Deed of foundation

What it means

A deed of foundation is the founding document of a single-member s. r. o. It contains what articles of association do: name, seat, scope of business, contribution, bodies.

When a second member joins, the deed becomes articles of association. That is no formality: it is the moment to set the rules of working together that nobody needed before.

A deed of foundation is a unilateral act of the founder, not an agreement between parties. That is why, unlike articles of association, it must take the form of a notarial deed, and its rules bind no one but the sole member and the company itself. Rules on relations between members are naturally absent, as there is no one to set them between.

How it works in practice

With one member, that member exercises the general meeting’s powers and decides in writing. The decisions are kept: on amending the deed they accompany the registration filing.

Changing fundamental details needs a notarial deed and a register entry. The consolidated text is filed in the collection of deeds and is public.

When a single founder sets up an s. r. o., we check that the scope of business in the deed matches the trades being notified and that the contribution and the contribution administrator are stated correctly. Fixing a mistake after registration means another notarial deed, another register filing and another fee, so the text is worth checking before signing.

What to watch out for

A sole member who is also the director often forgets they are contracting with themselves: a loan, a lease, a directorship agreement. These must be written and on arm’s length terms.

The deed often says nothing about what happens to the ownership interest if the sole member dies. The interest passes to the heirs, but until probate ends nobody can exercise the general meeting’s powers. If the member was also the only director, the company is left without any management for months.