Forming a company may appear to be a seemingly simple administrative process. In order to successfully accomplish it, however, it is necessary to submit a number of documents to the respective authorities. Their preparation, especially in case of a company being formed by a foreign person, is time-consuming and requires coordinated action consisting of several consecutive steps. It is advisable to become clear on the steps in advance and to familiarize oneself with the necessary documentation before beginning the process of company formation. The aim of our article is to clarify this process on the most frequent form on company formation, a limited company.

In order to form the company, it is first necessary to sign a Memorandum of Association before a notary (or an instrument of incorporation in case of a single founder). The content of the Memorandum of Association is partly set by law, and partly left to a free decision of the company. During the planning, it is therefore suitable to consider, what stipulations the Memorandum of association will contain, following also already existing statutes of a founding company, for example. An example could be the height of registered capital, where the minimum sum of CZK 1 recognized by the law may be perceived as non-representative. The process of drafting a Memorandum of Association before a notary requires the preparation of several documents, the form of which and the way of possible authentication of which (authentication of signature, apostille, legalisation of documents,…) depends on whether the company being formed by Czech or by foreign founders, as well as on the seat of a foreign founder. At this stage, it is also suitable to begin the preparation of documents, which will be required in subsequent steps, the processing of which may be lengthy, however (for example substantiation of the seat of the company, obtaining powers of attorney, criminal records extracts of future executives etc.).

After drafting a Memorandum of Association before a notary, contributions are deposited in a way set by this memorandum. Paid or unpaid objects of contribution are managed by a contributions administrator appointed by the founder, before a business corporation is formed. A monetary contribution is usually paid to a special bank account set up by the contributions administrator for this purpose. In case of a non-monetary contribution, it is necessary to resolve its valuation and to state the form of valuation in the memorandum of association.

The next step is a notification of trade at a respective trade licensing office and the acquiring of trade licenses. In this stage, it is necessary to have the documents prepared with respect to the type pf trades that will be notified.

After successful passing of the above steps, it is possible to request registration of the company in the trade register. Successful registration of a company in the trade register largely depends not only on correctly prepared documents, which need to be enclosed with the request, but due to different requirements of the individual courts of justice it also depends on the respective court keeping the trade register.

By registration in the trade register, the company is formed and a data box is automatically set up for the company.  From this day, the company is obliged to keep accounts. At the same time, it has the duty of registering with a locally relevant financial authority, or possibly with other authorities depending on the type of activity of the company.

It follows from the list above that the formation of a company is a process of consecutive activities, in the course of which several meetings with the authorities await the founders. Documents prepared in keeping with the respective laws are the key to fast and successful completion of the entire process.

In case you are interested, we will be happy to offer you our practical experience, which will save your time and simplify the entire process of formation including registrations with the respective authorities not only of the above mentioned limited company, but also of other newly formed companies.