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Slovakia Routes to Market

So you've decided to expand your business in Slovakia and researched your market. Now it's time to decide how you will register and set up the business. What is the best, most viable option for your company, your products, and yourself? Which is the path of least resistance?

Here are your typical options when expanding a business into Slovakia:

Branch Office of a Foreign Entity

This means that a foreign company can open and operate a branch in the Slovakia. They must be registered in the Commercial Register and must include details of the foreign parent entity, branch location, the scope of the business activities and names and address of the branch managers. It is important to obtain a license from the Trade Licensing office. The branch office does not have limited liability.

Joint Stock Company (a.s.)

This type of company may be set up in Slovakia by a single legal entity or by two or more people. They can be a resident or a non resident. A joint stock company breaks down into either:

1. A Public Joint Stock Company this means it has issued all or part of its shares, or has been accepted by the Stock Exchange to be traded.

2. A Private Joint Stock Company

The minimum capital required is 25,000EUR when registering in Slovakia. If there s only one founding member, a Founders Deed must be drafted and signed. If two or more people found the company, there must be a Founding Agreement. These forms are made in the form of a Notaries Deed and must be entered in the Commercial Register. The shareholders are not liable for the obligations of the company but the joint stock company is liable.

The company is made up of;

• Shareholders
• Board of Directors
• Supervisory Board

Limited Liability Company (s.r.o.)

This type of company may be set up in Slovakia by one or more people or legal individuals, and up to a maximum of 50. The founder members of the company are obliged to draw up a Memorandum of Association describing the company`s activities, partners and their shares, company representatives and details of the companys reserve fund.

There must be a registered capital of at least EUR 5000, with each partner contributing a minimum of EUR750. An application for the entry in the Commercial Register must be made within a month to 90 days of formation.

The partners are only liable for the amount of contributed capital.

Limited Partnership (k.s.)

This type of business can be started up in Slovakia by two or more people or legal entities. One partner, an active partner, is responsible for the running of the business and has unlimited liability. The sleeping partner is not responsible for the running and has limited liability. The entry in the Commercial Register must include the partners names, addresses and registered office. It must have who is the active and who is the sleeping partner and who has limited/unlimited liability.

General partnership (v.o.s.)

This type of company can be started up in Slovakia by two or more people or legal entities. All partners are entitled to act on behalf of the partnership and assume unlimited liability should any debts occur on the business. All partners names and addresses, and their registered office must be recorded in the Commercial Register. A Partnership agreement must be drawn up detailing activities of company and partners.

Licensing

Licensing is the permission for someone else to use your intellectual property rights: either a patent, trademark, trade secret, or copyright. Different types of license include:

Non-Exclusive License - A non-exclusive license implies that your intellectual property rights can be awarded to more than one licensee.

Exclusive License - A little more complex because, although the license may not be exclusive to one licensee, it may be exclusive to a geographic location, a certain product, or limited area of use. For instance, you may grant a licensee exclusive use of the rights in France, yet grant another licensee its use in Germany.

Patent License - The allowance of another party to use your patented product, design or process.

Trademark License - Trademark licensing means permission is awarded to a licensee to sell a product or service. However, the licensor retains more control in order to ensure that quality is maintained. Quality control is in place to uphold the image of the brand / product / service / licensor, and therefore sustain customer confidence and satisfaction.

Franchising In Slovakia

Franchising is the licensing out of a business name, product, technique, philosophy, trademark, etc, for a percentage of the income. Instead of setting up new outlets as part of your expansion, you license your existing business blueprint out to franchisees who then set up and manage it for you.

The benefits of franchising your business in Slovakia include: more freedom, as the franchisee takes on major responsibilities; minimal expense; lower cost and higher profits; potential for fast growth; brand building.

Disadvantages of franchising a business in Slovakia: although few, rely predominantly on your franchisees. They include: poor quality franchisees; franchisees not declaring all income; poor performance.

When considering whether to start up a franchise business in Slovakia you will need to research regulations and laws involved with the country. The Slovak Franchising Association which as founded in 1994 can help with potential opportunities.

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