The legal form of a Slovak “joint stock company” is the second most commonly used legal form for businesses in the Slovak Republic. Recently, we have received requests from our clients, mainly for the purpose of setting up their holding structures and ensuring the anonymity of their business. A joint stock company has its undeniable advantages, such as a stronger and more reliable company image and stable partners, a way to raise financial resources, and reasonable anonymity for shareholders. What are the advantages of a joint stock company, and how can you, as an entrepreneur, benefit from them in your business?
1. What are the advantages of a Slovak joint stock company?
1.1. Image of an Established and Strong Company: Joint stock companies have a better business image and appear more trustworthy. This is because their number is generally lower, and they are often used by medium and larger companies. Therefore, they are perceived as stable and larger companies among entrepreneurs, clients, and banks. Additionally, a joint stock company has a minimum share capital of €25,000, which means its initial capital is higher.
1.2. Possibility of Financing Business Goals through Share Issuance: A joint stock company can raise investments through the issuance of shares right from its inception, through a public call for share subscription. Entrepreneurs can establish a public joint stock company and convince investors to subscribe to shares based on their business plans. The number of subscribers is not limited, making it easier to raise funds compared to limited liability companies (s.r.o.).
1.3. Reasonable Shareholder Anonymity, But Not Complete: A significant advantage of a joint stock company is that shareholders can achieve partial anonymity. We will now explain why it’s only partial. In the case of a joint stock company with multiple shareholders, these shareholders are not disclosed in the commercial register, unlike partners in a limited liability company (s.r.o.). The company maintains a list of shareholders, which is submitted to the central securities depository. This list is not accessible to the public, ensuring anonymity. If a joint stock company is founded by a single shareholder, that shareholder is obligated to be registered and disclosed in the commercial register.
1.3.1. What Is the Actual Level of Shareholder Anonymity in a Joint Stock Company? Who Can Access Shareholder Information? Anonymity of shareholders is not absolute since the commercial register and the central securities depository provide shareholder information to selected institutions and individuals. For an idea of who is entitled to access this information, here are examples: public institutions and authorities such as the tax office, authorities involved in criminal proceedings, and others.
1.3.2. How Can You Determine Who Is a Shareholder of a Joint Stock Company? There is a way to at least identify a shareholder of the company, but not with 100% certainty. Every joint stock company must specify the founding shareholders of the company in its articles of association or social contract. The founding contract is required to be submitted to the collection of documents, the content of which is publicly accessible, so you can request this document. You will find out who founded the joint stock company and, in some cases (if the shareholder is not sufficiently sophisticated), you may conclude that the original founder is still a shareholder of the company.
1.4. An Advantage of a Joint Stock Company Is That Shareholders Do Not Personally Guarantee the Company’s Obligations: One of the advantages of a joint stock company is that a shareholder of a.s. does not guarantee the company’s obligations with their personal assets at all. In the legal form of s.r.o., a partner guarantees the obligations of s.r.o. up to the amount of the unpaid contribution recorded in the commercial register.
1.5. The Commercial Register Does Not Examine the Debts of a Joint Stock Company’s Shareholder at the Time of Establishment: For some, one of the advantages of a joint stock company may be that the commercial register does not examine the debts of the shareholder at the time of establishing the joint stock company, which are verified by the court when establishing s.r.o. The commercial register does not examine these areas:
- Debts of the shareholder of the joint stock company in taxes and customs duties
- Debts of the shareholder in social insurance
- Whether the shareholder is listed as a “mandatory” in the registry of persons authorized to perform enforcement actions against the shareholder
1.6. Possible Zero Taxation When Selling a Joint Stock Company’s Subsidiary Project: Under certain conditions specified in the Income Tax Act, it is possible to achieve a zero income tax on the sale of a company owned by a joint stock company. We have written an article on how to sell a company and pay zero income tax on this topic.
2. When to Use a Joint Stock Company?
When to use a joint-stock company? A joint-stock company is a company that requires a larger personnel composition (3 persons in the supervisory board and at least one member of the board of directors) and is more capital-intensive (€25,000 basic capital). Therefore, it is suitable to consider this legal form when the business reaches a certain size and when the entrepreneur is interested in utilizing some of the advantages of a joint-stock company mentioned above, whether it is the anonymity of shareholders or, for example, raising funds through the issuance of shares to a larger number of investors.Start your business with a Slovak joint stock company today.
