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Capital Stock

Capital stock is a part of own capital of a company.

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It is the aggregate value of monetary and non-monetary deposits paid by the company's owners. The capital stock is created at the founding of the company and usually it remains unchanged. The creation of the capital stock is required by law for limited liability companies, joint stock companies, limited partnerships and cooperatives. The minimum amount for limited liability companies (Ltd.) is only 1 CZK since 2014, for joint stock companies (Inc.) it is at least 2 million CZK.

Capital is related to financing of corporations and the ways in which a company would raise funds for its development and investments. The capital value is divided into own financial resources and liabilities.

Own resources include the resources that the company acquires by its activities (net profit), as well as those coming from the members (cash and non-monetary deposits, eg. the ones that members make in order to meet deposit obligations) and special contributions for which the company provides no consideration.

Liabilities are sources acquired from third parties; especially bank loans. Liabilities, unlike own resources, represent an obligation. After some time, the company will have to return these sources and pay the interest.

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