How to register in the Commercial Register

Quick overview

• Registration in the Commercial Register is mandatory for all companies and cooperatives.

• Self-employed persons are registered only if they meet the legal conditions or voluntarily.

• The application is submitted on the prescribed form to the registry court or notary.

• The court shall, as a rule, record the registration within 5 working days.

• Direct registration by a notary is faster and often cheaper.

If you want to have a registration without errors and delays, we can help you with the preparation of the proposal and communication with the notary.

Who enters the register?

The Law on Public Registers of Legal Entities and Natural Persons clearly defines who must be registered in the Commercial Register. Simply put, businesses and self-employed persons falling into one of the following categories should not be absent from the register:

• All legal persons engaged in business, i.e. companies and cooperatives (including housing or building societies),
• certain natural persons (entrepreneurs) – especially those who are obliged to keep accounts, for example if their turnover under the VAT Act for the immediately preceding calendar year exceeded CZK 25,000,000, or if they voluntarily request registration,
• certain foreign entrepreneurs,
• other entrepreneurs who are required to do so by law.

The obligation to register is regulated by the Act on Public Registers of Legal and Natural Persons.

An available attorney advises: Political parties or associations and foundations are not registered in the commercial register at all – they have their own registers, but they are entered in the register search.

Is it worthwhile to register as a regular self-employed person?

If a self-employed person does not exceed the income threshold, he or she is not obliged to register. However, it can do so voluntarily. This is the main difference from the trade register, where every trade licence holder must be registered.

Although registration in the commercial register is not at first sight a big decision, it is important to remember the many obligations that come with it. Here are the most important ones:

• Bookkeeping – this is a relatively large administrative burden, as ordinary self-employed persons can otherwise do with much simpler tax records.
• Accounting documents – while no law tells a regular self-employed person (unless he/she is a VAT payer) what his/her invoices should look like, in the case of a self-employed person registered in the Commercial Register, there is an obligation to issue accounting documents.
• Publication of financial statements – every entity registered in the commercial register is obliged to publish financial statements in the collection of documents (and self-employed persons registered voluntarily are no exception).

Incorporation is preceded by the establishment of the company

In the case of a legal entity, registration in the Commercial Register must be preceded by its incorporation under the Companies Act. The vast majority of companies are incorporated by articles of association. In the case of limited liability companies, it is also necessary to have the agreement notarised. In the event that a company is founded by only one shareholder, the memorandum of association is replaced by a so-called deed of incorporation, which must also be notarised. A public limited company is established by adopting the articles of association, while the establishment of a cooperative requires a constituent meeting, during which the articles of association are adopted and the members of the cooperative’s bodies are elected.

The law clearly distinguishes between the establishment and the formation of a company. While incorporation means the adoption of the relevant document or statutes, it is only on the basis of registration in the commercial register that the formation takes place.

It is therefore a so-called two-stage formation, where the founders must first meet and establish the company in the presence of a notary public. Then the founders must submit the given documents to the regional court, which keeps the commercial register, and only by registration in it the legal entity is established.

Registration in the Commercial Register is an important act for new entrepreneurs

Where and how to apply for registration?

Whether an entity registers in the commercial register by law or voluntarily, there are a number of requirements that must be met. In addition to the prior establishment of the company, the application for registration must be filled out correctly. This is a special smart form that can be found on the website of the Ministry of Justice.

The form is used not only for the first registration, but also for changes to the data or a request to delete the registration from the Commercial Register. The form is filled in directly on the website. Subsequently, you can opt for electronic filing (via the web or data mailbox) or printing and sending the form by post.

The addressee will be the registry court, i.e. the regional court (or the Municipal Court in Prague) locally competent for the registered office of the company or natural person. The application must always be submitted together with the memorandum of association, constituent deed or other document confirming the establishment of the company and other facts entered in the register.

