Information and Sale of Joint-Stock Companies in the Czech Republic

General Characteristics of a Czech Joint-Stock Company

To be fair, a joint-stock company in the Czech Republic (in Czech, Akciová společnost) is generally not that different from the more common Czech limited liability company (s.r.o.), and is likewise one of the forms of commercial corporation.

We should point out straight away that perhaps the main practical advantage of a joint-stock company is the ability to keep the identity of its shareholders private from publicly accessible information (Czech legislation allows this). Another important advantage is a more distributed management structure and a clearer division of responsibilities, which can be useful for larger organizations and companies.

Share capital

In general, the minimum share capital of a joint-stock company in the Czech Republic is CZK 2,000,000, or EUR 80,000 if the company keeps its accounts in euros.

The entire share capital (assets) of the legal entity is divided into shares, which are owned by the shareholders. These shares can be divided in different proportions. For example, if a company has share capital of CZK 2,000,000, it may be represented by 20 shares, each corresponding to CZK 100,000.

A joint-stock company is liable for its obligations only to the extent of its own assets, just like a limited liability company. The company's shareholders are not liable for the debts and obligations of the legal entity.

Ownership and Management Structure

It is divided into the following bodies:

• General Meeting of Shareholders (shareholders). The company's shareholders naturally have the right to the profits of the joint-stock company. At the General Meeting, they can make decisions concerning the removal of members of the company's Board of Directors (essentially the company's directors, described below), amendments to the joint-stock company's Articles of Association, distribution of profits, etc.

• Members of the Board of Directors. Essentially, these are the directors of the legal entity. They manage the company's day-to-day operations, make operational decisions and sign documents. For example, if the joint-stock company needs to open a bank account, this is handled by one of the members of the Board of Directors.

• Supervisory Board. This is the supervisory body of the joint-stock company. Members of the Supervisory Board oversee the actions of the members of the Board of Directors. The Supervisory Board has access to all company documents, including, for example, its accounting records.

What Makes a Joint-Stock Company Different?

As mentioned above, there are not many differences between a joint-stock company and, for example, a Czech limited liability company (s.r.o.), but there are still some important distinctions:

• In a joint-stock company, shares are usually registered shares (issued in the name of a specific natural person), while the shareholder's name is not stated in the publicly accessible Czech registers of legal entities, where the details of a Czech legal entity can otherwise be checked very easily. In practice, this provides an opportunity to preserve the privacy of the shareholders of a joint-stock company, which in our view is a significant advantage.

• The minimum share capital of a joint-stock company is CZK 2,000,000, whereas the minimum share capital of a limited liability company (s.r.o.), for example, is CZK 1.

• A joint-stock company can list its shares on a stock exchange, thereby raising additional capital. In this case, however, the share capital of the legal entity must be at least CZK 20,000,000.

• Without going into the finer legal details, a joint-stock company is subject to considerably greater attention under Czech legislation, particularly under the Business Corporations Act.

• Since this is a relatively complex type of legal entity, the process of establishing one is also considerably more expensive compared with, for example, a limited liability company (s.r.o.).