ECOVIS Miškinis, Kvainauskas ir partneriai advokatÅ³ kontora
The common way of starting a business in the country is to establish new legal entity. Usually, the main concern for the founders of the new entity is the liability of the shareholders. In this article I shall mention the main forms of profit-seeking legal entities in Lithuania and review the registration procedure of the most popular one – the registration of a private limited liability company (in Lithuanian – uÅ¾daroji akcinÄ— bendrovÄ—, abbreviation - UAB).
Leaving aside the specialized types of legal entities, such as an agricultural company or credit union or similar, there are three main forms of profit seeking legal entities – the Individual enterprise, private limited liability company and public limited liability company. The founder of the individual enterprise may be a legally capable natural person. The liability of the founder (and owner) of the individual enterprise is unlimited. The second and most popular form of legal entity is private limited liability company, where the shareholders have no financial obligations to the company save for the obligation to pay in, in the prescribed manner, for all the shares subscribed for at their issue price.
The amount of the authorized capital of a private limited liability company may not be less than 10,000 litas (2,900 euros). The maximum number of shareholders is restricted to 250 either legal or natural persons. The shares of a private limited liability company may not be offered for sale or traded publicly. The third form is the public limited liability company. The amount of the authorized capital of a public limited liability company may not be less than 150,000 litas. Its shares may be offered for sale and traded publicly, in compliance with the legal acts regulating public trading in securities.
The registration procedure of the private limited liability company comprises the following steps:
• The articles of association of the company are drawn up.
• The founders may submit to the Register of Legal Entities an application for temporary inclusion of the name into the Register;
• The articles of association of the company entitle the opening of an savings account for the company in the bank;
• An initial contribution for the subscribed shares is paid. Initial contributions may only be paid in cash. The amount of the initial contributions must be at least 10,000 litas; each shareholder must pay at least 1/4 of the aggregate amount of the nominal value of the subscribed shares and the total share premium of the subscribed shares;
• Prior to the signature of the articles of association of the company, the valuation of the contribution in kind intended for partial payment for shares must be made by an independent property appraiser;
• The constituent meeting is convened which must approve the founder’s report of the limited liability company and elect the members of bodies of the company elected by the general meeting of shareholders. If the supervisory board is elected, it must elect the board, if any, or the manager of the company if the board is not formed before registration of the company. The elected board must elect the manager of the company.
• The statutes are drawn up and signed;
• The company is deemed to have been established upon registration thereof with the Register of Legal Entities.
Before the application for registration of the private limited liability company is submitted to the Administrator of the Register, a civil law notary must verify the correctness of the particulars entered into the application, the compliance of the statutes with the statutory requirements and the fact that the private limited liability company is eligible for registration.
Usually all the above mentioned documents and registration procedures are done by local lawyers. In such a case, the founder(s) of the private limited liability company need to participate personally only at one stage of the registration process - to sign the company documents at the notary office.