist with legal analysis, project structuring, and legal regulation.
Registration number: 08620563
Anno: 21.10.2019
Phone: +420 775 524 175
Email: [email protected]
Address: Na Perštýně 342/1, Staré Město, 110 00 Prague
Registration number: 304377400
Anno: 30.08.2016
Phone: +370 6949 5456
Email: [email protected]
Address: Lvovo g. 25 – 702, 7th floor, Vilnius,
09320, Lithuania
Sp. z o.o
Registration number: 38421992700000
Anno: 28.08.2019
Email: [email protected]
Address: Twarda 18, 15th floor, Warsaw, 00-824, Poland
Europe OÜ
Registration number: 14153440
Anno: 16.11.2016
Phone: +372 56 966 260
Email: [email protected]
Address: Laeva 2, Tallinn, 10111, Estonia
Please leave your request
