II. Legal Regulation of Business Activities, Establishment of Business Entities

As of 1st January 2014, the formation and management of business entities (i.e., general partnership, limited partnership, limited liability company, joint stock company and cooperative) are in particular governed by the Act on Business Corporations and Cooperatives (Act on Business Corporations, i.e. Act No. 90/2012 Coll.). The formation and management of the European company, European Economic Interests Group and European Cooperative Society are in particular governed by respective provisions of the European Law and by the respective special acts (Act on the European Company – act. No. 627/2004 Coll., Act on the European Economic Interests Group – act No. 360/2004 Coll., Act on the European Cooperative Society – act No. 307/2006 Coll.). Some general issues related to the business entities are governed by the New Civil Code (Act No. 89/2012 Coll.). Some important issues are also governed by the Trade Licensing Act (Act No. 455/1991 Coll.,) and by the Act on Conversion of Business Companies and Cooperatives (Act No. 125/2008 Coll.).

In order to engage in a business activity, foreign persons (both individuals and entities) may participate in the foundation of a Czech legal entity or become partners or members in an already existing Czech legal entity. Provided that Czech law permits a sole founder or a single owner with respect to a certain form of legal entity, a foreign person may also become such sole founder or single owner. To sum up, for the purpose of engagement in a business activity Czech law offers the following options to foreign persons:

  • The establishment of an enterprise in the form of a partnership, corporation or sole proprietorship
  • The participation in an already existing enterprise as
    • a partner, a member or a shareholder on the ground of acquiring a share
    • a silent partner (sections 2747–2755 of the New Civil Code)
  • The establishment of a Czech enterprise of a foreign person or of a Czech branch of the enterprise of a foreign person
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