Lithuania Company Formation
Lithuania officially the Republic of Lithuania is a country in Northern Europe. One of the three Baltic states, it is situated along the southeastern shore of the Baltic Sea, to the east of Sweden and Denmark. It is bordered by Latvia to the north, Belarus to the east and south, Poland to the south, and Kaliningrad Oblast (a Russian exclave) to the southwest. Lithuania has an estimated population of 2.9 million people as of 2015, and its capital and largest city is Vilnius. Lithuanians are a Baltic people.
The official language, Lithuanian, along with Latvian, is one of only two living languages in the Baltic branch of the Indo-European language family.
The Northern European country Lithuania is one of the best destinations for the foreign investors. Lithuania is member of the NATO, EU and the Schengen Agreement and this fact is granting it advantageous fiscal policy. The main advantages of doing business in Lithuania is the well trained workforce at low costs, excellent infrastructure (in 2011 Lithuania was placed on the first place in the top of the internet download speed and second in the top of the Internet upload speed), the richness of the natural resources (especially oil and natural gas), special economic measures taken for the technology investors.
Business Entities and Formation of Company in Lithuania
Depending on possibilities, an entrepreneur may open a number of types of companies in Lithuania. The most popular forms are: sole proprietorship (PĮ), public limited liability company (AB), private limited liability company (UAB), general partnership (TUB) and the limited partnership (KUB).
The sole proprietorship is formed by one single unlimited liability person. There is no minimum share capital request. In order to open a sole proprietorship here are the steps that must be followed: company name reservation at the Public Institution Register Centre, notarize the Articles of Incorporation, submit the notarized documents at the Public Institution Register Centre, make a company seal, register at the Tax-Payer at State Tax Inspectorate no longer than 5 days after the registration.
Private Limited Liability Company
If an investor has available approx. 2900 Euro, he may open a private limited liability company. The UAB may be formed by one single shareholder with limited liability on debts and profits. Here are the main steps an entrepreneur must follow before opening a private liability company: reservation of the name at the PIRC, signing the Constitutive Act if there is only one shareholder or the Memorandum of Association for several members, open a bank account and deposit the minimum share capital of approx. 2900 Euros, submit the Articles of Association at the PIRC after notarization, make a company seal, apply for the taxes no longer that 5 days after receiving the statement of registration.
Public Limited Company
With a higher share capital, the investors may open a public limited liability company.
There is no limit in the number of the shareholders and the minimum share capital that has to be deposited is around 43,450 Euro, converted into freely transferable shares. The members’ liability is up to their contribution. All the important decisions are taken by the General Meeting of the Shareholders and a Board of Management must be appointed.
The general partnership is based on a signed Agreement between two or more partners with equal liability and contribution. It has the main advantage it is not based on a minimum share capital. The general partner’s agreement must contain the following: the name of the partnership, information regarding the members, information regarding headquarters, the type of business, procedure regarding the covering of the incorporation costs, the amount of contribution of each member, time of expiration when it is a temporary company, the date of signing the agreement. It must also contain information regarding the procedures of transferring the shares, on accepting new partners and regarding the opening of subsidiaries.
A limited partnership is formed by two or more members with different roles in the company, according to their financial contribution. There are the limited liability partners and the general partners with no limited liability and decisional power in the company. An agreement must also be signed. The name of the general partner and the limited partner must be underlined in this document. There is no minimum share capital request.
Enterprises including foreign enterprises may establish their branches for performing some elected or all function. It should be noted that the branch office does not has the status of an independent legal person.
Representative offices or any other organizations registered in Lithuania are governed by the law of the Republic of Lithuania.
Representative office of a legal person is a unit of a legal person, which has its registered office, enjoy the right to perform all operations specified below. Representative office of a legal person shall have the right to represent the interests of the legal person and to safeguard them, to enter into contracts as well as perform other operations in the legal person’s name, to conduct import and export operations exclusively between foreign legal persons and other organizations’, which have established the branch office or related enterprises, institutions or organizations’ and the branch office. Representative office of a legal person is not a legal person.
Upon registration of a representative office a foreign legal person or other organization must notify the Register of legal persons about the alterations of legal person’s documents and data filed with the Register as well as about the legal status of a legal person. Before the application for registration of the representative office of foreign legal entities is submitted to the Administrator of the Register, the 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 representative office of foreign legal entities is eligible for registration.
Company Formation of Lithuania
The initial step is to conclude the act of establishment of the company. Temporary bank account is opened and an initial contribution for the subscribed shares is paid. The amount of the initial contributions must be at least 2500 EUR.
The articles of association of the company are drawn up and approved by the notary and the necessary management bodies in the company are appointed;
The company is deemed to have been established upon registration thereof with the Register of Legal Entities.
All the documents must be submitted to Center of Registers in Lithuanian language. According to local laws, the translation of documents can be made only by a certified translator. Approximate cost for one page translation is 20-25 EUR/page; approximate cost for the translation of Company setup documents is 290EUR.
The list of the main documents and information for company incorporation in Lithuania are:
- Data on the company director and the board members (forenames, surnames, identification numbers, dates of birth, residence addresses and passports copies); Data on the establisher of the company (in the case of the establisher being the legal person (company) – extract from Center of Registers on the company;
- Legal address of the company in Lithuania;
- Information on the Bank preferences;
- Act of Establishment;
- Articles of Association;
- Establishers Decision;
- Certificate from the bank which proves that the initial share capital of EUR 2500 have been paid.
Also please be aware that the availability of the name of the legal entity must be checked prior to registration.