SLOVAKIA Law and Practice Contributed by: Lukáš Michálik, Peter Makýš and Šimon Hora, Ments s.r.o.
2.2 Type of Entity The legal form of a company most commonly used in Slovakia to establish a start-up is the limited liability company, which generally has the following advantages. • Fast incorporation process – it takes approxi- mately one to three weeks to incorporate a company, depending on the speed of its inclusion in the commercial register. • Low initial costs – setting up a limited com- pany is the least expensive of all company set-up options. The minimum legally required registered capital of a company is EUR5,000. • Simple corporate governance – internal rela- tions are relatively easy to establish and, in many areas, it is possible to have the regula- tion of relationships governed by statutory provisions generally set up under the Com- mercial Code, although it is also possible to have the internal processes of a limited liability company prepared quite flexibly. • Transparency – a limited liability company is a very transparent type of entity, with publicly available information on its shareholders’ structure. If a joint-stock company is used to set up a start- up, although used much less frequently, its spe- cific characteristics include the following. • Higher capital requirements – the minimum amount of registered capital in a joint-stock company is EUR25,000. • The possibility of a more complex adjustment of the internal structure – eg, the internal bodies and their functioning (board of direc- tors, supervisory board, general meeting, and facultative committees); the internal control systems (via the supervisory board); and the possibility of issuing different types of shares for the shareholders.
• Lack of disclosure of information on the shareholders – a joint-stock company does not have a publicly accessible list of share- holders (unless there is just one sole share- holder). 2.3 Early-Stage Financing The source of early-stage financing differs from case to case. In many instances, the initial fund- ing of start-ups comes primarily from the pri- vate resources of the founders. In addition, there are several venture capital (VC) funds in Slova- kia that contribute certain amounts of money, although these resources are fairly limited, and a share of these amounts comes from public resources (eg, EU funds). Local VC funds have been fairly active in the Central European eco- system in recent years. Wealthy entrepreneurs (mostly) from the technology sector also oper- ate in Slovakia and diversify their portfolios by investing in start-ups. In addition to financially assisting start-ups through investments, these investors also often help founders with guidance and mentoring. Occasionally, family offices, wealthy individuals or even some established Slovak companies also invest in start-ups. Financing documentation has not been suffi- ciently standardised yet, and it could be depend- ent upon the subjects involved – ie, whether financing is provided by a private investor or a VC fund, etc). For smaller investments, where the investor is also often an individual investor (an angel investor), documentation is not always standardised. For larger investments, where a significant number of investors contribute to the investment round, or when the investors are larg- er and more sophisticated, experienced service providers and advisors are often also involved. In these cases, it is standard to use investment documentation that is based on that used in jurisdictions with a more developed start-up
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