While the economy has made great strides since the Czech Republic joined the European Union two years ago, the country still needs to work on fine-tuning its tedious and time-consuming registration procedure for new businesses.

After the procedure received criticism from many local and foreign organizations, the Chamber of Deputies passed legislation in July 2005 in an effort to make it simpler and faster. Unfortunately, there haven't been many significant results. While getting a new firm registered in most EU countries is typically done in a matter of days, it can take several weeks, if not months, to accomplish the same thing in the Czech Republic.

These days, more and more business owners are avoiding the bureaucratic red tape and instead jump-starting their ventures through ready-made companies. These companies — sometimes called "off-the-shelf" — are basically pre-established corporations that have already gone through all the paperwork. This market has been steadily growing since 2001, when firms selling ready-made companies first appeared on the scene.

In order to fully understand the advantages of ready-made companies, all you have to do is take a look at the mound of legal requirements needed to form a corporate entity in the Czech Republic:

The company (limited-liability or joint-stock) is incorporated by the signature of the Memorandum of Association signed by all incorporaters in front of a notary public.

Each company must have a registered office and show proof of occupancy by providing a rental agreement or consent form signed by the owner of the premises. This registered office cannot be a post-office box or temporary address serving only for registration purposes.

The government doesn't allow companies to open unless they can show they have funds in an established Czech bank account. The amount needed varies depending on the type of business. For example, in the case of a limited-liability company, the price is 200,000 Kč ($9,100).

nIf the company intends to do commercial activity, it must define and register the nature of its business (business activity) and obtain a trade license that corresponds with that type of business. A trade representative must also be appointed, and that person must be in a contractual relationship with the company.

The director or owner of the new company may be a foreigner but must have a "clean" police record in both the Czech Republic and his or her native country. A police record from the native country must be certified and translated into Czech by a certified translator.

According to new legislation, registering a new company should take no longer than five days. If any of the necessary documents are incorrect or missing, the application is rejected. Getting all necessary documentation usually takes between four to eight weeks.

Given all this, it is not surprising that many business owners choose to buy a ready-made company instead of forming a new entity. They benefit in the sense that a director is immediately appointed to the new company based on a decision made at a general meeting of company shareholders. The new director can then act on behalf of the acquired ready-made company immediately.

Acquisition of a ready-made company is simple:

The client contacts a ready-made firm and chooses one from a list of available companies. (A ready-made firm takes care off all the pre-registration paperwork for the clients.)

In order to make the necessary changes to the company being acquired, the client must provide the firm with the new company's name, registered office, the names of its directors and nature of the business.

The firm will then prepare relevant documentation, which includes a transfer-of-shares agreement.

A general meeting is called to appoint the clients as the "new directors" of the company. Up to this point, the firm is considered the legal "owner" of the ready-made company.