General Information

The dissolution of the Austro-Hungarian Empire at the close of World War I allowed the Slovaks to join the closely related Czechs to form Czechoslovakia. Following the chaos of World War II, Czechoslovakia became a Communist nation within Soviet-ruled Eastern Europe. Soviet influence collapsed in 1989 and Czechoslovakia once more became free. The Slovaks and the Czechs agreed to separate peacefully on 1 January 1993. Slovakia joined both NATO and the EU in the spring of 2004.

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 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.

Slovakia has mastered much of the difficult transition from a centrally planned economy to a modern market economy. The DZURINDA government made excellent progress during 2001-04 in macroeconomic stabilization and structural reform. Major privatizations are nearly complete, the banking sector is almost completely in foreign hands, and the government has helped facilitate a foreign investment boom with business friendly policies. Foreign investment in the automotive sector has been strong. Slovakia's economic growth exceeded expectations in 2001-06 despite the general European slowdown. Unemployment, at an unacceptable 18% in 2003-04, dropped to 10.2% in 2006 but remains the economy's Achilles heel.

Company Information

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 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 1000,000 SK. 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.

Compliance

As a matter of Slovak law, the formation of a company is divided into two stages, as follows:

1. establishment; and
2. incorporation.

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;
(ii)	Articles of Association (although these are not mandatory for an s.r.o. - all relevant facts could be included in the Memorandum of Association).

b. Joint stock company

(i)	Notarial Deed on Establishment;
(ii)	Memorandum of Association or Foundation Deed;
(iii)	Articles of Association.

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:

(I)	a filled-in form of the Trade Licence Office;
(II)	corporate documentation proving the establishment
of the company; and
(III)	an extract from the criminal records of:

-	the director (if a simple trade is applied for or when the director is the same person as the responsible representative);
-	the director and the responsible representative (if a specific trade is applied for and the director is not the same person as the responsible representative).

b. Additional documentation required for the Trade Licence Office

Additional documentation required for the Trade Licence Office is as follows:

(I)	documents proving the director's/responsible representative's qualification (usual documents include: graduation certificate, confirmation of professional practice, certificate of specific examinations);
(II)	a copy of the long-term residence permit/permanent residence permit for the director/responsible representative (if applicable) unless the director/ responsible representative is a citizen of an EU/OECDMember State; and
(III)	an extract from the criminal records for the home jurisdiction of the director/responsible representative (if applicable).

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:

(I)	an application for the incorporation;
(II)	the Memorandum of Association or the Foundation Deed;
(III)	the Articles of Association;
(IV)	the decision made by the Supervisory Board regarding the election of the Board of Directors, if the Supervisory Board of the company elects the Board of Directors according to the approved Articles of Association;
(V)	the declaration of the founder nominated to administer the founders' contributions (or a bank) that the agreed amount of contributions to the registered capital is paid up;
(VI)	corporate documentation proving the corporate existence of each of the founders and establishing the signing rules;
(VII)	corporate decisions of all founders' authorities who are competent to decide on the relevant investment (e.g. Board of Directors, Supervisory Board or in some cases even the General Meeting);
(VIII)	specimen signatures of the directors;
(IX)	copy of the long-term residence permit/permanent residence permit for the executive members of the Board of Directors (if foreigners) unless the executive members are citizens of an EU/OECD Member State; and
(X)	trade licence.
If the company is founded upon a call for subscription of shares, the following additional documents must be attached to the application for incorporation:
(XI)	the call for subscription of shares in the published version, together with a document proving its publication;
(XII)	subscribers' list, or counterparts, or copies of the written expression of the will of the subscribers; and
(XIII)	Notarial Deed from the Constituent General Meeting.

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:

(I)	application for incorporation;
(II)	the Memorandum of Association or Foundation Deed;
(III)	the declaration of the founder nominated to administer the founders' contributions (or a bank) that the agreed amount of contributions to the registered capital is paid up;
(IV)	corporate documentation proving the corporate existence of each of the founders and establishing the signing rules;
(V)	corporate decisions of all founders' authorities competent to decide on the relevant investment (e.g. Board of Directors, Supervisory Board or in some cases even the General Meeting);
(VI)	specimen signatures of the directors;
(VII)	a copy of the long-term residence permit/permanent residence permit for the executive members of the Board of Directors (if foreigners) unless the executive members are citizens of an EU/OECD Member State; and
(VIII)	the trade licence.

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. Each document in a foreign language needs to be accompanied by an official translation into Slovak.