What is the main source of law authorising this entity form?

Act No. 90/2012 Coll., on Commercial Companies and Cooperatives (Business Corporations Act), as amended (the “Business Corporations Act”).

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

The s.r.o. has a legal personality.

(Maximum) period of existence

There is no maximum period of existence. If the time for which a legal person is formed has not been provided, it is conclusively presumed to have been created for an indefinite period.

Governing document(s)

The governing document is the Memorandum of Association (společenská smlouva), also referred to as Articles of Association, and the Deed of Foundation or Charter of Incorporation; the governing document must be notarized under Czech law..

Liability of incorporators / shareholders

Founders (incorporators, shareholders) are jointly and severally liable for the company’s debts up to the amount at which they have not fulfilled their contribution obligation, pursuant to the record in the Commercial Register. As soon as all the founders (incorporators, shareholders) fulfill their contribution obligation and the share capital is fully paid up and after the information about the fulfilment of the contribution obligation is registered in the Commercial Register, the founders (incorporators, shareholders) are no longer liable for the company’s debts save for in the case of dissolution at which point, the shareholders are liable for the company’s debt up to the amount of their share in the liquidation balance.

(Governing) bodies

The supreme body of the s.r.o. is the General Meeting (valná hromada). An Executive Body of a company constitutes of one (1) or more Executive Directors (jednatel); Executive Directors do not form a collective Executive Body unless provided otherwise in the Memorandum of Association (although Executive Directors do not form a collective Executive Body, resolutions on the business management (obchodní vedení) of the Executive Directors have to decide jointly – majority is required, unless provided otherwise in the Memorandum of Association). If required by the Memorandum of Association or by the law, the s.r.o. also establishes a Supervisory Board (dozorčí rada).

Other particularities

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

According to Czech law, cross border restructurings are a merger, division, transfer of assets and registered office transfer.

The s.r.o. can be involved in international restructurings between EU Member States or a State of the European Economic Area.

Effective from July 19, 2024, the Czech s.r.o. may transfer its registered office to a country outside the EU Member States and European Economic Area.

A foreign legal entity (i.e. a legal entity not incorporated under laws of an EU Member State or State of the European Economic Area) may transfer its registered office to the Czech Republic.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

No, however, a shareholder’s interest may be represented by a common certificate, which is an order instrument. However, a common certificate may not be subject to public offering or admitted for trading on a public market.

Can this type of entity be used for a non-profit or charitable organization?

No, common forms of a non-profit organisation are association (spolek), benevolent association (obecně prospěšná společnost), social cooperative (sociální družstvo), foundation (nadace), foundation fund (nadační fond).

It is no longer possible to establish benevolent association (obecně prospěšná společnost) under Czech laws, however the existing benevolent associations may continue under the said legal form.  

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

The incorporation of the s.r.o. consists of 2 phases, the first one being the establishment by adopting a Memorandum of Association. After the Memorandum of Association is duly executed in the form of a notarial deed, the founders fulfill their contribution obligation and other requirements by law (such as obtaining an approval from the owner of a premises to use the premises as a registered office) and after that the s.r.o. can be registered in the Commercial Register. The company becomes a legal person as of the date of the entry into the Commercial Register.

Involvement of notary, company register, governmental authorities

The s.r.o. is established by a Memorandum of Association. It requires the form of an authentic instrument which means a notarial deed. The Memorandum of Association includes in particular:

• company’s trade name,
• objects or activities of the company,
• identification of the shareholder(s),
• information on whether there is only one type of share or several types of share; where different types of business shares are permitted in the memorandum of association, the Memorandum of Association must include determination of the types of shares held by each shareholder and the rights and duties attached thereto,
• amount of contributions and amount of registered capital,
• number of Executive Directors and the way they act on behalf of the company,
• contribution obligation of the founders including the deadline for its fulfillment,
• person(s) to be appointed by the founders as first Executive Directors,
• contribution administrator.

Timing (estimate)

Any time after the establishment of the company by a Memorandum of Association but not later than before commencement of business, the company must notify a trade licensor or/and obtain a trade license.

The s.r.o. can be established and registered in the Commercial Register as fast as within one business day (by direct registration by a notary if all legal prerequisites are met). The “regular” registration procedure within the Commercial Register takes around 1-2 weeks. If the founders do not file the application for registration of a company within 6 months after the date of its establishment, it is presumed that the shareholders had withdrawn from the Memorandum of Association.

Main costs, including registration and similar fees (excluding legal fees)

The main costs are the notaries' fee (for drawing up the notarial deed and for the registration of the company in the Commercial Register), the application fee within the Commercial Register, and the fee for the company's business license.