3. Characteristics of a Slovak joint-stock company.
A joint-stock company is one of the types of commercial companies regulated by the Slovak Commercial Code. It is a capital company, which means that when it is founded, basic capital must be created, with a minimum amount prescribed by law of €25,000. This basic capital of the joint-stock company is divided into a specific number of shares with a certain nominal value of shares. For example, the basic capital of a joint-stock company is €25,000 and is divided into 10 pieces of registered shares, with the nominal value of one share being €2,500.
The shareholders or owners of a joint-stock company are the owners of the shares. Therefore, they are called shareholders. Shareholders of a joint-stock company can be either natural persons or legal entities. A shareholder is not liable at all for the obligations of the joint-stock company. Non-liability of the shareholder for the company’s obligations is one of the advantages of a joint-stock company. However, a joint-stock company is liable for its obligations with all its assets. A joint-stock company may also have only one shareholder, but in that case, the sole shareholder must be a legal entity. There is no upper limit on the number of shareholders of a joint-stock company. In the case that a joint-stock company has only one shareholder, this shareholder must be registered in the commercial register. In the case that there are more than one shareholder, they are not registered in the commercial register.
The share of a joint-stock company is a type of security that represents the rights of a shareholder as a participant in accordance with the law and the company’s articles of association in the management, profit, and the liquidation surplus after the dissolution of the joint-stock company with liquidation, which are associated with the share as a security.
ordinary shares – ordinary shares do not have any special rights of the shareholder as the owner of a security. preferred shares – preferred shares have preferential rights relating to dividends. However, the total nominal value of preferred shares cannot exceed half of the basic capital.
- share as a paper security: the share is issued in the form of a physical document held by the shareholder.
- share as a registered security: the share is registered in the central depository of securities and does not take the form of a document held by the shareholder.
- share in the name: shares in the name can be issued in the form of a document or in the form of a registered security.
- bearer form of share: Paper shares in the name do not contain the owner’s designation, and therefore, the rights associated with them can be exercised by the person who physically holds the share, i.e., the holder of the share. Our laws do not allow the issuance of paper shares to the bearer, so they can only be issued in the form of registered securities. However, the purpose of bearer shares has been lost in the registered form, as the shares are held in the central depository of securities in the accounts of their owners.
3.5. Mandatory bodies of the slovak joint-stock company.
The mandatory bodies of a joint-stock company are:
- General meeting
- supervisory board
- board of directors
General Meeting of the Slovak Joint-Stock Company: The general meeting of the slovak joint-stock company is the highest body of the company, which decides on all fundamental and important issues of the slovak joint-stock company. The general meeting is composed of all shareholders of the joint-stock company.
Supervisory Board of the Slovak Joint-Stock Company: The supervisory board is a supervisory body composed of at least 3 members. The function of a supervisory board member is not compatible with membership in the board of directors, with the function of the company’s proxy, or with a function that is registered in the commercial register as a person authorized to act on behalf of the company. Members of the supervisory board are elected by the general meeting of the Slovak joint stock company for a term in accordance with the articles of association of the joint-stock company, but not for a period exceeding 5 years. The function of the supervisory board is to control the activities of the board of directors and the company’s business activities. The supervisory board has the right to inspect all relevant documents related to the company’s activities, including the management of the company’s accounting documentation. The supervisory board checks whether the activities are carried out in accordance with the law, the articles of association, and the resolutions of the general meeting.
Board of Directors of the Slovak Joint-Stock Company: The board of directors is the statutory body of the slovak joint-stock company, which acts on its behalf and manages all the company’s activities that are not entrusted to the general meeting or the supervisory board by law or by the articles of association. The board of directors may have one or more members. If there are more members, one of them is the chairman of the board of directors, and the others are members. Unless the articles of association provide otherwise, every member of the board of directors is authorized to act on behalf of the joint-stock company. In the founding agreement, it is possible to stipulate that the members of the board of directors act jointly or in a combined manner. The board of directors ensures the proper management of the company’s accounting and submits a proper individual financial statement and an extraordinary individual financial statement and a proposal for the distribution of profit or the coverage of losses to the general meeting in accordance with the articles of association. Members of the board of directors are elected and removed by the general meeting of shareholders or other persons for a period determined in the articles of association, which may not exceed five years. The articles of association may stipulate that members of the board of directors are elected and removed by the supervisory board in the manner specified therein.
