ESTABLISHING A BUSINESS ENTITY IN CZECH REPUBLIC 1. Types of business entities Investors may choose from the following forms of corporate structure:

personal property, certain intangible assets, and existing and documented due debts. The value of in-kind contributions is subject to an official valuation. Generally, before applying for incorporating a company, the premium and at least 30 percent of each monetary contribution must be paid up. The outstanding amount must be paid up upon agreement between the shareholders within five years at the latest. Contributions in-kind must be paid up in full before the company is incorporated. The company is owned by one or more individuals or corporations. Each shareholder holds an "ownership interest'' which corresponds to a percentage of the total registered capital. An LLC with a sole shareholder can also be the sole shareholder or founder of another limited liability company. The company itself is wholly liable with all its assets for any breach of its obligations. The liability of a shareholder for the company's obligations is limited to the unpaid amount of the shareholder's contribution. Consequently, shareholders in a limited liability company are not liable for the company's debts provided they have paid up their contributions in full. The “qualified” shareholders may exceptionally become liable for a company’s debts by application of the rules on company groups, namely in insolvency, e.g., if they, through their control or influence, significantly affect the conduct of the company to the detriment of the company. 1.2 Joint-stock company A joint-stock company (JSC) is established by adopting by-laws. The minimum registered capital is CZK 2,000,000, or EUR 80,000 if the

Limited liability company

Joint-stock company

Limited liability partnership

General partnership


• Branch 1.1 Limited liability company

A limited liability company (LLC) is the most frequent corporate structure used in the Czech Republic. An LLC is founded by a Memorandum of Association if there is more than one founder; or a Foundation Deed if there is a sole founder. No minimum

registered capital is required by law for an LLC; the law only requires the minimum contribution of each shareholder in the amount of CZK 1. However, it is advisable to count on a reasonable starting amount for the registered capital for financing the launch of the business and thus avoid the application of the insolvency test from the very beginning. Monetary or non-monetary (in-kind) contributions are allowed, namely real or

ILN Corporate Group – Establishing a Business Entity Series

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