A description of the anticipated business is required for the process of incorporation.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

All founders must be identified either personally, or by a facilitated identification (zprostředkovaná identifikace) when establishing a s.r.o. in accordance with the Act No. 253/2008 Coll., on Certain Measures Against Money Laundering and Terrorist Financing (the “AML Act”). All the subsequent steps to establish a company can be made by an attorney acting based on a power of attorney (verified/notarised signature(s) on the power of attorney required).

The s.r.o. can also be established online via virtual conference with notary. However, in this case, bank identity (bankovní identita) and qualified electronic signature (kvalifikovaný elektronický podpis) are required.

Minimum number of incorporators / shareholders and residency requirements

There must be at least one (1) founder and there are no residency requirements, however, there may be specific restrictions based on the international sanctions in accordance with the AML Act and other applicable law.

Minimum number of directors (or other applicable officers) and residency requirements

There must be at least one (1) Executive Director and there are no residency requirements, however, there may be specific restrictions based on the international sanctions in accordance with the AML Act and other applicable law.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The minimum amount of a share capital is CZK 1 (which is less than 0,05 EUR) per founder – not used very often, though. A monetary contribution shall be paid into a designated account held with a bank or a savings and loan cooperative to be opened by the contribution administrator. If the amount of all monetary contributions does not exceed CZK 20,000 (approximately EUR 800), the monetary contributions can also be paid in another way including a cash payment. A contribution in kind must be contributed to the company capital prior to its incorporation.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

No, the process of incorporation may be done by virtue of a power of attorney (verified/notarised signature(s) required). However, the AML Act applies and therefore it is possible that the physical presence of the founder(s) may be required to comply with the AML Act.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

A tax identification number is required, and it is obtained pursuant to registration with the tax administrator (správce daně) within 15 days of the company's formation. It is received electronically via data box (datová schránka). If the company fails to register itself with the tax administrator, the tax administrator will register the company ex offo and delivers the company the decision of the tax administrator and the tax identification number via data box (datová schránka); there is no sanction if the registration is done ex offo by the tax administrator.

What is the title of the applicable company registry?

The Commercial Register (Obchodní rejstřík), which is held by respective Regional courts or Municipal Court in Prague, depending on the registered office of the company.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles or other formation document, Articles or other formation document, Group structure, Share capital, Directors, Accounts, Insolvency, good-standing, liquidation, Liens and encumbrances on the shares, Liens and encumbrances on assets of the entity, Other (e.g. litigation, tax matters)

Information listed below must be filed at the Commercial Register and will be publicly available:

• Memorandum of Association;
• Company's trade name and seat;
• Legal form;
• Date of incorporation and dissolution;
• Identification number;
• Objects and activities of the company;
• Information about the Executive Directors, including their date of birth and address details, and the way they act on behalf of the company;
• Details about supervisory body (if the Memorandum of Association sets up such) and eventually information about the members of the control authority, including their date of birth and address details;
• Information about the proxy (prokura), if applicable, and information about the person who is granted with the proxy (prokurista) including the name and surname, date of birth and address detail of the person granted with the proxy;
• Amount of registered capital;
• Amount of the members' contributions;
• Details about the enterprise;
• Suspension of the execution of the function;
• Details about interests;
• Shareholders identification, including their date of birth and residency in case of natural persons and identification no. and seat in case of legal persons;
• Insolvency, liquidation etc.;
• Liens and encumbrances in the interests and in assets of the entity, including negative pledge;
• Annual accounts;
• Notice of dissolution proceedings;
• Any other important fact which the registered person requests to be recorded if they have a legal interest in such recording.

Additionally, information regarding the beneficial owners of the company must be filed at the Beneficial Owners Register or with the notary public (in case of simple shareholding structure and in case shareholders are registered in the Czech population register, the record in the Beneficial Owners Register shall be updated automatically); information regarding the beneficial owners will be publicly available and include:

• First and last name;
• Date of birth (only month and year is publicly available);
• Address details (only state of residence is publicly available);
• Citizenship;
• An indication of the nature of the beneficial owner's position (whether the beneficial owner has a relevant interest in the voting rights or profits or exercises controlling influence in the parent company (if applicable));
• Beneficial owner’s status – real or substitute;
• An indication of the size of the beneficial owner's direct or indirect interest or profit, when that interest establishes his position or profit;
• The day from which the individual is the beneficial owner; and
• The date until which the natural person was the beneficial owner.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The Executive Body is constituted by one (1) or more Executive Directors (jednatel). An Executive Director primarily represents the company and oversees the management of the company's business (obchodní vedení), ensures that the prescribed records and accounts are duly and properly kept and that a register of members is administered, submits financial statements to the General Meeting for approval, and, upon request (that can be made at any time), informs the members about any company-related matters. An Executive Director must, without undue delay after becoming aware of any change in the Memorandum of Association, draft the full text of Memorandum of Association including any changes and deposit it, together with the documents proving the change, in the commercial register's collection of deeds (sbírka listin).

