Investors can form four types of companies under the Czech Commercial Code. Of these, the form of the limited liability company (společnost s ručením omezeným) and the joint-stock company (akciová společnost) are the most preferred legal forms as they give their shareholders the advantage of having only limited liability for the company's obligations. There is, however, a substantial number of investors who run their businesses in the form of a general partnership (veřejná obchodní společnost) or limited partnership (komanditní společnost). The company formation process is generally comparable for all company forms and similar general rules are followed. We outline below these general principles, although the process may vary in number of cases, according to the particular circumstances.

The process of company formation is basically divided into two phases. First, the Memorandum of Association, or the Founders' Deed in the case of a one-man company, is signed by the partners or the shareholders and second, the company is registered in the Commercial Register. In the meantime, several further steps have to be taken to meet the requirements stipulated by law.

Forms of companies

• Limited Liability Company (SRO)
• Joint Stock Company Partnership (AS)
  
• General partnership (VOS)
  
• Limited partnership (KS)

Main features of a limited liability company (SRO)

• Total share capital to be at least CZK 200,000 (€7,000), at least 50% paid up
• Each shareholder to contribute minimum of CZK 20,000 (€700)
  
• An individual may be a sole shareholder in no more than three SROs
  
• A reserve fund from profits to be built up to 10% of registered capital

Main features of a joint stock company (AS)

• Minimum share capital CZK 2 million (€70,000)
• If via a public offering, minimum share capital CZK 20 million (€700,000)
  30% of share capital to be paid up
• Two-tier system comprising management and supervisory boards
• Reserve fund from profits to be built up to 20% of registered capital

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