Takeovers - Czech Republic

Updated 07/2012

Legal requirements

In addition to setting up your own business, you can also acquire a stake in a company that already exists. The main legal requirements for this are set out in the Commercial Code and in the Act on the Transformation of Companies and Cooperatives.

Commercial Code
Act on the transformation of companies and cooperatives [860 KB]
Act on takeover bids

Foreign nationals may also own shares in Czech legal entities. Foreign nationals have the same rights and obligations as Czech nationals.

Types of takeover

Several options exist for business owners wishing to own part of another company:

acquiring a business share in a limited liability company,
acquiring stock or other participatory securities in a joint stock company,
taking over part of a business without acquiring an interest in it by means of a business transfer contract.

Other more complex means exist to transform businesses, such as mergers for example.

Company mergers - Czech Republic

Transferring a business share in a limited liability company

This is the commonest way of acquiring a share in a company. The current partner transfers his/her business share to another partner and/or a person outside of the company by means of a contract on the transfer of a business share.

Transferring shares in companies

Acquiring participation in a joint stock company

This is based on a contract on the transfer of stock or other participatory securities. Unlike a business share - where the partner is always entered into the Commercial Register - the company here can remain anonymous.

Transformation of a company

Business transformations are complex operations from both a legal and an organisational standpoint. For this reason, experienced professionals must be called upon. The legal aspects of business transformations are set out in Act No 125/2008 on the transformation of companies and cooperatives.

Act on the transformation of companies and cooperatives [860 KB]
Characteristics and types of merger

Changes to the structure of a company will often require an amendment to the company's deed of establishment. These amendments can be performed only by a notary.

Notarial Chamber of the Czech Republic

Contract on the sale of a company

A business also consists of items, rights and other assets that belong to the business owner and serve the running of the business.

A contract on the sale of a company does not automatically lead to participation in that company. It involves a change to the ownership of an asset that belongs to the business owner, or a change to the ownership of part of a business, if the sale involves part of a business. The new owner thereby acquires a business asset.

Steps in the takeover process

Acquiring participation in another company is typically a very complex process requiring a sound contractual basis for the safety of both parties. Typically, the parties involved in the transaction have legal representatives. Law firms frequently carry out detailed audits at the request of participants. The goal is to identify any possible legal or economic risks related to the takeover.

Czech Bar Association

Retiring business owners need to plan the transfer of their business in advance.

Selling on — Czech Republic

Some standard requirements to be completed when taking over a business are the same as when setting up a new business.

Start-ups — Czech Republic

Administrative procedures

Registration

All changes relating to the structure of a company that occur during the course of acquiring participation in a company need to be entered into the Commercial Register.

Applications for a change to be entered must be delivered to the Court of Registration as soon as possible after the change has taken place. Further details may be found on:

Recording changes in the Commercial Register
Commercial Register

Resources

The following governmental and non-governmental institutions and web portals offer other information and useful services.

Czech Bar Association
BusinessInfo.cz - official portal for business and export
Public Administration Portal of the Czech Republic
Ministry of Industry and Trade of the Czech Republic - Business Support Section

Programmes

The programme of investment incentives for business start-ups, intended mostly for foreign companies:

Investment incentives of the Ministry of Industry and Trade of the Czech Republic

Check also the legislation on this topic in:

Takeovers - Czech Republic