4. Formation of a slovak joint stock company
4.1 Memorandum of Incorporation of Slovak joint stock company
A Slovak joint stock company is established by a deed of incorporation (if the company has a single shareholder) or by a memorandum of association (if there is more than one shareholder). The mandatory elements of the memorandum of association of a public limited company are as follows:
- Business name: the founders must choose a business name that is not already registered in the commercial register. Principle of non-interchangeability: the business name must not be too general, such as Restaurant, Café, etc. It must also not be interchangeable with another existing business name. A business name must not be confusable in appearance (e.g. Complex a.s. – Camplex a.s.), but also phonetically (Kalex a.s. – Calex a.s.). Principle of truthfulness: the business name must reflect the true image of the company that bears the business name. The principles of name creation are – personal name (Jozef Starý; Starý, a.s.), fancy (Vaeol a.s.) or mixed (Jozef Starý – Kachliar a.s. ). The principles are to characterise the company and give an approximate picture of the type of company and its form.
- Registered office: the exact address of the company’s registered office must be stated in the contract in accordance with the law. The address shall be the name of the municipality with its postcode, the name of the street or other public space and the landmark number or, if the municipality is not subdivided into streets, the registration number. Registered office means the address which is entered as the registered office or place of business in the commercial register or the trade register. The slovak joint stock company must prove that it has a right of ownership or usufruct over the immovable property or part thereof, the address of which is entered as its registered office or place of business in the commercial register or in the trade register or in another register provided for by a special law, which does not exclude the use of the immovable property or part thereof as a registered office or place of business, or the written consent of the owner of the immovable property or part thereof with a certified signature or the written consent of the majority of the co-owners of the immovable property
- Objects of business: the contract must state the precise wording of the objects of business in which the company will carry on business. The wording of these businesses should be identical to that published in the lists of businesses published by the Ministry of the Interior. Reference to the list of business objects. A company may also carry on business in subjects of business for which professionally qualified persons are required, in which case these will be craft or related subjects of business. Alternatively, it may also be in business objects which are not a trade, then it will be a business on the basis of special regulations.
- Proposed share capital: the minimum amount of the share capital of a Slovak joint-stock company is EUR 25 000 and is made up of the contributions of the founders or shareholders of the company.
- Number of shares, their nominal value and form: the contract must contain information on the number of shares, their nominal value, their form (whether they are registered or bearer shares) and their form (whether they are certificated or book-entry shares). The sum of the nominal values of all the shares must be equal to the amount of the share capital. The nominal value of a share shall be expressed as a positive whole number in €. If shares of different kinds are to be issued, the memorandum of association must also contain a description of the rights attached to such shares and their name. If registered shares whose transferability is restricted are to be issued, the following information on the restriction of their transferability must also be included in the memorandum of incorporation.
- Issue price at which the shares are issued by the company: the contract must state the issue price of the share, which is a monetary expression of the price at which the share is sold. The issue price of the share may not be less than the nominal value of the share. If the issue price of a share is higher than its nominal value, the amount in excess of the nominal value of the share is called the premium.
- The number of shares subscribed for by each founder.
- Determination of the object of the contribution in kind and determination of the amount of money in which the contribution in kind is to be credited towards the issue price of the shares.
- Designation of the deposit manager: the memorandum of association must specify who is the deposit manager. As a general rule, it shall be one of the founders of the company.
- Expected costs of incorporation and formation of the company.
The memorandum or deed of incorporation shall always be drawn up in the form of a notarial deed. The fee for the services of a notary in the execution of the notarial deed is based on the amount of the share capital of the slovak joint stock company in accordance with the Decree on Notaries’ Fees and Expenses. If the amount of the share capital is minimal, i.e. € 25,000, the notary’s fee for the notarial deed is approximately € 300.
4.2 Procedure for the establishment of a slovak private joint stock company
There are two types of slovak joint stock company, namely (a) a private slovak joint stock company and (b) a public slovak joint stock company. In this article, we will deal with the procedure of incorporation of a private joint stock company. A private company limited by shares is one in which the promoters of the public limited company undertake in writing in the memorandum of association to pay up the entire share capital of the public limited company in a certain proportion. For the purposes of this article, we will be setting up a public joint stock company with cash contributions to the share capital, the shares being in certificated form in the form of registered shares.
(i) Preparation of the incorporation documents of the joint stock company
In case of incorporation of a private limited company, the following documents required for incorporation of a private limited company shall be prepared:
- the memorandum or articles of incorporation
- the statutes of the slovak joint stock company
- consent to the appointment of a member or chairman of the board of directors and specimen signatures
- consent to the appointment of a member of the Supervisory Board and their specimen signatures
- consent of the owners of the real estate to the registration of the real estate as the seat or place of business in the commercial register / or lease agreement, etc.
