Term
Joint-stock company
A capital company whose registered capital of at least EUR 25,000 is divided into shares. It has a board and a supervisory board, and hits the statutory audit thresholds sooner than an s. r. o.
Updated
What it means
A joint-stock company is the capital form for larger business: registered capital of at least EUR 25,000 divided into shares, a management board as the statutory body and a supervisory board as control.
A shareholder is not liable for the company’s debts, and shares transfer more easily than an ownership interest in an s. r. o. That is why companies with several investors choose it.
A classic joint-stock company differs from the simple joint-stock company mainly in strictness. The simple form was created for start-ups, with low registered capital and looser rules; the a. s. has a firmer structure of bodies, a mandatory supervisory board and tighter capital protection. Both issue shares, but they are not interchangeable, and moving between them is a change of legal form.
How it works in practice
The administration is heavier: a general meeting recorded by a notary, board minutes, a shareholder register and the statutory audit biting sooner than for an s. r. o.
In the books the difference shows in equity: share premium, a mandatory reserve fund and stricter rules on distributing profit to shareholders.
When setting up an a. s. we also settle with the client what form the share will take: book-entry or registered paper. That decides how ownership will transfer and who keeps the list of shareholders. Book-entry shares mean a relationship with the central depository and its fees; paper shares mean careful upkeep of the list inside the company.
What to watch out for
Companies convert long before they need to and then pay a notary and an auditor for nothing the form gives them. Without investors or a market listing in view, an s. r. o. is cheaper and just as credible.
The supervisory board is underrated too. Its members often treat the seat as a formality, yet they answer for carrying out oversight, and if they checked nothing for years and the board of directors caused damage, shareholders and creditors can turn to them as well. The minimum is regular minuted meetings and real access to the accounting figures.
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