Passing a Czech family business to one child: what to plan for
A daughter works in the business and is taking over its operations. Her brother has a different career and does not want a management role. Their parent wants the daughter to inherit the shares without forcing the business to sell assets to fund an inheritance settlement. The plan has to cover ownership, management and how any amounts due to other heirs will be paid.
Identify what the parent owns and what the company owns
For a Czech limited liability company, an s.r.o., it is generally the shareholder's interest that passes through the estate. The company itself may own the building, bank account and equipment. Check the ownership structure, the articles and any relevant matrimonial property arrangements. Whether inheritance of an interest can be restricted depends on the articles and the ownership structure. Czech law does not allow the inheritance of an interest in a single-member s.r.o. to be excluded or restricted.
Make sure someone can run the business immediately
Inheriting shares does not make the heir a managing director. Check who can sign contracts and authorise payments if the founder dies. If the founder is the sole managing director and the only person authorised to operate the bank account, arrange continuity during the founder's lifetime.
Plan how to fund any amounts due to other heirs
If one child is to receive the shares, consider their value, what else is in the estate and any compulsory portion due to protected descendants under Czech law. The compulsory portion is generally a claim to a sum of money. It does not in itself make the claimant a shareholder. If the estate has little cash, address the potential shortfall while there is still time to plan. Bring the articles, ownership records, an initial valuation and your proposed ownership and management arrangements to a Czech notary.
Czech Business Corporations Act, sections 42 and 198 · Czech Civil Code, sections 1642–1654 · Czech Chamber of Notaries – Wills