Czech Company – Founding and establishing
Commercial companies in Czech republic are formed in two stages. The first stage involves founding the company and the second stage involves establishing it as a legal person, as of the date of its entry in the Czech Republic Commercial Register.
The actual founding of the company does not imply its legal existence. In the period between its founding and establishment, the company has no legal form (it cannot acquire rights or responsibilities, neither by its own acts nor the acts of other persons), nor does its statutory bodies exist. The shareholders of the company are only in the position of founders, not shareholders.
The legal proceedings relating to the founding, establishment, changes in, abolition or termination of a business corporation must be done in writing with notarized signatures, otherwise these acts are invalid. Nullity need not be argued before the court, since it is taken into account even without a petition.
Partnership agreement (founding charter)
If commercial companies are founded by more than one person, they are founded with a partnership agreement signed by all the founders. In the event a capital company is founded, i.e. a company with limited liability or a joint-stock company, the partnership agreement must be in the form of a public charter. One of the types of public charters is a notarial deed.
Every notary public prepares a notarial deed based on the documents and facts communicated and submitted to him by the founder or his legal representative. The cost of preparing the notarial deed is charged according to the notarial tariff (the price reflects the tariff value of the act).
In the event that the company is being formed by a single founder (the law permits this possibility for limited liability companies and joint-stock companies), the partnership agreement is replaced by a founding charter, which must be done in the form of a public charter.
The legal acts for the foundation must therefore always be in writing.
Obtaining a business license
Before forming the company, the company must obtain a business license (assuming that it is founded for business purposes), either a trade or other business license. A legal person is authorized to do business on the day its entry in the Commercial Register is announced, within the registered scope of its business. Under the Trade Act, the business license is a certificate from the Commercial Register and until the issue of the certificate, a copy of the announcement with confirmed receipt by the Trade Office. The license for other business activities is the authorization issued by the competent authority under other laws.
Commercial companies are formed as of the date of their registration in the Commercial Register. As of this date, the established company becomes a legal entity. Since the new Civil Code went into effect, a legal entity is not conferred legal capacity, i.e. not authorized to perform legal acts independently, and must therefore be represented by a statutory body or agent. If neither the partnership agreement nor founding charter indicates the duration of the company, it shall be formed for an indefinite period. The application for entry in the Commercial Register must be submitted to the competent registration court within six months (unless the partnership agreement provides a different period) of founding the company, otherwise, the same effects as occur during the withdrawal from an agreement shall apply.
The application for entry in the Commercial Register must be submitted on a special form, which is available on the website www.justice.cz. It can be submitted in paper or electronic form and must be accompanied by documents of the information that should be in the public register, and the documents that form the collection of documents in connection with the registration.
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