Joint Stock Company

A joint stock company is another frequently used legal form in the Czech Republic. The Act on Business Corporations defines the joint stock company as a company whose registered stock (capital) is divided into a certain number of shares. The company is liable for a breach of its obligations with its entire property. The shareholder is not liable for the company’s obligations (debts).

For the establishment of the joint stock company, adoption of the articles of association is required. In addition to the above stated compulsory content of a founding document common both for the limited liability company and the joint stock company the articles of association have to contain, throughout the entire existence of the company, also:

  • the number of shares, their nominal value, type (forma), if they are certificated or book-entered (paperless), information on limited transferability of shares, as the case may be, eventually information if the certificated shares are immobilized
  • where multiple types (druhy) of shares are to be issued, their names and a description of the rights attached to these shares
  • determination which of the systems of the internal structure of the company has been chosen; the founders may choose either the dualistic system (in such a case, the board of directors and the supervisory board are the compulsory bodies of the company) or the monistic system (in such a case the statutory director and the administrative board are compulsory bodies of the company).

Upon foundation of the company, the articles of association of the company must contain also:

  • the number of shares subscribed by each founder, by what contribution and for what price, the manner and time-limit for paying up of the issue price
  • amount in which the registered capital has to be paid upon the company coming into existence
  • an approximate estimate of the setting-up expenses relating to the company’s foundation
  • provided that book-entered (paperless) shares shall be issued, also the numbers of the property accounts to which the shares shall be issued.

Company bodies of a joint stock company:

  • General meeting, which is the highest body of the company. If a company has a sole shareholder, no general meeting is held and this member exercises the powers of the general meeting.
  • Board of directors, which constitutes the statutory body of the company. Any member of the board of directors may represent the company towards other parties, unless the articles of association provide otherwise. The board of directors has three members, unless the articles of association provide otherwise. Members of the board of directors are elected by the general meeting, unless the articles of association stipulate that they are elected by the supervisory board. In the event that the monistic system is chosen, the company does not have a board of directors but a statutory director (or other body with similar powers) who is the statutory body of the company.
  • Supervisory board, which shall oversee how the board of directors exercises its range of powers and how the business activity of the company is conducted. The supervisory board consists of three members, unless the articles of association provide otherwise.
  • In the event that the monistic system is chosen, the company has neither a board of directors nor a supervisory board but the administrative board.
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