Risks buying an old SRO or ready-made SRO company

Warning: Buying a previously-owned or ready-made 'off-the-shelf' SRO company

Basically there are two types of 'not new' SRO companies:
  • Previously-owed SRO companies
  • Ready-made / 'off-the-shelf' SRO companies


Of couse not all old companies or 'off-the-shelf' companies are problematic, but since foreigners usually do not speak Czech and do not know the rules and regulations, they form an easy target for people / companies that are not so honest.

Alexio.cz deals on daily basis with issues that foreigners run into, and most of them could have been avoided if only the customer would have been informed / warned.

As we provide company formation services we feel it is important to inform you before you buy, after all, owning a company is no small decision.

If you already bough an SRO company and now have a problem, feel free to contact us.

Previously-owed SRO companies

Old SRO companies have been founded in the past, with one or more owners (jednatels), and usually are not active anymore or are in minus (Why sell it if the company makes profit?), did not file corporate income tax returns, VAT reports and accounting records are missing / absent. Since the jednatels do not want to go in bankruptcy or pay their debts, they try to make somebody else the new owner / jednatel.

In Czech such a person is a 'bilý kun' (a white horse) and he will be responsible for the company after the sale. Usually this is a person that doesn't have any money or doesn't even exist so it is impossible to collect the debts and the old management escapes from the whole situation without being responsible anymore.

But, instead of a fictive person, also foreigners looking for a cheap SRO company are target for such practises.

Ready-made / 'off-the-shelf' SRO companies

Even the so-called 'off-the-shelf' SRO companies are not as safe as they look.

Our experience is that in more than half of the cases something is wrong with the foundation documents, the trade licenses (missing), the registration at the taxoffice (not done) or the tax return (not filed).

There is, for example, no requirement in Prague to write the exact address in the notárský zápis (company founding documents). Off-the-shelf companies may have the full street address (or an address outside Prague), forcing you to make expensive changes when you want to move away from that address.

Another example is that the notárský zápis is not suitable for more than one jednatels / shareholders, and needs to be re-written should a seoncd director / share holder want to join the company.

A third example is that the company was formed without any trade licenses, so not only the company founding papers need to be re-written / changed, also the registration at the Trade License Register needs to take place.

If a ready-made SRO company was formed in a previous year, then in most cases no tax-return has been filed for the previous years, because the company was probably not even registered at the 'financní úrad'. After becoming new owner, then one of the first things to do it to solve this situation with the tax office.

Finally, even if the old director has been in function for 1 day, that day could have been enough to sign all kinds of documents that you as new director are unaware of (but will become responsible for after transfer of the company to you), such as leases, loans, unpaid bills etc etc.

So, although buying an 'off-the-shelf' company is advertised as easy, quick and without problem: check, check and double-check before you buy anything else than a new SRO company.

Conclusion

Our advice: Save yourself from possible trouble lateron, and form a brand-new SRO company or register a živnostenský list instead of buying an old, used or a ready-made SRO without knowing what you are getting yourself into.

Buying a new SRO company

There are many companies that will do the SRO company formation for you.

On the next page you can find a checklist that -according to us- a quality service provide should confim to, see