LITHUANIAN GOVERNMENT PLANS TO CREATE A NEW LEGAL FORM – SMALL PARTNERSHIP

ECOVIS Miškinis, Kvainauskas ir partneriai advokatų kontora

The Lithuanian government has recently confirmed the conception of a new legal form of company – Small Partnership (SP). It is hoped that the new legal entity will accelerate the startup of small and medium businesses.
Currently there are two types of forms of active legal entities dominating in Lithuania: the Private Limited Liability Company (PLLC, 56 percent) and the Individual Enterprise (IE, 19 percent). Together these two legal forms constitute 75 percent of all active Lithuanian legal entities.

The new form (SP) should fill the niche between the PLLC and IE, and it should be used for small or family businesses. The procedures of activity and accounting for the SP should be simpler than those for the PLLC.
The basic difference from the PLLC will be the absence of a minimum share capital, but the SP will have limited liability (this will differentiate it from the IE). Members of an SP should be allowed to divide the profit in advance (not only once a year, like the shareholders of PLLC). SP should also have simplified management.

The most appropriate legal form for doing business in Lithuania can be chosen after consulting with professionals on the responsibility, taxation, management and other issues of planned business activity.