[ESTABLISHING A BUSINESS ENTITY IN CZECH REPUBLIC] 141
complicate the branch’s operations and day - to-day business. A branch is established upon the execution of a founding document known as the resolution of foundation. Its form depends on the requirements set by the law governing the founder. Having at least officially certified signatures on the document is always advisable. A branch must obtain the corresponding trade licences or other permits necessary to do business which correspond to the activities of the founder. A branch must have a director who is an individual, generally registered in the Commercial Register, and who executes all legal acts relating to the maintenance of the branch on behalf of the founder. There is no requirement under Czech law regarding a branch's registered capital. 1.7 Entities under European law A European Company or Societas Europea (SE) and European Economic Interest Grouping (EEIG) are also considered as business entities which may operate in the Czech Republic. 2. Steps and timing for establishment Generally, a company is established in two steps: 1. founding the company by adopting a foundation document, and 2. registering the company with the Commercial Register. Founding a company does not mean it legally exists. In the period between its foundation and establishment, the company does not have legal personality (it cannot acquire rights or obligations), and its statutory bodies do not yet exist. Company shareholders are only in the position of founders and not shareholders. The Company’s founders must authorize a person to administer the paid-up capital before
incorporating the company. The administrator, often one of the founders or a bank, is obliged to take custody of the founders’ contributions. In addition, they are obliged to provide a written statement on how much capital has been paid up, which must be attached to the application for registration in the Commercial Register. If the amount of all cash deposits into the limited liability company does not exceed CZK 20,000, it is possible to repay a cash deposit in a way other than through a special bank account, for example, by using a deposit manager to accept cash or through current accounts. This change makes it cheaper and faster to set up and create low-cap limited liability companies. Upon establishing the company, these deposits become the property of the company, which may from that moment on freely dispose of them. The company must obtain a business licence (such as a trade or other licence). The trade licence is certified by an extract from the Trade Register held by the Trade Licensing Office. The company acquires the trade licence, in the extent of the registered scope of business, from the date it was established at the earliest. The business licence can be notified even after registration. The description of the business must be clear; a reference to a free licence is not sufficient. A newly founded company must be registered with the regional Commercial Register before it can become a legal entity. Commercial Registers in the Czech Republic are kept by Regional Courts or the Municipal Court of Prague. Corporate information on existing companies such as business name, address, authorized representatives, registered capital, and certain other information can be found in these registers (accessible online). In general, if an application to register a company in the Commercial Register fulfils all
ILN Corporate Group – Establishing a Business Entity Series
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