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But it must also be said that with Slovakias admission to the European Union
and with the ongoing harmonisation of Slovak law with EU legislation, this
process has become more and more effective, flexible and transparent.
The current legal framework, which envelopes the whole process of founding
and operating a Slovak commercial company and is valid for both domestic and
foreign investors alike, consists mainly of these laws: the Commercial Code, the
Act on the Commercial Register, the Trade Licence Act, the Civil Code, the Act
on Accountancy and various tax laws. The latter includes the Acts on Income
Tax, on the Value Added Tax (VAT), on Tax Administration and Tax Fees, and
others.
The Commercial Code, as the key legal norm, authorises four basic types of
corporate entities and a cooperative form. These are considered independent
legal entities which have their own legal personality and thus they can enter
business-legal relations independently and undertake operations in their own
name.
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the department of trade licenses to file an application containing the list of
business activities that will be undertaken by the company. The office requires
and grants a separate license to operate for each activity.
For the company to be incorporated, i.e. to become a legal entity and thus to be
able to fully carry out its business activities, it must file a proposal for registry in
the Commercial Register within 90 days after being founded or after the license
to carry out business activities has been delivered. Currently, it is possible under
certain circumstances to file an electronic application with the Commercial
Register. The day of being registered in the Commercial Register is the date
when the company is formed, and from then on it acquires not just rights but
also duties. From its incorporation at the latest the company is obliged to
start performing double-entry bookkeeping and it is also obliged to register at
the relevant tax office within 30 days for the purpose of corporate income taxes.
The company can also voluntarily register for value added tax purposes.
The various legal forms for a company under Slovak law provide various
advantages as well as disadvantages connected to the process of their founding
or their consequent operation and their connected duties. The following
highlights the basic characteristics of the individual types of companies under
Slovaks legislation.
A general partnership (v. o. s.) is the typical, so-called personal company with
the participation of at least two persons, while the maximum number of persons
partners is not stipulated. The advantage of the general partner form can be
the possibility to found it without initial investments; but on the other hand, each
partner is held liable for all liabilities of the company with his/her whole private
property. The profit of the company is divided among the partners in the manner
specified in the founding deed; otherwise it is divided equally.
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The main difference in their status is that the limited partner is in a position
similar to that of an shareholder in a limited liability company and the liability
of the limited partner is limited to the amount of his unpaid mandatory
contribution (250 at least) registered in the Commercial Register while the
position of the general partner is identical to that of a partner in a public
company and even though he/she does not have to render the company
contribution, the general partner is liable with his/her whole private property,
like a partner in a public company. Also, due to this unlimited guarantee, the
general partner has the position of a statutory body and thus relatively greater
decision-making authority. The companys profit is divided fifty-fifty among
limited partner and the general partner, and subsequently, they divide it among
themselves, if not stipulated otherwise in the company agreement. Shares in the
profit are taxed in different ways among partners.
A joint-stock company (a. s.) is, relatively, the most complicated type of
company for both its founding and administration; but on the other hand, it
divides the responsibility the commitments of its shareholders concerning the
companys liabilities. This type is a company that is liable for its liabilities only
through its own property. The registered capital is divided among a certain
number of shares with a certain nominal value. A legal person as well as an
individual, and also the state, can become an owner of the shares a shareholder
and the number of shareholders is, in principle, not limited. This type of
commercial company has the highest minimum registered capital stipulated by
law and this must be at least to 25,000. Specific kinds of duties for this type of
company stem from the law: for example, review of the financial statements by
an auditor and preparing an annual report, while other types of companies only
must do so after meeting certain conditions.
A limited liability company (s. r. o.) is a company for which the owners are
liable for its liabilities only to the amount of their unpaid contribution to the
registered capital, registered with the Commercial Register. The fact that the
minimum sum of the registered capital is only 5,000, much less than for a joint-
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stock company while the liabilities of its shareholders are significantly limited,
makes this type of company more attractive, especially for small businesses.
Generally, it can be said that a limited liability company is the type of company
which is popular also among mid-sized and often larger businesses. Its operation
is administratively simpler when compared with a joint-stock company. Having
the financial statements approved by an auditor becomes a requirement only
after certain conditions have been met. It is also attractive due to its limits on the
liabilities of the owners for the companys liabilities, as its name implies.
Generally, it can be stated that the process of founding the various types of
companies is similar but the administration and costs associated with each
process are different. From this viewpoint, the most simple and also the
relatively easiest to administer seems to be the limited liability company which
in reality is the most common type of commercial company in Slovakia. In an
ideal case, the process of founding a limited liability company does not take
more than three weeks, which presupposes, however, that the registry court
evaluates the filed founding documents and their supplements as sufficient and
flawless.