Alexio.cz SRO Company Formation ContractThis SRO Company Formation Contract describes formation steps, required documents and best practises.
The client must read & understand this document in it's entirety to avoid issues later.
§ 1 Notes on Ready-made CompaniesNotes on Ready-made (off-the-shelf) companies:
- Technically, when signing for a read-made, you are immediately director, but officially changing the directors, company name, trade licenses or business address takes time. Before those changes are reflected at Court and Trade License Register it will take just as long as registering a new company.
- When looked up online at Court, previous company names and directors will always be visible, so everyone knows it is a recycled company,
- One can never be 100% sure that the previous director (even if for 1 day) did not use the company for malicious purposes,
- For a read-made company the share capital has been paid already. This may have a negative effect on your visa application, because not paying the share capital yourself is a strong indicator for the foreign police that you also do not have the financial resources for living in Czech Republic.
- With a ready-made the share capital will be taken out before you become director. This also means there is a hole in the accounting (a negative amount in the petty cash), which becomes your responsibility.
Therefore, if you are serious about starting a business, have Alexio form a new sro company, exactly according to your specifications, without the potential trouble of incomplete registrations, previous owners, previous history, missing tax returns etc. etc.
§ 2 Formation DetailsBelow steps describe the formation of a new SRO company.
With Ready-made SROs several steps are skipped (Step 1, 3, 4) - unless the new owner requires changes to the Ready-made company.
§ 2.1 Step 1: Company Formation Document (Notárský Zápis)The company formation document Notárský Zápis contains the following information (see also § 5)
- Company name (cannot conflict with already registered names and must be accepted by the Commercial Court),
- Business Seat (sídlo) (virtual office address or address of your choice),
- How Shares are divided among Directors / Shareholders,
- Description of Business activity by selecting one or more trade licenses,
- Who is going to be director (jednatel) and who is only going to be shareholder,
- In case of a legal entity being shareholder: extract of commercial register + apostille stamp, personal data of the owner / director *,
Client information is collected using a template XLS sheet (and / or using the online order form), so that we can create the Power of Attorneys (POAs).
At the day of signing, directors must have a passport that will be at least 6 months valid and sign POAs for the Notary, Bank, Trade license Register and Commercial Court. After this, presence of the directors is not required. It is not possible that one director signs for all other directors at this stage in the process. After company formation it is possible to appoint persons using a (General) Power of Attorney.
If the directors / shareholders are not able to come to Prague to sign, the POAs must be signed at the local Czech embassy and company formation will be handled by us remotely for an additional fee.
Note *: All foreign documents cannot be older than 3 months and must have a legal translation into Czech
§ 2.2 Step 2: Business SeatWe recommend a virtual office as business seat since it is much cheaper then getting an office right away, and finding offices may take time - which will block the company formation until the owner issues permission for registering the company at that address.
The future office or place of business can be somewhere else, the business seat is only the registered (correspondence) address for the authorities *.
Alexio offers business seat in Prague 1, 2 and 3, but Prague 3 is recommended since it is among the cheapest offers in Prague of the reliable service providers.
- Business seat Praha 3 for 1 year: 770 CZK / month = 9.240 CZK / year *
- Business seat Praha 3 for 3 years: 560 CZK / month = 20.160 CZK *
For additional location/ prices, click here: Prague Virtual Office, Business Seat (sidlo), Registered Address Services
* excluding 21% VAT. 0% VAT can apply in certain cases
Note: It is possible to register at an address of your own choice, but all building owners of this property need to sign a permission. Our experience is that getting this permission and collecting all signatures can take a long time. And, most likely, the registered address of the sro has to be moved after the lease contract ends. Moving a company is an expensive process, so no money is saved using an alternative location unless you own it and will not move for at least a couple of years.
Note: The business seat cannot be used as proof of residence in CZ for visa purposes.
§ 2.3 Step 3: Tradelicense RegisterOne or more trade licenses will be registered on the company. After company formation the trade licenses can always be changed / added.
Some special trade licenses require diploma’s or certifications (bar / restaurant activities, medical / beauti procedures, some financial services). However, for 90% of the business activities no special licenses are required.
Registration at the Trade license Register will take place according to the trade licenses chosen by the owners. This process usually takes up to 5 working days.
§ 2.4 Step 4: Depositing Share CapitalSince 2014, the share capital can be as low as 1 CZK (it no longer needs to be 200.000 CZK). The share capital needs to be deposited in a special business account at a Czech bank, created for the purpose of forming the company.
This account will be opened by one of the directors in person, or by Alexio on behalf of the director using a POA.
