Slovakia

Slovakia

Slovakia Company Formation

Introduction

Slovakia officially the Slovak Republic is a landlocked country in Central Europe. It is bordered by the Czech Republic and Austria to the west, Poland to the north, Ukraine to the east and Hungary to the south. Slovakia’s territory spans about 49,000 square kilometers and is mostly mountainous. The population is over 5 million and comprises mostly ethnic Slovaks. The capital and largest city is Bratislava.

Language

The official language is Slovak, a member of the Slavic language family.

Economy

The Slovak economy is a developed, high-income economy, with the GDP per capita equaling 76% of the average of the European Union in 2014. The country used to be dubbed the “Tatra Tiger” before the recent global economic crisis. Slovakia successfully transformed from a centrally planned economy to a market-driven economy. Major privatizations are nearly complete, the banking sector is almost completely in private hands, and foreign investment has risen. Slovakia had experienced high and sustained economic growth. In 2007, 2008 and 2010 (with GDP growth of 10.5%, 6% and 4% retrospectively), Slovakia was the fastest growing economy in the European Union.

Business Entitles and Formation of Company in Slovakia

Several types of companies can be established in Slovakia, according to the needs and possibilities of the owners. Each type of legal structure has its own particularities and our Slovak experts in company formation matters can advise you upon the most suited type for your business needs.

Sole Proprietorship

Sole proprietorship is an authorized type of business that is owned and run by an individual person. This form of business is quite common in Slovakia and other countries as well. It is most often used in construction, beauty sphere and other forms of small business.

Sole proprietorship, comparing to limited liability companies, has certain advantages. For example, you may use single-entry rather than double-entry bookkeeping, you do not need to invest a registered capital, and the registration takes 7 days only. Moreover, comparing to standard employment relations, a sole proprietorship gives several advantages, especially in the terms of health and social security deductions. Nevertheless, it must be noted that there are different rules for a sole trader with a permanent place of residence in Slovakia and all the others who have a permanent place of residence out of Slovakia, because they are regarded as foreigners. Consequently, almost all the sole trader’s advantages are not valid for foreigners

Registration of a sole proprietorship in Slovakia takes five working days.

Limited Liability Company

Limited liability Company, the abbreviation SRO is used in Slovakia, is the most common commercial company. While its registration one should determine the following questions:

  • Name
  • Amount of registered capital
  • Its members and their shares
  • Its executive directors and the manner in which they will represent the company
  • Registered seat
  • Scope of business

There are no major restrictions on the name of the company in Slovakia. It is only important that the name should not have been taken yet. Special conditions apply to the use of words such as “casino” or “bank”.

The minimum amount of the registered capital is 5 000 EUR, with the minimum percentage of the member at least 750 EUR. Unlike other countries, there is no need to place the registered capital at the company’s bank account. It can be paid up in cash. The maximum number of members of a limited liability company is 50. It is better to register a legal entity as a Joint Stock Company in case you need to have more members.

It is important to decide who will become the executive director of a Slovak company. By law, a citizen of a member of the European Union or the Organization for Economic Cooperation and Development may become an executive director. Nationals of third countries may become executive directors only with a permanent residence permit in any EU country or a temporary residence permit in Slovakia. There are no quantitative restrictions for the number of executive directors.

Usually, all the directors act independently from each other. Nevertheless, memorandum of association may limit their actions in a way that, for example, directors should act together or at least two of the three directors should act together, or signatures of all directors might be required in matters exceeding certain amounts.

Our company will prepare all the documents necessary for the establishment and registration of the company for you. Our fees depend on the selected package. The cost of all three packages includes the registered seat for the first year. We can also provide a registered seat to an existing firm. The cost of the registered seat is 249 EUR per year.

Depending on the selected package the cost of company registration includes 10, 20, or 30 free business activities from the total list of about 170. Activities which require a license are obtained separately. Licensed business activities are for example: a travel agency, a touristic operator, a real estate agency, translation activities, language courses, transportation services, most financial activities, catering, etc. For most of them it is necessary to prove work experience and education, usually higher or professional and they are to be proved by either the executive director or an employee working under an employment agreement. Diploma recognition might be required in most cases.

The registration of a limited liability company takes about three weeks in Slovakia.

Joint Stock Company

Slovak Commercial Code divides joint-stock companies into open joint-stock companies (verejná) and closed joint-stock companies (súkromné), however, the separate abbreviations are not used in Slovakia. There is a single abbreviation: – Akciová spoločnosť.

Most of the rules and restrictions relating to limited liability companies can also be applied for the corporations.

The minimum registered capital is 25 000 EUR and it is divided into a certain number of shares – shares with a fixed face value. The market value of shares can often differ from a face value. Shareholders are liable for debts to the corporation’s creditors only to the level of their investment into the company and shareholders have no right to demand the return of their investment from the company.

Joint stock companies are used in most cases when it is assumed that the number of owners will be over 50 or in fields of business that require higher investments or in cases when it is required by law. A joint-stock company may be registered by one founder if he/she is a legal entity, or at least by two founders, if they are individuals.

The bodies of joint-stock company are:

  • General meeting (valné zhromaždenie)
  • Board of Directors (predstavenstvo)
  • Supervisory board (dozorná rada)

The general meeting is a supreme governing body of a joint-stock company. The executive body is the board of directors. It is an equivalent of the executive director of limited liability companies. Controlling authority is a supervisory board with a minimum number of members being 3; board of directors may be a sole authority. Due to the large number of persons participating in the activities of a joint-stock company, there may be misunderstandings between them as a main goal of board of directors as an executive body is to maximize profits, while the objective of shareholders is to maximize the dividends.

The annual results of the company shall be verified by an independent auditor

General Partnership

A Slovakian General Partnership (verejná obchodná spoločnosť) is no different from the rest of the general partnerships around the world. The partners are equally liable for the company’s debts even with their own personal assets. All the decisions are equally taken by the partners, unless it’s stipulated differently in the Articles of Incorporation.

Limited Partnership

The limited partnership (komanditná spoločnosť) in Slovakia is a rare form of partnership. It is based on a partnership agreement between two or more partners, called the general partners and the silent partners. The silent partners must make a contribution to the share capital of at least 250 Euro. Their liability is in the limit of their contribution. The general partners are not required to make any initial contribution and have unlimited liability and decisional power.