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Limited liability company (s.r.o.) is a type of corporation and is one of the most common legal forms of doing business. S.r.o. can be founded by one or more founders (max. 50). S.r.o. with a single founder cannot be a single founder or a single member of another company. S.r.o. always creates registered capital (at least EUR 5000). The minimum membership contribution is EUR 750.

Starting an s.r.o. is a rather complicated procedure, therefore we recommend using a lawyer or another expert when starting an s.r.o. Before you start doing business using an s.r.o., you should follow the steps below.

Founding the company

As the first step it is necessary to set the business name of the company, the field of activities and the registered address, and to draft Memorandum of Association or Foundation Deed (signatures must be verified).

Acquiring a trade licence/trade permit (or another business permit)

Generally, the information available here applies to acquiring a trade licence, except that the responsible representative in the case of an s.r.o. must be except for other cases appointed always when running a crafts trade and professional trade trade, and must be an employee or a member of the s.r.o. 

Residence in connection to starting a s.r.o.

Only the foreign national who is/will be an authorized representative (konatel) of the s.r.o. is eligible for applying for a temporary residence for the purpose of business (i.e. just being a member/co-owner of the s.r.o. is not enough). The purpose of residence, in case the foreign national is becoming an authorized representative of the newly established s.r.o., is proved by a business plan together with the anticipated costs of starting a business, or by a business licence together with the Memorandum of Association or Foundation Deed. If the foreign national becomes an authorized representative of an s.r.o. that already exists, the purpose of the residence is proved by an extract from the Commercial Registry of the s.r.o. and a decision of the general assembly that the foreign national will become an authorized representative of the s.r.o. after having obtained the residence permit.


Entry in the Commercial Registry

Motion for an entry to Commercial Registry is filed at a registry court according to the registered address of the s.r.o. The following is required:

  1. Official form
  2. Memorandum of Association (2x) or Foundation Deed (2x)
  3. Entitlement to use the property that is considered registered address of the business
  4. Statutes, if they have been adopted (2x)
  5. If the company has been founded by a single founder, a written declaration that he is not a member of more than two s.r.o.s
  6. If the company has been founded by a single s.r.o., a written declaration of the founder that the s.r.o. that is the founder has several members
  7. Certificate of trade licence (2x)
  8. Written declaration of the contributions' administrator about contributions or their part being paid up by individual members (2x)  
  9. Consent of the tax administrator with entry of the s.r.o. into the Commercial Registry.

Commercial Companies and Associations

Commercial companies are legal persons which are typically founded for business purposes. They are divided into personnel and capital. Unless the law provides for otherwise, companies establish a partnership contract signed by all their founders. The legality of the signatures of the founders must be officially verified. 

The company comes into existence from the day it is recorded in the Commercial Registry.  Registration in the commercial registry must take place within 90 days of the founding of the company or the by receipt of documents demonstrating trade or by other commercial entitlements. Companies are liable for all of their commitment and assets. 

The Commercial Code distinguishes the following types of company:

  • public company,
  • limited partnership,
  • limited Liability Company,
  • joint stock company. 

A public company (P.C.) is a company in which at least two persons do business under a common business name and are jointly responsible for the liabilities of the company through their assets. A condition for establishing a public company is not always the obligations of its members to deposit or create capital. Typically, each partner is entitled to manage the company and all partners are usually statutory bodies. This form of business is used in small-scale business where the risk of unlimited liability is relatively small (eg. family businesses, craft activities or retail).

The advantages of a P.C. are: basic capital isn’t necessary, they are easy to manage with a small number of partners and are easy to establish as well.

The disadvantages of a P.C. are: unlimited liability, complex management with greater numbers of members.

Limited partnership (L.P.) is a company in which one or more partners guarantee the company's liabilities in the amount of their outstanding deposits which are recorded in the Commercial Register (limited partners, a deposit of at least € 250), and one or more members guarantee these liabilities through all of its assests (general partners). This form of business is used in situations where you need to combine the advantages of a partnership (general partners are statutory bodies and are entitled to company management, simple management) and the advantages of a capital company (the possibility of increasing capital, better credit worthiness). 

A Limited Liability Company (Ltd.) is a company whose basic capital is created in advance through the deposits of its members.  The value of each member’s deposit must be at least € 750. Before submitting the proposal for registration of the company into the Commercial Registry, each member must make a monetary deposit of at least 30%. However, the total value of paid monetary deposits, together with the value of submitted non-monetary deposits must be at least € 2 500. 

A Limited Liability Company may also be  established by just one person and can have up to 50 partners. A partner is liable to the company for the obligations of the amounts of their outstanding deposits registered in the Commercial Register. The value of basic capital must be at least € 5,000.

The advantages of an Ltd. are:  low basic capital, only one founder is necessary, easy to set-up and manage the company especially in the case of one owner.

Disadvantages of an Ltd: mandatory creation of a reserve fund, individual partners cannot leave the company unilaterally.

A Joint Stock Company (J.S.C.) is a company whose capital is divided into a certain number of shares with a nominal value. The company is responsible for any breach of its obligations through all its assets. A shareholder is not liable for the obligations of the company. The value of the basic capital of the company must be at least € 25,000.  A Joint Stock Company is an appropriate legal form, particularly in difficult cases concerning initial capital because it brings together capital from individuals and legal entities via the issuance of shares.

A Joint Stock company may be established by just one founder if the person is a legal entity, otherwise at least two founders are necessary. The statutory body of the company is the executive board which manages its activities and acts on its behalf.

Advantages of a J.S.C.: a shareholder is not liable for the debts of the company, it's possible to form capital by the issuance of shares. Disadvantages of a J.S.C: staffing demands, complicated management within a formal organisational structure, the requirement of having its financial statements audited. 

An Association is a community of an open number of persons established for the purpose of business or the assurance of the economic, social or other needs of its members. The main advantage of the association is its openness, ie. relatively free accession and departure of its members. 

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