Types of Enterprises in Czech Republic

Co-operatives

• A co-operative is formed by at least 5 members (or at least 2 legal entities) to undertake business for the economic or social benefit of its members.
• The minimum registered capital is CZK 50,000, and each member's basic investment must be entered in the Commercial Register.
• An indivisible fund of at least 10% of the registered capital must be created at the time of incorporation.
• At least 10% of the profits after tax must be transferred annually to the indivisible fund until it reaches a minimum of 50% of the registered capital.
• Members are not liable for the debts/obligations of the co-operative.
• Foreigners may only be statutory representatives of the co-operative if they have a Czech residency permit.

Limited Partnership

• A limited partnership is formed by two or more natural persons or legal entities.
• At least one general partner must assume unlimited liability and is responsible for the obligations of the partnership.
• Limited partners are only responsible for the obligations of the partnership up to the level of un-paid contributions as originally recorded in the Commercial Register.
• A partnership agreement must be drawn up.

Production Enterprises

• There are three main production methods: jobbing (one-off production), batch production, and mass production.
• Economists distinguish three broad sectors of the economy: primary (extracting natural products), secondary (processing and manufacturing), and tertiary (services).

Types of Enterprises

• Foreigners can choose from four main types of companies: branch office, partnership, limited liability company, and joint stock company.
• Enterprises can be classified by ownership, organisational form, activity, and size.
• In the Czech Republic, the most common forms of business are limited liability company and joint stock company.

Limited Liability Company (s.r.o.)

• A limited liability company can be formed by one to fifty members.
• One person can be both the sole owner and executive.
• The s.r.o. does not have a board of directors.
• A registered capital of at least CZK 1 (5 euro cents) is needed, and 30% of the share capital must be paid before registration.
• For non-monetary contributions, they must be clearly settled in the statutory papers.

Joint Stock Company (akciová společnost)

• It is commonly used for large companies.
• To set up a joint stock company, there must be either a founder's deed or an association of individuals or legal entities through a memorandum.
• The minimum share capital required by Czech law is CZK 2 million (approx. 78,000 EUR).
• An audit is compulsory if at least one of the criteria is met: net turnover over CZK 80 million, over 50 employees, or a balance sheet over CZK 40 million.

General Commercial Partnership (v.o.s.)

• All partners are liable with all their property.
• The management has to be formed by at least two persons.
• The advantage of a general partnership is that you do not need the initial investment.
• The entry in the Commercial Register must include the partners' names and addresses, a statement as to who are the limited and unlimited partners, and the amount of paid-in capital by each limited partner.

NACE Classification

• NACE is the classification of economic activities in the European Union.
• NACE is a four-digit classification providing the framework for collecting and presenting a large range of statistical data according to economic activity.
• NACE consists of a hierarchical structure, introductory guidelines, and explanatory notes.