How are the members of the executive body appointed, dismissed and replaced?

The members of Executive Body are appointed and recalled by the General Meeting. The change has to be registered with the Commercial Register however the entry in the Commercial Register has declaratory, not constitutive effect.

The Memorandum of Association may create a share with a right to appoint one or more Executive Directors (podíl s vysílacím právem). The total amount of Executive Directors appointed by the shareholders must not be higher than amount of Executive Directors appointed by the General Meeting.

Is it possible to appoint corporate directors or must all directors be natural persons?

It is possible to appoint a legal entity as an Executive Director, however in this case a representative who is a natural person must be appointed by the legal entity which is an Executive Director. The representative acts on behalf of the legal entity as a member of the executive body. Both the legal entity and its representative shall be registered in the Commercial Register. In the event of a breach of the duty to act with due care, the legal entity and the representative shall jointly and severally compensate for the damages.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

Czech law does not recognize the concept of non-executive directors (but at the same time does not prohibit companies from having non-executive directors). The powers of non-executive directors would have to be specified in the Memorandum of Association as well as their obligations and means of their appointment and recall.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The General Meeting consists of all shareholders of the company. It decides in particular on the contents of the Memorandum of Association (including all changes and amendments thereof), changes the amount of registered capital, appointment and recall of the members of the Executive Body and the Supervisory Board (if established), appoints the liquidator, and the General Meeting approves the grant of proxy (prokura). It further approves financial statements and also decides to convert the company or to dissolve the company by liquidation. Only the General Meeting is allowed to decide on the distribution of the profit. The General Meeting may also reserve the right to decide in relation to matters which fall within the powers of another body of the company.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

The General Meeting decides by a simple majority of votes of the present members unless the Memorandum of Association or the law states otherwise. However, to approve some decisions a two-thirds majority of the votes of all members is required, and the Memorandum of Association can also require a greater majority in these cases. Additionally, the consent of all shareholders is required when a change in the Memorandum of Association or other decision to be adopted by the General Meeting affects the rights and obligations of all shareholders. When a change in the Memorandum of Association affects the rights of particular shareholders, the respective shareholders have to grant their consents. The quorum requirements are met if members with at least a simple majority of votes is present at the General Meeting unless the Memorandum of Association states otherwise.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

Not in general. However, other legal regulations than Business Corporation Act may require special governance regimes e.g. in connection with special object of business e.g. companies operating on the capital market etc. Special regime may for example require the s.r.o. to establish a supervisory body (dozorčí rada).

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

A company creates the financial statements which have to be approved by the General Meeting no later than six (6) months after the last day of the past accounting period and have to be filed with the collection of deeds (sbírka listin) of the Commercial Register.

Is the entity permitted to determine its own financial year?

Yes, the s.r.o. is permitted to determine its own financial year.

Is the entity subject to any statutory (external) auditor obligations?

The obligation to have a statutory auditor depends on the number of employees, the annual net turnover, and the assets. In detail regulated by Act No. 563/1991 Coll.., on Accounting, as amended.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

A company establishes a Supervisory Board, if provided by the Memorandum of Association or by legal regulation. It supervises the activity of executives, reviews trade and accounting books, and reports annually to the General Meeting on its activities.

There are no residency requirements that apply to members of the Supervisory Board.

No other corporate bodies are required by the law.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Interest (podíl).

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Yes, different types of interests may be allowed by the Memorandum of Association. Different rights may be attached to each type of interest – e.g. right to a profit share, right to a share of the liquidation balance or a voting right.

What documentation is required for the transfer of ownership interests?

For any transfer of an interest not represented by a common certificate (an order instrument) it is required to have the interest transfer agreement completed with certified signatures. In case of transfer of an interest represented by a common certificate, the conclusion of an interest transfer agreement is required (written form is not necessary, however is recommended) along with an endorsement of the common certificate and a physical transfer of the common certificate to the transferee.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

Unless provided otherwise in the Memorandum of Association, a shareholder is entitled to transfer their interest to a person who is not a member only with the consent of the General Meeting. The Memorandum of Association may also set the condition of the consent of a company if the interest is transferred to another shareholder of the company.

If the interest is represented by the common certificate, it is not possible to restrict its transferability.

The transfer of the interest shall be notified to the company by presenting the company with a counterpart of the effective interest transfer agreement with certified signatures and shall be effective as of the moment of presenting the relevant documents.

The transfer of the interest represented by the common certificate shall be notified to the company by presenting the company with an endorsed common certificate and the transfer shall be effective as of the moment of presenting the endorsement to the company.

Are there any applicable stamp duties imposed when transferring ownership interests?

Yes, when transferring an ownership interest, a fee of CZK 2,000 (approx. EUR 80 as of June 2025) shall be paid to the Court maintaining the relevant Commercial Register to register the changes.