The proposal must not lack the business name of the newly established company, i.e. the name under which the company will be entered in the register and under which it will operate after its establishment. What the correct name of the company looks like:

• it is unique and cannot be confused with an existing entity,
• it is not misleading and does not contain the name of an area other than that in which the company is actually engaged (e.g. a company selling electronics must not have the word “butcher” in its name),
• it contains an indication of the form of the company (s.r.o., a.s., k.s., v.o.s.) or the name of a cooperative.

In practice, we see that proposals are most often returned due to formal errors – if you want to make sure that the proposal passes the first time, you can use our assistance in setting up a company.

In addition to the business name, the proposal must also include:

• the address of the registered office,
• a clearly defined business object,
• the members of the statutory and other bodies,
• designation of the shareholders,
• details of the share capital,
• such other facts as may be prescribed by law,
• certified signatures of the persons applying for registration(electronic or notarized signature).

The law requires that the application be submitted by a specific person or persons (e.g. in the case of a v.o.s. it is all shareholders). If the document does not meet the formal requirements or is submitted by a person who is not authorized to do so, the registration court will reject the application for registration. In this case, you will have to file the application again, which will only delay the formation of your company. Therefore, we recommend that you keep a close eye on all the requirements and follow the established procedure.

Processing time and fee for registration in the Commercial Register

If the application contains all the required requirements and is accompanied by documents confirming the truth of the information, the registration court will, as a rule , make the registration within 5 working days of submission. It shall then send a notice of registration, supplemented by an extract from the commercial register.

In some cases, fees may be charged for registration in the register. The decisive factor is not only the form of the company, but also whether it is the first registration of data or a change (and if applicable, which one).

Direct registration in the Commercial Register by a notary

Not only registry courts, but also notaries can, under certain conditions, make an entry through their remote access to the register. The notary verifies the articles of incorporation and then makes the registration.

Direct registration by a notary is a faster option (the company appears on the justice.cz portal on the second day or so), but it is necessary to take into account that notaries charge a fee for their services. This again varies depending on the form of the company and the type of registration. The condition is that the notarial deed can only be executed by a notary who has executed all the underlying notarial deeds.

However, we can only recommend this form and if it is a so-called simple company, the registration is also significantly cheaper than the classic one through a court proposal.

In our experience, direct registration is particularly suitable for a standard LLC with one managing director and without a complex shareholding structure.

An available attorney advises: Many people are discouraged from using a notary by the idea that it is not worth their while. Although you have to take into account the fees for registration and notarization, you will still pay less in the end than if you go through the registry court. For example, setting up a limited liability company will cost you CZK 2,700 at the notary, and CZK 6,000 at the court. For a joint stock company, the fee is approximately CZK 8,000 at the notary, and CZK 12,000 at the court. It is more than obvious that direct registration is worthwhile.

Avoid mistakes and comply with all requirements

Entering your company into the commercial register is an act that deserves your attention. It only takes a small mistake for the registry court to reject your application. Don’t waste your time, which is crucial when setting up a new company. We can help you prepare all the documents, advise you on how to proceed with the application and, if necessary, draw up contracts, articles of association or other documents needed for the company formation. We will also arrange everything with a notary.

Checklist

• memorandum of association or memorandum of association

• consent to the location of the registered office

• affidavits of the members of the bodies

• declaration of the administrator of the deposits

• a proposal for registration on the prescribed form

Summary

Entry in the Commercial Register is mandatory for all companies and cooperatives and in some cases also for natural persons engaged in business; for them, the obligation is typically based on the keeping of accounts under the Accounting Act. The registration is preceded by the establishment of the company (e.g. by a memorandum of association or a deed of incorporation in the form of a public deed) and the actual establishment only occurs on the date of registration. The application is submitted on a prescribed form to the registry court or direct registration by a notary can be used, which is usually faster and in some cases cheaper. The key is to correctly state all the data to be registered (company, registered office, business object, members of the bodies, share capital) and to provide the necessary documents, otherwise the court will reject the application and the whole process will be prolonged. Careful preparation of the documents and checking the formalities thus significantly increase the chances that the company will be established without unnecessary delays.