The account remains locked (only money can be deposited, not taken out) until the Commercial Court has finished the company registration and the director has left a signature specimen at the Bank. After this, the entire share capital is again freely at disposition for the company.
In case the sahreholder is planning to inject a relatively high amount of money into the company, we recommend to limit the amount od share capital and insert the rest as a loan to the company, this will allow the shareholder to take out this money without any further taxes at a latwer point in time.
§ 2.5 Step 5: Police Clearance / Criminal Extract for the director(s)Of each director is required: the police clearance / extract of criminal record from the country of origin + apostille stamp, both not older than 3 months * **, and also an extract of the Czech criminal database.
The Czech criminal extract may take days or weeks to obtain - therefore, the application should be filed before everything else.
Only holders of a US passport may use an affidavit (without apostille stamp), issued at the US embassy in Prague, instead of a police clearance. Unfortunately, other nationalities can not use an affidavit or sworn statement, but some embassies in Prague are able to issue a foreign police clearance.
Note *: Without the apostille stamp the foreign document is worthless. It contains the words ‘Apostille, convention de La Haye du 5 Octobre 1961’, otherwise it is not an apostille. There are only a few countries in the world that do not provide apostille stamps (usually Islamic countries, there another super legalisation is used).
Note **: All foreign documents cannot be older than 3 months and must have a legal translation into Czech.
§ 2.6 Step 6: Commercial Court RegistrationThe company formation document (§ 2.1), business seat (§ 2.2), trade license registration (§ 2.3), proof of share capital (§ 2.4) and criminal extract(s) (§ 2.5), are essential for registration at Commercial Court.
If one or more documents are missing, the application for registration will be rejected. The registration at Court (this step, § 2.6) takes about 10 working days, but if the Court is busy or requires more information it can take longer.
Alexio is not able to influence the speed of the Court, and Alexio cannot be held responsible for delays or application rejections at the authorities. The Court may reject a business name if it rules it is too similar to existing business names.
Since this depends on individual judgment of the judge who handles the application, Alexio can not influence or prevent this, only advise about what it considers a reasonable name for a company.
From the moment of signing the POAs (§ 2.1), till completing the registration at Court (this step, § 2.6), a typical company formation will take around 3 weeks, provided that the client presents the required information, pays the deposit invoice in full and transfers the share capital in time to the special escrow account. Not doing so, will delay / stop the company formation process.
§ 2.7 Step 7: Handover of documentsOnce the registration processes are completed the following document will be handed over / sent to the new owners:
- company formation documents (notárský zápis, (§ 2.1)
- extract of trade license register (vypis z živnostenského restríku) (§ 2.5)
- extract of commercial court (vypis z obchodního restríku) (§ 2.6)
§ 2.8 Step 8: Registration at Tax Office, Social Security and Health InsuranceIt is the legal responsibility of the company owners to register at the tax office, and in case of employees also at the social security and health insurance.
Alexio.cz will register the company at the tax office (only for the tax ID and corporate income tax).
Other registrations are subject to additional fees.
§ 2.9 Step 9: Accounting-, Consulting- and Tax return servicesCosts of Accounting-, Consulting- and Tax return services fall outside the scope of this agreement.
For more details we refer to: Accounting- and Business Services for Foreigners in Czech Republic
§ 3 Disclaimers
§ 3.1 DisclaimersBy signing this formation agreement, the client acknowledges that he will not engage in criminal activities but solely commercial activities with his company.
The client is responsible for the legality / feasability of his business plan.c Alexio recommends to study market conditions before forming / buying an SRO. Some common business activities are difficult to operate successfully in Czech Republic.
Legal responsibility of Alexio.cz and it’s associates is limited to formation or transfer of the s.r.o. company only and does not extend to managing or running the company.
Alexio.cz will not in any way manipulate or reduce (take out) the company share capital, unless instructed so by the client.
All signed POAs will lose their validity after the formation / registration process has been completed, unless agreed differently.
§ 3.2 Director’s / shareholder’s responsibility for accurateness / completeness of dataThe director(s) / shareholder(s) take(s) full responsibility for accurateness / completeness of data he / they provide (especially the criminal extract + apostille stamp and the extract from the Czech criminal database).
The Commercial Court may reject data and / or require additional data, in particular about foreign persons, for one reason or the other, even if documents normally filed in similar cases are accepted.
The Court may take undetermined time to study documents or reject documents in case of doubt.
§ 3.3 Costs for significantly more work / incomplete dataIn case the tasks to be performed by Alexio are significantly more than for a standard company formation, for example due to the Trade license Register or Commercial Court not accepting documents provided by the client, or requesting additional information, extra fees will be charged.