How are shares issued? (including information on payment obligations, registration requirements)

The interests are determined in the Memorandum of Association which can be amended by agreement of all shareholders (or eventually by the resolution of the General Meeting) in the form of notarial deed.

The contribution obligation must be paid within the period of time stipulated in the Memorandum of Association and no later than five (5) years after the date of incorporation or the assumption of the contribution obligation. If the contribution obligation is to be paid in-kind (by contributing an item distinct from money), the contribution obligation has to be fulfilled prior to the registration in the Commercial Register.

An interest may also be represented by a common certificate (kmenový list) which is an order instrument.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

It is possible to contribute by an item the value of which can be expressed in monetary terms, which is called the "contribution in kind".

The value of a contribution in kind must be specified in the Memorandum of Association of the business corporation and must be based on an expert evaluation. Contribution in kind cannot consist of work or services.

Share premium contributions (commonly referred to as the “contribution outside the share capital”) are possible with the consent of the Executive Director, or, if provided in the Memorandum of Association, upon decision of the General Meeting.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

The registered capital may be decreased by a resolution passed at the General Meeting.

The s.r.o. can acquire its own interest unless it is acquired through an interest transfer agreement. The company cannot exercise shareholder’s rights and has no right to profit share etc. If the company acquires all own interests, its obliged to transfer at least one to any third-party; if the company fails to do so for 3 months from the acquisition of last interest, the court shall ex officio decide on the dissolution of the company

Any requirements with respect to distributions to shareholders?

A share of profit is determined on the basis of the financial statement approved by the General Meeting. It can only be distributed among the shareholders, unless provided otherwise in the Memorandum of Association. The profit share is divided between shareholders pro rata according to the proportion of their interest, unless provided by the Memorandum of Association or by the decision of the General Meeting otherwise. If the share carries a right to a fixed share in the profit, no decision of the General Meeting on its distribution is required.

Decisions to pay a profit share are made by the Executive Director(s).

Profit share may be paid to the shareholders only after the Executive Director(s) perform the “bankruptcy test” (in brief, the General Meeting may only decide on the distribution of profits and own resources not exceeding the sum of profit for the accounting period and undistributed profit plus free capital funds minus allocations to reserves and other funds required by the law and Memorandum of Association) and the “insolvency test” (in brief, the profit share shall not be paid if such payment could result in insolvency).

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes, such agreements are allowed.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The company has to have a proper legal reason to use the premises at the registered office of the company. The company has to have an Executive Director (and it is common that the company concludes an executive service agreement – smlouva o výkonu funkce (more commonly called performance agreement) governing the remuneration of the Executive Director; however, the performance of the function of an Executive Director can be agreed as free of charge). The company must convene the General Meeting at least once every accounting period. The company has further expenses for bookkeeping and expenses associated with preparation of the tax return (which varies based on the taxes the company is subject to, e.g. if the company is subject to value added tax, the company must file a VAT control report monthly). 

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The general corporate income tax rate is 21 %. There is no local distinction.

Summary of any specific matters, e.g. recent or prospective major legal developments

• At the end of 2016, an amendment of the Criminality Liability Act expanded the scope of criminal liability of legal entities. The legal entities themselves can be liable for almost all crimes under the Criminal Act.
• From 2017, legal entities can be liable themselves for administrative offenses (přestupky) under the Act on Liability for Offenses and the Procedure of Offenses.
• From 2018, all legal entities registered in the Czech Republic have a duty to disclose information about their beneficial owners to the register courts via the Beneficial Owners Register. The beneficial owner is in brief defined as any natural person who may de facto or legally directly or indirectly control the legal entity or benefit from such entity or a natural person owning an interest in the amount of at least 25 %. The system of beneficial owners is based on the EU AML Directive (Directive (EU) 2015/849) as amended by Directive (EU) 2018/843.
• From June 2021, there are new sanctions in case the company fails to identify its beneficial owner(s). The sanctions vary from prohibition of exercise of the voting rights of the beneficial owner at the General Meeting of the company, the prohibition to pay out the profit share to the beneficial owner and, as an ultima ratio, the possibility of imposing a fine of up to CZK 500.000 (approximately EUR 20,000).
• From July 2023, conditions to become a member of the corporate body are stricter. Persons who are to become Executive Directors or members of the Supervisory Board (if established) are not eligible for the office (i) if disqualification of holding of office has been imposed on them by court or other public authority, (ii) if the prohibition of exercise of activities relating or similar to the company’s object of activity has been imposed on them by court or other public authority, (iii) if they have been convicted of certain criminal offenses and there has been no acquittal, and (iv) in case of the declaration of bankruptcy on their assets. Following the change in the conditions of performance of office, the evidence of disqualified persons (evidence vyloučených osob) is established and the eligibility for performance of office shall be investigated by the notary or registry courts (rejstříkový soud).