Slovakia: Formation of Companies
The legislation stipulated in Act No. 513/1991 Coll., commercial code as amended (the „Commercial Code“) on formation of companies can be considered to be a standard legislation, reflecting the legislation of European Union. The provisions of the Commercial Code stipulate the following five types of commercial companies.
General Trading Company (in Slovak: Verejná obchodná spoločnosť) (the “GTC”)
GTC is considered to be one of the less used types of commercial companies, mostly due to the fact that GTCs partners are liable for GTC’s obligations with all of their assets. Minimal number of partners/founders is 2 and, unless stipulated otherwise, any of them is entitled to act on behalf of GTC.
Limited Partnership (in Slovak: Komanditná spoločnosť) (the “LP”)
Along with GTC, LP is another type of commercial company that is not used often. It can be most easily described as a combination of GTC and LLC (as defined below), in which limited partners (in Slovak: Komanditista) are liable for LP’s obligations up to the amount of the unpaid part of their contribution, as recorded in the Commercial Register and general partners (in Slovak: Komplementár) are liable for LP’s obligation with all of their assets. Minimal number of partners/founders is 2, from which one is to be limited partner and the other one is to be general partner. Minimal contribution of the limited partner is EUR 250.00. Only general partners are entitled to act on behalf of the LP, unless agreed otherwise.
Limited Liability Company (in Slovak: Spoločnosť s ručením obmedzeným) (the “LLC”)
In comparison to GTC and LP, LLC is a type of commercial company that is the most prevalent in Slovak Republic. Minimal umber of shareholders/founders is 1 and the maximal number is 50. Also, LLC with only one shareholder cannot be sole founder/shareholder of another company. Additionally, natural person can be sole founder/shareholder in up to 3 LLCs only. Shareholders are liable for LLC’s obligations up to the amount of their unpaid part of the contribution to the own registered capital of the LLC, as registered in the Commercial Register. Minimal registered capital of LLC is EUR 5,000.00, while minimal contribution of founder/shareholder is EUR 750.00. Executive directors (appointed by the general meeting of shareholders) are entitled to act on behalf of LLC.
Joint Stock Company (in Slovak: Akciová spoločnosť) (the “JSC”)
JSC is a type of commercial company, whose own registered capital is in the form of shares. The Slovak law differentiates between different types, forms and sub-forms of the shares. The two types of shares are common stocks (in Slovak: Kmeňová akcia) (with no special rights) and priority stocks (in Slovak: Prioritná akcia) (with rights to priority dividends, however with no voting rights. With regards to the forms of shares, the Slovak law differentiates between deed shares (in Slovak: Listinná akcia) and booked shares (in Slovak: Zaknihovaná akcia). When it comes to sub-forms, there are registered shares (in Slovak: Akcia na meno) and bearer shares (in Slovak: Akcia na doručiteľa). Deed shares can be issued only in the sub-form of registered shares and booked shares can be issued in both sub-forms. Booked shares are registered in the owner’s accounts administered by Central Securities Depository. When it comes to Deed shares, JSC is obliged to keep a List of Shareholders at the Central Securities Depository. Shareholders are not liable for JSCs obligation. Minimal number of founders is 2 in case of natural persons, and 1 in case of a legal entity. Minimal registered capital of JSC is EUR 25,000.00. Board of directors (at least 1 member, appointed by the general meeting of shareholders or supervisory board) acts on behalf of JSC, with term of office up to the maximum amount of 5 years. Supervisory board is an obligatory body of company (min. 3 members), with term of office up to maximum amount of 5 years.
Simple Stock Company (in Slovak: Jednoduchá spoločnosť na akcie) (the “SSC”)
SSC is generally considered to be a simplified version of JSC with minimal own registered capital in the amount of EUR 1.00. Shares of the SSC can be only issued in the form of booked shares. In addition to the JSC, SSC shares can be prohibited from being transferred, which is counterbalanced by more flexible rights of the Shareholders to terminate their participation in the SSC.
Cooperative Society (in Slovak: Družstvo) (the “CS”)
In addition to the abovementioned companies, the Commercial Code also contains legislation on a CS, being an entity with “dualistic” entrepreneurial-social character. Minimal number of members is 5 natural persons or 2 legal persons. Members are not liable for CS’s obligations. Minimal own registered capital is EUR 1,250.00. Board of directors acts on behalf of CS, members of the board can only be voted from the members of the CS. Control commission is an obligatory control body of CS.
Formation of Companies
In general, a company is founded on the basis of a deed of association, signed by all of the founders, with authorized signatures. If the company is being founded by a single founder (applicable only in case of LLC and JSC), the deed of association is replaced by founder’s deed. The abovementioned can also be processed by an attorney based on a power of attorney.
One of the obligatory contents of the deed of association (or founder’s deed respectively) is the scope of the company’s business activity. Generally, pursuant to Slovak law we differentiate between:
(a) business activity based on a trade licence:
i. free trade licence – no special requirements needed;
ii. craft trade licence – requirement of acquiring professional competence acquired by training in the respective field;
iii. bound trade licence – requirements specified by specific legal acts;
(b) business activity based on a specific legal act, that is not considered a trade licence and is usually governed by specific association (e.g. attorneys, architects, etc.);
(c) special license such as bkn license, security trader license etc. issued by special state authorities such as National Bank of Slovakia.
In general, the most effective process is to obtain few general free trade licences in order to be able to establish the company and if some other business activities are required, the process of acquiring such licences/permissions will be handled after the company has been duly brought up.
Foreign person as a Shareholder and member of a company’s executive body
Aside from the limitations specified in the abovementioned text, foreign person can be a shareholder in JSC, LLC and SSC or limited partner of an LP even without having any kind of residence in Slovak Republic or other EEA member state.
On the other hand, when it comes to being member of an executive body of JSC, LLC and SSC and being partner of an GTC or general partner of an LP, it is necessary to have granted at least a temporary residence in Slovak Republic or other EEA or OECD member state.