- list of shareholders of the company
- certificated shares – in the case of registered certificated shares
- declaration of the deposit administrator on the redemption of deposits into the company’s share capital
- completion of the form – application for registration of the joint stock company in the commercial register (this is only possible electronically).
(ii) Execution of the notarial deed and signing of the documents
After completing the execution of the incorporation documents, an appointment must be made with a notary public who needs to have a draft of the memorandum or articles of incorporation and articles of association in advance in order to prepare the notarial deed. At the appointment with the notary you will also sign the other documents mentioned in point (i).
The following is the repayment of the deposits of the individual shareholders of the slovak joint stock company, either to a special account in the bank or to the bank account of the deposit manager. It is a good idea to obtain an official confirmation from the bank (statement or certificate) on the status of the bank account, which you can later attach to the application for registration of the company in the commercial register as an appendix to clearly declare the repayment of the deposits of all shareholders. A written declaration from the custodian of the deposits will also suffice.
(iv) Obtaining a certificate of trade licence and filing with the commercial register via JKM
Subsequently, the documents so signed must be scanned into pdf. format and signed with a guaranteed electronic signature of the person authorized to file the application for registration of the company in the commercial register. The proposal for registration of a joint-stock company in the commercial register is submitted by the Board of Directors and signed by all members of the Board of Directors. The signed documents together with the completed and signed form “Application for registration of a joint-stock company in the commercial register” must be attached as annexes to the filing at www.slovensko.sk. You can also file a petition for registration of the company in the commercial register through this notification and thus use the services of the JKM. You will therefore not have to make a separate filing with the commercial register later on.
(v) Payment of court and administrative fees
JKM and the court will generate the administrative and court fees via www.slovensko.sk, which will be sent to your electronic mailbox. You can pay these by credit card or bank transfer.
(vi) Registration for CIT and, where applicable VAT as well.
Once a slovak joint stock company is registered with the Companies Registry, a CIT number and registration for CIT is automatically generated for the company. This will happen automatically if you have ticked the box on the form when submitting to www.slovensko.sk that you wish to register online. The certificate of registration will be delivered to the company by the tax office at its registered office address. At this stage, once the limited company has been formed, it is a good idea to consider whether it is necessary for your business to be registered for VAT. This way you can save on VAT in case of high investments.
(vii) Registration with the Central Securities Depository (CSD)
As the last step of incorporation of a joint stock company, it is necessary to fulfill the obligation imposed on the joint stock companies by the laws – the Commercial Code (art. 165, para. 6.) and the Securities Act (art. 107, para. 9.), which impose on joint stock companies that have issued certificated shares in registered form the obligation to notify the CDCP of the list of its shareholders. This is done by registering the JSC with the CDCP and entering into an agreement with the CDCP to maintain the list of shareholders. An annual fee of approximately €300 is paid as consideration for the services of the CDCP under this agreement.
If you want to do business through a joint stock company and you find the exhaustive description of setting up a slovak joint stock company given here lengthy and difficult, our company SetupMART will be happy to provide you with the services of a ready-made joint stock company. This is a service in which the client incorporates itself into a form of Incorporation by purchasing from us a pre-made joint stock company that has been set up for the purpose of selling it. This way he gets the comfort that he does not have to undergo the whole process of its incorporation and the process is much faster and of course risk-free.
6. Our shelf joint stock companies meet the following parameters:
- they are 100% owned by our company – the only shareholder of the ready-made a.s. is our company SetupMART LLC
- they have a duly paid-up share capital of EUR 25,000.- – the share capital of the joint stock company is paid up by the sole shareholder in the full amount of EUR 25,000.-. The share capital is duly handed over to the client upon the purchase of the shares of the ready-made a.s.
- they have a bank account – each ready-made company has a free bank account with Fio banka.
- they are ready for immediate transfer – you can act as a member of the board of directors on behalf of the joint stock company within 24 hours. We can arrange for the execution of documents and notarial deed so quickly.
- have no contracts – ready-made joint stock companies have no contracts except for the contract on maintaining a business account
- have no liabilities (monetary, contractual or other…)
- we guarantee their debt-free status – we guarantee the debt-free status of a joint stock company contractually under the threat of damages.
- have proper accounting records kept by a tax advisor
For more information you can contact us at +421 940 601 033 or by email at email@example.comStart your business with a Slovak joint stock company today.
Autor článku: Mgr. Dominik Ondrišeje
Dominik is co-founder of the SetupMART project. Dominik is responsible for corporate services and implementation of modern technologies in our services at SetupMART. Dominik is dedicated to the sale of ready-made companies since 2011. Dominik studied law at the Pan-European School of Law.