Legal Q&A · Company & shareholders

Can a security right be created over a business share in an s.r.o.?

Law as at 17 August 2026

Answered by , Czech and Slovak attorney, admitted to the Slovak and Czech Bars (SAK 300422 · ČAK 19654).

Short answer

Yes, for example to secure a loan. The agreement must be written with officially certified signatures, and the security right arises only on Commercial Register entry. If the memorandum prohibits transfers entirely, the share cannot be pledged. If transfer requires general meeting consent, consent is also required for the security. The shareholder continues to exercise shareholder rights while it exists.

Can a business share be used as security?

A business share has economic value and can therefore secure a loan or another claim. Section 117a of the Commercial Code permits this and otherwise refers to the general rules on security rights.

What form must the security agreement take?

The agreement must be written with officially certified signatures (Section 117a(2)). Unlike a business share transfer agreement, whose form was tightened from 17 August 2026 to a notarial deed or lawyer-authorised agreement, certified signatures remain sufficient for a security agreement. The security right itself arises only on Commercial Register entry. Before then, it has not been created. Either the secured creditor or security provider may apply for registration or removal.

A business share cannot be pledged if the memorandum prohibits its transfer entirely. If transfer is possible only with general meeting consent, consent is also required to create the security right; without it, the right does not arise. No further general meeting consent is required when the security is enforced and the share sold. Likewise, any other transfer condition in the memorandum must also be met when the security is created.

Who makes decisions while the security exists?

For shareholder and creditor alike, the key point is that the shareholder continues to exercise participation rights, including voting, rather than the secured creditor. We prepare the agreement, any general meeting consent and Commercial Register entry. Transfer and security rules should be clarified in the memorandum of association so that a later share transfer or enforcement does not encounter obstacles.

This answer provides general information on the law as at 17 August 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.

More legal questions

All questions and answers
  1. What is a simple joint-stock company, and who is it suitable for? A simple joint-stock company (j. s. a.) is a capital company aimed mainly at startups. Share capital starts at €1, even a single individual can establish it, and it issues shares, including shares with special profit, voting or information rights. It requires a notarial deed, full payment of capital before incorporation and an issue of book-entry shares through the Central Securities Depository.
  2. An investor wants drag-along and tag-along rights in the agreement. What do they mean? Drag-along is a right to require a share transfer: when selling the company, the majority shareholder can require the minority to sell too, so the buyer acquires the whole company. Tag-along is the corresponding minority right to join a sale on the same terms. Both have statutory rules for a simple joint-stock company and can be registered to bind legal successors. In an s.r.o., they operate only contractually.
  3. I am transferring my share to my brother. Do I need the other shareholders’ consent? No. The fact that the acquirer is a close person, such as a brother who is also a shareholder, does not change the consent requirement. Transfer to another shareholder normally requires general meeting consent unless the memorandum provides otherwise. The Civil Code’s pre-emption exception for close persons does not apply to business shares; their transfer is separately regulated by the Commercial Code.
  4. Can several people own a single business share? Yes. A single business share may belong to several people, such as multiple heirs or co-investors. They may exercise its rights only through a common representative and are jointly and severally obliged to pay the capital contribution. The common representative and details of all co-owners are entered in the Commercial Register.

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Mgr. Patrik Tulinský, LL.M. Czech and Slovak attorney · SAK 300422 · ČAK 19654

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