Joint-stock company founding

Joint-stock company is established by signing the Articles of Association. It is the single founding document and it must be in the form of a public document; according to the Business Corporations Act (§ 776 par. 2 Act no. 90/2012 Coll., On Business Corporations, hereinafter referred to as „ZOK“) in form of a notarial deed.

As a founding document, the Articles of Association constitutes the legal and organizational aspects of the company. They are decisive for the internal organizational structure of the company, or the rights and obligations of the company and its shareholders. The law distinguishes between obligatory elements of the Articles of Association (which are concentrated in § 123 of Act no. 89/2012 Coll., Civil Code, hereinafter referred to as „OZ“) and § 250 ZOK, and optional elements which can be found in other provisions across the law.

Obligatory elements of Articles of Association include:

- the company name

- the business object according to future entry into the Trade Licencing Register

- the capital; the lowest possible capital of a joint-stock company is 2 million CZK or 80 thousand EUR

- number of shares the company emits and their form

- the information whether the shares issued are in the kind of registered shares or bearer shares, and the number of each kind; if the shares issued are of different kinds, their respective names and description of the rights attached must be established; and information regarding the transferability of shares or restrictions on transferability of shares;

- the issue price and the number of shares subscribed by each founder

- the deadline for payment of the issue price and the method of payment

- the minimum number of shareholders is one (the sole proprietor), the maximum number is not limited

- if the issue price is paid for entirely or partly in non-monetary way, it is necessary to determine the nature of this consideration and its value, then number, form, and type of shares that will be paid for by this contribution

- approximation of the total costs of the establishment process of the joint-stock company

- appointment of the deposit administrator who manages deposits until the company is founded (until the date of its entry in the Companies Register); afterwards these deposits shall become the property of the joint-stock company

- determination of the number of votes associated with each share and the detailed voting arrangements of the General Meeting

- which conception of internal organization was chosen by the founders; it can be either the two-tier system (Board of Directors and Supervisory Board are established, this conception is typical in the Czech Republic) or monistic system (establishing Management Board and Corporate Director, this conception is typical in Germany). If there are any doubts as to which conception was chosen, law (ZOK) establishes an irrefuttable presumption of the two-tier system.

- number of the members of the Board of Directors and their names (and identification); Board is the  statutory body and unless the Articles of Association stipulate otherwise, there are 3 members. Subsequently, the Board would elect its chairman

- number of the members of Supervisory Board and their names (and identification); Supervisory Board is the supervisory body of the company

At this stage, we will provide you with a model of the founding document and we will consult you about specific amendments to the Articles of Association that would meet the requirements of you and your business. We will also recommend the modification of certain provisions that, in our experience, are important.

Once the founding document is completed, we arrange the registration of the joint-stock company at the Notary Public; we can also have the company registered for you by proxy.

The joint-stock company (Inc.) is established, as soon as the Articles of Association are signed by the founders. However, it is not a legal person until it is entered in the Companies Register (date of incorporation).

The next step is to acquire the trade license, which is issued by the respective Trade Office.

In the case of unqualified (notifiable) trade licence it is not necessary to appoint a representative responsible for its granting. In the caseof application for granting a vocational notifiable trade licence or regulated trade licence it is necessary to appoint a person who actively participates in the company, and this person would meet the qualification requirements for the trade licence.

Simultaneously with the proceedings at the Trade Licensing Office, it is necessary to start paying up thecapital (ie the issue price according to the provisions of the Articles of Association). The simplest case is depositing the share price on  a special bank account that we can set up for you by proxy. Until the incorporation in the Companies Register, the company can not dispose of the deposits. After the incorporation, the deposits become part of the company’s property.

If the contributions to the capital are made in non-monetary form, we will estimate the cost of the consideration for you with the help of a court-appointed expert.

After completing all documents necessary for the incorporation of the company, we will process the electronic version for filing in the Companies Register and subsequently, we will apply for the company’s entry in the Register with a special form. Notary fee for the incorporation is 2 000 CZK.

The company shall be incorporated within the statutory period of seven days. However, the decision process of the court maintaining the Companies Register contains a 15-day appeal period. After this period the court decision becomes effective; this process may be accelerated if the founders waive their right to appeal.