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Slovakia |
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Slovakia Key Corporate Features
The Slovak Republic is set to become the world's next Hong Kong, a small place that's an economic powerhouse. Foreign investors are already taking note: Foreign direct investment in this country of 5.4 million people has grown from $2 billion to $10 billion since 1999. Slovakia has just introduced a 19% flat tax, for both individuals and corporations. The tax on dividends has been abolished. The government plans to chip away at the high payroll tax that funds various social programs such as health care. It is also considering ways to fundamentally reform its social security pension system, perhaps privatizing a portion of it. The work force is skilled, well-educated and stable. When people join a company in Slovakia, they want to stay until retirement. Students there have achieved some of the highest test scores in the world in math and science. And the government has recently passed new labor laws for overtime and seasonal help that are among the most flexible in Europe. Wage rates are a true bargain, about $3 to $4 an hour--only 15% of the European Union average and 11% of Germany's. Unemployment is still high, around 15%. There are plenty of well-trained, educated workers available for jobs. Living costs are also cheap--41% of the EU average. The country's central location is a major plus: 350 million people live within a day's truck drive of Slovakia. It formally joins the EU by May 1, 2004, which will not only vastly encourage commercial relations with that immense market but also provide a springboard for those wishing to do business with Russia, Ukraine and similar markets. Companies are beginning to wake up to this gem's advantages. Volkswagen produces some 300,000 cars in Slovakia. Peugeot is putting in a $750 million facility to produce 300,000 cars by 2006. Other automakers are sniffing around. Auto parts suppliers, such as Dura, Johnson Controls, Delphi and Molex, are already manufacturing there, with others ready to follow suit. It's no surprise that a number of companies with facilities in western Europe are contemplating expanding into Slovakia. Whirlpool has done just that, transferring a high-end washing machine production facility from France. An astonishing 91% of current foreign investors in Slovakia intend to increase their stakes. No nation is perfect. There is still some corruption, although
the government is making serious efforts to curb it. Retrograde
government-should-dominate-the-economy political forces haven't
given up yet. They may get a second wind because of tactical mistakes
the current regime has made in its tax reforms: It raised excise
taxes and various VAT levies because it felt obliged to match the
revenues that would allegedly be lost by moving to a flat tax. But
the economic growth generated by the flat tax would have rapidly
made up for any anticipated budget shortfall. If Slovakia remains
on its reform path, it could become the domino that pushes the rest
of the EU, particularly "Old Europe" nations Germany and
France, toward a more free-enterprise, entrepreneurial era. That
would be good news for everyone. All clients wishing to start or expand their business activities in the Slovak Republic immediately will certainly be interested in the possibility of acquiring of an already existing (ready-made) company - s.r.o. or a.s. The setup of a tailor made company is always possible, but time cosuming. The registered office need not be where the company will carry out its business, but every company registered in the Slovak Republic must have its registered office in the Slovak Republic. It a place where the company's statutory records are maintained, available for inspection and is the address where documents can be served if necessary. Branch offices, joint-stock companies, limited liability companies, limited or unlimited partnerships, cooperatives, silent partnerships, and associations are all permissible under the Slovak Commercial Code. All entities must be registered in the Slovak Commercial Register. The most common option for foreign companies is the limited liability company because it is simplest to establish and 100 percent foreign ownership and full repatriation of after-tax profits are allowed. Between 1 and 50 shareholders may form a limited liability company. Total basic capital must be at least 200,000 SK ($6,300) with minimum participant deposit of 30,000 SK each. A supervisory board is not required, but may be established. An official appraiser must value non-monetary contributions, and for certain contributions two appraisers are required. At least 30 percent of each partner's deposit and all non-monetary contributions must be paid up before the company may be entered in the Commercial Register, with the total value of these deposits amounting to at least 100,000 SK ($3,150). If the company is founded by a single entity, the foundation capital must be paid up in full. The process of handling an application for entry in the Commercial Register takes approximately 90 days. As a matter of Slovak law, the formation of a company is divided into two stages, as follows: 1. establishment; and 1.1 Establishment The establishment of a company is deemed to be the moment when the founders execute the foundation documentation. The establishment does not create a legal personality for the established company and, therefore, the company is not yet entitled to trade. However, the founders may take certain legal actions which lead to the company’s incorporation or which are connected thereto. For such action the founders bear joint and several liability, unlimited by reference to the assets of, or contribution to, the company.Documents to be executed upon the establishment of a company include: a. Limited liability company (i) Memorandum of Association or Foundation Deed; b. Joint stock company (i) Notarial Deed on Establishment; The above corporate documents can be signed either by the present representatives of the founders or by proxies under a power of attorney. Each power of attorney must be issued and signed in accordance with the applicable signatory rules of each of the founders. Regarding formal requirements applicable to powers of attorney, please refer to paragraph 1.3, “Form of documents” below. 1.2 Incorporation Incorporation is the act of the regionally competent court operating the Commercial Register deciding on the company’s entry into its records. Once the company is incorporated, it gains its corporate existence and personality, and is capable of suing and being sued. There are numerous documents to be submitted to the court prior to incorporation.a. The standard documentation required for the Trade Licence Office The standard documentation required for the Trade Licence Office is as follows:
b. Additional documentation required for the Trade Licence Office Additional documentation required for the Trade Licence Office is as follows:
c. Documents required for submission to the court (joint stock company / a.s.) For incorporation of a joint stock company, the following documents need to be submitted to the court:
d. Documents required for submission to the court (limited liability company / s.r.o.) For incorporation of a limited liability company, the following documents need to be submitted to the court:
1.3 Form of documents Each signature on a legally relevant document, such as a power
of attorney or a resolution approving an investment, must be notarised,
i.e. the notary must confirm the identity of the signatory. The
signatory’s authority should be obvious from the document
proving the corporate existence of a founder and, if not, it should
be obvious from another legally binding document executed by an
authorised signatory. Contact: info@personaloffice.com
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