As a provider of ready-made company sales services in Slovakia, I would like to give you a comprehensive overview of what you should know before buying or setting up an LLC in Slovakia. You may be considering establishing or purchasing your first LLC in Slovakia, so it is important to be informed about all the duties that await you as a shareholder or executive director in a Slovak LLC. The duties of a shareholder and executive director of an LLC in Slovakia are as follows.
What Is a Slovak LLC and How Does It Work?
A limited liability company, or LLC (s.r.o. in Slovak), is a very popular legal form of business in Slovakia. It is ideal for small and medium-sized businesses due to its flexibility and the limited liability of its shareholders for the company’s obligations. This means your personal finances are separated from the company’s finances, minimizing personal risk.
Advantages of a Slovak LLC
- Limited liability: As a shareholder, you are liable only up to the amount of your unpaid contribution to the company’s share capital, as registered in the Commercial Register.
- Flexibility in management: An LLC allows for efficient decision-making and adaptation to market changes.
- Professional image: An LLC may appear more trustworthy to clients and partners.
As a shareholder of a Slovak LLC, you have several duties, the most important of which are listed below:
- Payment of the contribution: Each shareholder must contribute a certain amount of capital to the company’s share capital upon its formation. The minimum contribution for one shareholder is €750; however, if you are establishing the company as the sole shareholder, the minimum share capital is €5,000. When buying a ready-made LLC, you do not have to pay the contribution, as it has already been paid.
- Liability for the company’s obligations: The shareholder is liable for the company’s obligations up to the amount of the unpaid contribution recorded in the Commercial Register. Once the shareholder has paid the full contribution, they are no longer liable for the company’s debts.
- Covering company losses: A shareholder is obliged to contribute to covering the company’s losses according to their contribution, if stipulated in the company’s articles of association.
- Decision-making powers and the duty to comply with the majority: Shareholders have the right to vote on important matters such as company changes, profit distribution, etc. However, if a shareholder is outvoted by the majority, they must comply with the decision of the general meeting.
As a shareholder, you also have a range of rights, the most important of which include:
- Right to profit share: As a shareholder, you are entitled to a share of the company’s profit in proportion to your contribution to the share capital, unless the articles of association specify otherwise.
- Right to transfer/sell your share: A shareholder has the right to sell or transfer, or split their share, under the conditions stated in the articles of association. The transfer may require the consent of other shareholders.
- Right to a settlement share: If a shareholder’s participation in the company is terminated by court decision or if they are expelled, they are entitled to a settlement share, calculated in proportion to their paid-up contribution compared to all shareholders’ paid-up contributions.
- Right to a liquidation balance: Upon the company’s dissolution with liquidation, each shareholder is entitled to a share of the liquidation balance proportionate to their paid-up contribution, unless otherwise specified in the articles of association.
- Right to participate in the general meeting: Every shareholder has the right to attend the general meeting and vote on important company matters. The voting weight is usually proportionate to their contribution.
- Right to appoint executive directors: Shareholders have the right to decide on the appointment and removal of executive directors at the general meeting.
- Right to information: Shareholders have the right to request information from executive directors on company matters and to inspect company documents.
Duties of an Executive Director of an LLC in Slovakia
The executive director is the company’s representative and public face. Their duties and responsibilities are comprehensive and include:
- Day-to-day management of the company: Daily duties include:
- concluding contracts
- managing the company’s employment matters
- handling the company’s routine affairs
- maintaining the list of shareholders
- informing shareholders promptly and properly about company matters
- complying with the non-compete obligations
- Tax and accounting duties: These include:
- keeping accounting records
- preparing annual financial statements
- Other duties:
- following company instructions
- protecting and promoting the company’s interests
- considering all available information when making decisions
- being liable for damages caused by breaches of duty
- maintaining confidentiality of all confidential information
- implementing resolutions of the general meeting
- drafting and approving the company’s internal rules
- calling the general meeting as set in the articles of association at least once a year
- chairing the general meeting until the chairman is elected
- complying with the non-compete obligations
- preparing the full text of the articles of association after each amendment
What Duties Does the Slovak LLC Itself Have?
An LLC in Slovakia has numerous tax, accounting, and other obligations. Here are some basic ones after formation (some are legal requirements, others are recommendations):
- Accounting and taxes: Proper bookkeeping, filing corporate income tax returns, and paying taxes are essential for lawful operation.
- Publishing financial statements: An LLC must publish its annual financial statements in the Collection of Deeds.
- Compliance with sector-specific regulations: Depending on the industry, specific rules may apply.
- Opening a bank account: Not mandatory, but a practical step after company formation.
- Income tax registration: All LLCs must register for corporate income tax immediately after formation.
- VAT registration: VAT registration is not mandatory immediately, but it may be worth considering depending on your business.
- Social and health insurance registration
- Activating the electronic mailbox and e-communication: An electronic mailbox on www.slovensko.sk is automatically set up and activated for every new LLC.
- Company seat signage: The company’s registered office must be marked with its trade name, at least on the mailbox.
Why Buy a Ready-Made LLC in Slovakia?
Buying a ready-made LLC brings many advantages, including:
- Speed and simplicity: A ready-made LLC allows quick market entry without the lengthy formation process.
- Less administration: Avoid the complicated steps associated with setting up a new company.
- Immediate operational readiness: Such a company is ready to do business immediately.
- No need to pay the €5,000 share capital: The share capital is already paid in a ready-made LLC.
Conclusion
Owning an LLC in Slovakia comes with certain duties and responsibilities. As a potential shareholder or executive director, it is important to have clear expectations and be prepared for various aspects of company management. A ready-made LLC is an excellent choice for those seeking an efficient way to start doing business in Slovakia quickly.
TIP: Are you ready for a business adventure in Slovakia? Consider all the advantages of buying a ready-made LLC and start your journey with a clear understanding of your duties and opportunities.
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.