Joint-Stock Company: Governing Bodies, Incorporation, and Operations

Quick Overview

• Minimum authorized capital: 2,000,000 CZK or, under statutory conditions, 80,000 EUR.
• Shareholder Liability: Shareholders are not liable for the company’s debts.
• Incorporation: Incorporation is based on the adoption of the articles of incorporation in the form of a public document—a notarial deed.
• Incorporation: A.s. is incorporated only upon entry in the Commercial Register.
• Governing Bodies of a Joint-Stock Company: In the dualistic system, these include the general meeting, the board of directors, and the supervisory board; in the monistic system, they include the board of directors.

Are you establishing a joint-stock company and unsure about the articles of incorporation or registration in the Commercial Register? We’ll help you set up your company correctly from the start and handle the necessary registrations.

What is a joint-stock company?

A joint-stock company is a type of legal entity whose authorized capital is divided into shares. However, shareholders are not personally liable for the company’s obligations, which distinguishes a joint-stock company from certain other types of business entities. Well-known joint-stock companies include, for example, ČEZ, Škoda Auto, and Komerční banka.

The main legal regulation governing joint-stock companies is the Business Corporations Act. It is also subject to the Civil Code, which governs general legal issues related to business.

How does a joint-stock company differ from other forms of business?

• Limited Liability Company (s. r. o.): Compared to a joint-stock company, its formation and internal operations are generally simpler, and it requires a significantly lower minimum share capital. There is also a fundamental difference in liability: while the members of an s. r. o. may be liable for the company’s debts up to the amount of their unpaid capital contributions as recorded in the Commercial Register, the shareholders of a joint-stock company are not liable for its debts.
• Limited Partnership (k. s.): A limited partnership is a combination of a partnership and a corporation, where limited partners have limited liability and general partners have unlimited liability.
• General Partnership (v.o.s.): In a general partnership, all partners are fully liable for the company’s obligations, whereas shareholders of a joint-stock company are not liable for its debts.

How to Form a Corporation in 2026?

A major disadvantage of a joint-stock company is that you’ll have to dig deep into your pockets to set it up. The minimum authorized capital for a joint-stock company is 2,000,000 Czech crowns, or 80,000 euros, in the case of a company headquartered in the Czech Republic but with authorized capital denominated in euros. The company must pay up at least 30% of this authorized capital before it is even entered into the Commercial Register. The amount of authorized capital is often the deciding factor, since you only need 1 koruna to establish a limited liability company.

The first step is to adopt the articles of incorporation, which must take the form of a public document, i.e., a notarial deed. Among other things, the articles of incorporation specify the company’s name and business purpose, the amount of the authorized capital, the number and form of shares, and the chosen system of the company’s internal structure.

At the same time, the founders subscribe to shares and pay their issue price. No later than the time the application for the company’s registration in the Commercial Register is filed, each founder must pay any share premium, and the founders collectively must pay at least 30% of the par value of the subscribed shares. Only then can the company be entered into the Commercial Register, thereby establishing the joint-stock company.

From a lawyer’s perspective: In the case of a joint-stock company, it pays to devote significantly more attention to the articles of incorporation than merely meeting the legal minimum. It is precisely in the articles of incorporation that one can establish, for example, rules governing the transferability of shares, the functioning of individual corporate bodies, or certain shareholder rights. Ambiguous or overly general articles of incorporation can later complicate decision-making within the company as well as relationships among shareholders.

What Are the Governing Bodies of a Joint-Stock Company?

We already know what a joint-stock company is and how much money is needed to establish one, so now let’s take a look at the governing bodies of a joint-stock company. The highest governing body of a joint-stock company, which decides on key issues such as amendments to the articles of incorporation, who will serve on the governing bodies, or how profits will be distributed, is the general meeting of shareholders.

Another governing body of a joint-stock company is the board of directors. This is the executive body responsible for managing the company.

The supervisory board, as its name implies, is a supervisory body that oversees the activities of the board of directors and protects the interests of all shareholders. Shareholders have the right to attend the general meeting, vote, receive dividends, and share in the liquidation proceeds should the company be dissolved.