Costs resulting from information expiring (data older than 3 months) or costs of filing part of or the entire company again are invoiced separately.
Note: In most cases extra work results from the client not following up our instructions exactly, delays in providing documents / money transfer or not providing data in the way required by the Trade license Register or Commercial Court. (Typical problems: criminal extract expired or without apostille stamp, passport not valid longer than 6 months, not providing permission for the business seat, unable to provide the share capital, rejected company name, earlier bankruptcy etc etc)
§ 3.4 Cancellation of the formation process.If the company formation / transfer cannot be completed because of missing documents, or the future owners decide to stop the process for whatever reason, Alexio will not refund the deposited sum with exception of unpaid legal-, Trade License- and Commercial Court fees (already paid fees or work done will not be refunded).
§ 3.5 Applying for a Business VisaForming an s.r.o. is requirement for a business visa, but it is no guarantee for it.
The Foreign Police determines if the director(s) will get a business visa. If the applicant fulfills all requirements of the embassy and the Foreign Police there is no reason to fear that the visa application will be rejected.
Applying for a business visa must be done in the country of origin (for most non-EU nationalities) and needs be done in person (no POA is possible). Since 2011 the validity of the Business Visa is only 6 months, instead of 12 months. After 6 months the visa can be extended by 2 years.
Only after 5 years of continuous business visa a non-EU national is entitled to apply for a permanent residence permit.
Alexio can provide help preparing the application for a business visa (subject to an additional fee)
Alexio does not take responsibility for visa refusal and does not refund the company formation costs in case of visa rejection.
Common reasons for visa rejection are: not having enough financial means for living expenses, not being able to answer questions by the embassy personnel satisfactory, especially how the future business activities will be conducted (Therefore, presenting a business plan is recommended).
§ 3.6 Applying for a Temporary Residence Permit – EU Citizens with Schengen passportEU-citizens with a Schengen-passport do not need a business visa, but have to apply for a temporary residence permit for doing business in CZ.
Also non-EU citizens that have a spouse / registered parter are entiled to receive a temporary residence permit (instead of a visa)
Alexio can provide help preparing the application / extension of a temporary residence permit (subject to an additional fee)
§ 4 Costs and Payment of Services
§ 4.1 CostsCosts for SRO Company Formation / a Ready-made SRO can be calculated exactly here: SRO Formation Cost Calculator / Order Form
Iincluded in the new SRO / Ready-made SRO package:The price includes:
- Formation Documents (notárský zápis),
- Extract of Commercial Court (výpis z obchodního rejstríku),
- Extract of Tradelicense Register (výpis z živnostenského rejstríku),
- notary fees,
- Getting the Czech police clearance for all directors *,
- Signature Verifying fees in Prague,
- Tradelicense fees,
- Commercial Court fees,
- Registration at the Tax Office for Corporate Income Tax
Unless specified otherwise, The package price does not include:
- Business Seat / Virtual Office (sídlo) - from 375 CZK / month,
- Business / Visa consultancy (can be booked here, independently of SRO purchase)
- Share Capital (základní kapitál)
- Bank fees for proof of deposited share capital (not for ready-made)
- Translation of documents (criminal extract with apostille, from 1000 CZK / page)
- Help with the application for long-term D Visa for Business purposes (charged separately).
§ 4.2 Deposit InvoiceOur services will start after reception of the entire sum stated on the deposit invoice.
After completion of the company formation an invoice will be issued to the new company or shareholder.
If extra hours were spent and / or extra costs were made then these will be invoiced on the final invoice.
It is possible to pay in CZK, EUR or USD. It is not possible to pay the sum in parts or afterwards.
Our deposit invoice does not include the share capital.
It is possible to pay by PayPal or by credit card (using PayPal). 3.5% PayPal charges will be added to the invoice.
§ 5 Company formation data to be provided and checked by the clientBefore any POAs can be written, basic company formation data is required, such as company type and name, names and addresses of the directors / shareholders etc.
This data is to be filled in on a template Excel sheet (or filled in on the online order form), and checked by the client.
Alexio is not responsible for typos in data provided by the client on the Excel sheet or online form.
§ 6 Signing the agreementBy signing this agreement the client acknowledges he has read and understood the content, understands the costs of company formation, understands what is required of him and understands what Alexio’s role in the company formation is.
Paying (part of) the deposit invoice (without signing this document) is also considered acknowledgement of this agreement.
|On behalf of the client:
||On behalf of Alexio Expat Accountant:
This Document (c) 2015 Alexio.cz Expat Accountant sro