Chaining of SROs still an issue

The Czech Republic is such a free country that even chaining of companies is not allowed, writes Arthur Braun of bpv Braun Partners

Expert files|Business Essentials|Companies

Guest Writer | 10.02.2012

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Chaining structures can cause problems once a due diligence is made

What does chaining mean? The provision in § 105 para. 2 Commercial Code which was introduced in 2001 and which prohibits a Czech s.r.o. to have as sole shareholder another s.r.o. (or similar legal form if it is a foreign company) with only one shareholder. Despite the almost 11 years of existence by now, thousands of Czech s.r.o. still have this illegal structure and — at least theoretically — face liquidation by decision of the Commercial Court.

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