There are more than 30.000 limited liability companies and more than 1.000 joint-stock companies founded each year in the Czech Republic. Therefore, simplification of a process of founding a new company is quite a significant issue. New European Directive seeks to improve legal and technological environment with regards to the use of digital tools and processes in the commercial law.
According to a notice published by Department of Justice, a notary plays a vital role in establishing commercial companies in the Czech Republic, because they verify the identity of the founders and their will to found a company, and they also ensure the compliance of the legal processes with the law. These arguments, however, in my opinion, do not correspond with reality and are not correct.
Identity can be verified both electronically and with a verified signature. Currently, you can submit an electronic application to the government via data mail using electronic signature. There is no good reason why such an electronic procedure can’t be used to establish trading companies. Even in identifying a person by an off line method, there are other and simpler means than a notarial deed. There is an institute of verified signatures, where an identity of a signatory is controlled by an office or a public notary. If it is possible to transfer real property and to submit motions for changes in the commercial register with a certified signature, there is no valid reason why not to establish a company by using such a form of identification.
Another reason mentioned by the Department of Justice is to ensure the compliance of the legal processes with the law. While there are companies with a difficult internal legal structure (and their process of establishment will require a legal assistance of lawyers or notaries), absolute majority of limited liability companies and also significant number of one-person joint-stock companies use a very simple structure of a founding document, which is a partnership agreement or memorandum or statutes. Variables are only number of members, number of shares, number of managing directors, the existence and the number of members of the supervisory board and a few other regulations.
In the Czech Republic, there is an automated on-line system that works well and prepares a application for changes in the commercial register. An applicant enters certain data and online system will automatically generate an application that can be signed electronically or can be printed out and sent to the court with a physical signature on it. Thus, it is obvious that such a procedure can be applied also in the process of founding a company. So the alleged vital role of public notaries in such cases is very questionable and their role has become obsolete taking into account that electronic means can be used to execute the process of founding a company.