The amendment to the Business Corporations Act effective from 1 January 2021 has simplified the procedure for establishing a limited liability company. If the registered capital is agreed in the maximum amount of CZK 20,000 (approx. 750 €), it is not necessary to open a bank account to pay up such registered capital.
This innovation will be appreciated especially by those for whom a company with a low initial registered capital will suffice and who will finance the initial start-up and operation of the company primarily from other sources. If the total capital contributions to the registered capital do not exceed CZK 20,000, such contributions may now be paid up in any way, i.e. not only to the bank account set up by the contribution administrator for this purpose as was previously the case.
When opening an account in a bank, it is generally necessary to complete AML, KYC and other procedures, which may complicate and delay the establishment of a company, especially in a situation where the founders are foreign persons (foreigners, foreign legal entities). It can be thus expected that the process of establishing and incorporating a limited liability company with a registered capital of up to CZK 20,000 (inclusive) will be significantly simplified and shortened as a result of the new legislation. In fact, it is possible to establish a company within a single day.