involved in a share deal are mostly organized as limited liability companies or joint stock companies. B. Residential Property Residential property is most often owned by natural persons. Most frequent forms of ownership of residential property by natural persons are: 1. Sole ownership: The owner is the only person authorized to control and dispose of the property in question. 2. Co-ownership: More than one person owns an undivided share of property. Each co-owner is entitled to dispose of their share. 3. Community property: Each of the spouses is entitled to the assets which comprise the community property, but neither is entitled to dispose of the assets independently, i.e., without the consent of the other spouse. Legal entities, however, often own residential property as well. C. Commercial Property Commercial property is usually owned by private legal entities. Joint-stock companies (a.s.) and limited liability companies (s.r.o.) are the most common forms of legal entities used for the purpose of owning real-estate (or for any entrepreneurial aim, for that matter) in the Czech Republic. 1. Limited Liability Company – s.r.o. d. Most widely used legal form for corporations. e. Highly flexible, with relatively few obligations. a) Legal Entity f. A legal entity acts autonomously, represented by executive director(s).

g. Subject to taxation independently of its members (shareholders). h. The rights and obligations of an s.r.o. exist autonomously from those of the shareholders and the executive directors. b) Formation i. An s.r.o. is founded by way of conclusion of a Memorandum of Association or via a Foundation Deed in the case of a sole shareholder. It has to be notarized. j. Setting up an s.r.o. is uncomplicated and can be accomplished easily. Registration is done either directly by notaries or via the courts. k. Under Czech law, it is not mandatory to set up a supervisory board as one of the bodies of an s.r.o. c) Costs of Formation The estimated total notarial costs for the formation of a standard s.r.o. usually amount to approximately CZK 6,800 CZK (€250) (In the case of registered capital – CZK 200,000 (€7,300)) plus court costs, about approximately CZK 6,000 CZK (€22 0) and fees for legal counsel regarding the drawing up of the Foundation Deed or of the Memorandum of Association. Notarial costs are calculated based on the amount of the company's registered capital. The registration of an established company in the Commercial Register can be performed directly by a notary following the procurement of a certificated notarial deed. In such a case, the total costs of the formation of an s.r.o. are a little lower. d) Minimum Registered Capital l. The minimum registered capital required for an s.r.o. is 1 CZK. It is, however, recommended to set up a company with higher registered capital, which will serve to cover the company’s initial expenses and to

ILN Real Estate Group – Buying and Selling Real Estate Series

Made with FlippingBook Online newsletter