A joint-stock company may choose one of two internal governance structures. In the dualistic system, the Board of Directors acts as the statutory body and the Supervisory Board as the supervisory body. In the monistic system, a board of directors is established, which serves as the statutory body and is responsible for both the business management and oversight of the company’s activities. The general meeting stands above both systems as the company’s highest body.

Not sure whether a monistic or dualistic system is better suited for your company? Properly structuring the corporate bodies and articles of incorporation can prevent future disputes among shareholders. Our attorneys will help you set up the company’s operations to meet your specific needs.

What Are Stocks?

As we mentioned at the beginning, in a corporation, capital is divided into shares. But what exactly are shares? They are securities that represent a stake in the ownership of a given company. If you buy a share of a company, you become a shareholder. This gives you, for example, the right to a share of the profits, to vote at the general meeting (applicable to common stock), and thus to influence the management of the company, or the opportunity to see your investment appreciate (if the stock price rises, you can sell it for a higher price).

The basic types of shares are then classified according to the following criteria:

By the rights associated with the shares

• Common: Ordinary shares that give shareholders the right to a share of the profits and the right to vote at the general meeting.
• Preferred: These are shares that give shareholders a preferential right to dividend payments or to a share of the liquidation proceeds. However, their holders often cannot vote at the general meeting.

By form and transferability

• Registered: These shares are registered to a specific person; if the owner wishes to transfer them to someone else, they may do so only in accordance with the company’s clearly defined rules.
• Bearer shares: This type of share is anonymous; the owner is not registered, so they can be easily transferred. However, this type of share has been restricted in the Czech Republic since 2014 and exists in the form of book-entry securities.

By Form

• Certificated: These shares physically exist and take the form of a paper document.
• Book-Entry: These shares are held solely electronically in the Central Securities Depository.

In some jurisdictions, we may also encounter other special types, such as golden shares, which grant special rights to the state or the founder. Then there are also employee shares, which are intended for the employees of a given company.

How is a corporation financed?

A corporation can raise capital in various ways—most commonly by issuing shares, issuing bonds, or going public. Issuing shares means that the company issues new shares to raise additional capital for its growth.

If the company does not wish to issue new shares, it can issue corporate bonds—securities that represent the company’s debt to investors. An investor provides the company with money, and the company commits to repaying the bondholder the face value by a specified date and to paying interest periodically.

Another way for a corporation to raise money is through an initial public offering (IPO), in which a private company becomes publicly traded and its shares are offered to investors on the stock exchange for the first time.

Dividend policy can also play a role in financing, as the company decides whether to pay profits to shareholders or reinvest them.

Each method of financing has its own specific characteristics and is regulated by a legal framework, particularly the Business Corporations Act and the Czech National Bank.

Advantages and Disadvantages of a Corporation

One of the key advantages of a joint-stock company is the limited liability of its shareholders. Shareholders are not liable for the company’s obligations with their personal assets, but only up to the amount of their investment. Because a joint-stock company can issue shares or bonds, it can relatively easily secure additional funding for its growth and investments. Since management is divided between the members of the board of directors and the supervisory board, there is no risk of dependence on a single shareholder and their arbitrary decision-making.

On the other hand, establishing a joint-stock company is no simple matter, if only because of the high minimum capital requirement and complex administrative procedures. Furthermore, a joint-stock company must maintain double-entry bookkeeping. Founders must also be careful not to issue too many shares and thereby lose control of the company. If an investor were to acquire a controlling stake, they could easily take control of the entire company.

Summary

A joint-stock company is a capital-based business entity whose registered capital is divided into shares. The minimum registered capital is 2 million CZK, or 80,000 EUR under certain legal conditions, and shareholders are not liable for the company’s debts. If you are considering how to establish a joint-stock company, the basic steps involve adopting articles of incorporation in the form of a notarial deed, fulfilling the requirements for paying the issue price, and registering the company in the Commercial Register. The governing bodies of a joint-stock company vary depending on the chosen system: the dualistic system uses a board of directors and a supervisory board, while in the monistic system, the statutory body is the board of directors. A joint-stock company (A.s.) allows for raising capital through shares and other instruments; however, in exchange, its establishment and management are generally more complex than those of a limited liability company (s. r. o.).