A limited liability company –Společnost s ručením omezeným or s.r.o.- is the most usual legal type for a business entity in the Czech Republic. This company is a separate legal entity whose authorized capital consists of contributions paid by its shareholders. These partners are responsible for the debts of the company as much as their unpaid contributions to the company capital registered in the trade registry.
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Doing business as a foreigner in the Czech Republic
Foreign investors have no restrictions on setting up a limited liability company in the Czech Republic. Foreign natural and legal persons can set up any company with Czech or foreign partners or as individual shareholders. This means that foreign legal and natural persons have the same rights as Czech citizens and can be treated the same way.
Czech direct investment abroad as of 31 December 2020 – by economic activity
The company can be set up by either one or more people (the maximum number is not fixed). No matter if they are EU, EEA, or third-country residents, foreign entrepreneurs have the option to set up an s.r.o. Company in the Czech Republic.
Czech company incorporation from abroad
Foreigners can perform the function of director or partner, regardless of where they reside in the Czech Republic. An associate can be either a foreign legal entity or a natural person, and a person can be a partner without a Czech Republic residence permit or visa. A foreigner can also be a company director, and it is not necessary to have a visa or a residence permit.
The company can be established without visiting the Czech Republic via the power of attorney. You can sign a power of attorney in the Czech Repuclic Consulate Section in your home country. The power of attorney gives a legal right to your business consultant to complete the establishment process on your behalf.
The minimum capital for limited liability companies
The minimum shareholder contribution is 1 CZK. According to the Business Corporations Act. The legislation does not specify the minimum registered capital. It is calculated from the shareholder’s minimum contribution. Limited Liability Companies with only one shareholder have a minimum registered capital of 1 CZK. If your company registered capital is less than € 800 you don’t need a bank account for showing starting capital during the incorporation process.
Required documents to register a company
- A passport copy of directors and shareholders
- If a foreign company is a shareholder, court-translated company extractions with an apostille stamp
- Each director will need a sworn-translated criminal clearance record with an apostille
- Documentation proving the address of the shareholder/owner
- Address and virtual office for the business location (sidlo)
This company type is more complicated than setting up a business license for an individual (i.e. “Zivnostenske opravneni” – trade license for a self-employed person). This bureaucratic process requires a notary, notarized signings, and visits to several government offices.