s.r.o. is the most common acronym for společnost s ručením omezeným, which translates to a Limited Liability Company (LLC). It is the most widespread form of a capital business corporation in the Czech Republic. Its key feature is limited liability, which means that its members (owners) are liable for the company's obligations only up to the amount of their unpaid contributions to the registered capital. The personal assets of the members are thus separate and protected from the company's potential debts.
To establish an s.r.o., it is necessary to draft a memorandum of association (or a founder's deed in the case of a single founder), pay up the registered capital (a minimum of CZK 1 per contribution), and register the company in the Commercial Register. The statutory body that acts on behalf of the company is one or more executive directors (jednatel). An s.r.o. is an independent legal entity, which allows it to own property, enter into contracts, and be a party in legal proceedings. Thanks to the combination of a relatively simple setup and the protection of personal assets, it is a very popular form for small and medium-sized businesses.
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