[ESTABLISHING A BUSINESS ENTITY IN SLOVAKIA] 426
4. capitalization requirements, residency, and material visa restrictions No significant barriers to entry for an offshore party Foreign investment, There are no significant barriers for an offshore party to be a shareholder in the above company types. However, some restrictions may apply to certain types of businesses (e.g., certain regulated activities may be reserved for Slovak or EU nationals or nationals of a country which has concluded a reciprocal treaty with Slovakia). Capitalization obligations The capital requirements for limited liability companies are set out under Section 1.1.1 of this summary and the capital requirements for joint stock companies are set out under Section 1.1.2. Apart from the minimum registered capital, there is another requirement, which is the creation of a reserve fund. A reserve fund is obligatorily created by both limited liability companies and joint stock companies. The Slovak law also contains specific limitations for the companies that are considered to be “ in crisis .” A company is “in crisis,” if (i) it technically meets the conditions for bankruptcy or its bankruptcy is imminent, or (ii) its equity to liabilities ratio is less than 8 to 100. The threat of bankruptcy is not directly connected with the immediate threat of insolvency or restructuring proceedings, but it is connected with several consequences. One of the consequences is that a company, if it is in crisis, or if it would fall into crisis as a result of such performance, may not return the “performance replacing its own resources.” “Performance replacing own resources” includes providing credit or loan or other similar performance with the same economic effect to the company during its crisis (or even before its crisis, if the payment term was postponed or extended during the
company’s crisis) by inter alia a person/entity whose direct or indirect share represents as least 5 percent of the registered capital or on the voting rights or he/she has a similar influence on the company or a person acting on their behalf and some other qualified persons (statutory representatives and related parties, etc.). Periods for the return of “performance replacing own resources” are suspended during the periods when it cannot be returned due to the mandatory provisions of Slovak commercial law. If the “performance replacing own resources” is returned to the creditor despite the statutory prohibition, members of the statutory body (e.g. directors, members of the BoD) who held office at the time the performance was provided and those who held offices as the members of the statutory body in the period in which the company did not claim the return of the performance shall be jointly and severally liable for its return towards the company as well as the company’s creditors. Special business or investment visa issues Citizens of the EU/EEA/Switzerland (hereinafter jointly “EU citizen”) do not need any special permit to live and work in Slovakia. An EU citizen who is the holder of a valid identity card or travel document is entitled, without any further conditions or formalities, to reside in Slovakia for three months from his/her entry into Slovakia. If the EU citizen resides in Slovakia for more than three months, he/she is obliged to apply for registration of residence in Slovakia. An application for the registration of residence must be filed in an official form in person at a police department within 30 days from the lapse of three months from the entry into Slovakia. A third country national may apply for one of the following types of residence: i) temporary residence, ii) permanent residence and iii) tolerated residence. Temporary residence can be granted for one of the purposes listed in the
ILN Corporate Group – Establishing a Business Entity Series
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