Company Registration in Lithuania
Lithuania, a country of northeastern Europe, is the southernmost and largest of the three Baltic states. Lithuania was a powerful empire that dominated much of Eastern Europe in the 14th–16th centuries before becoming part of the Polish-Lithuanian Confederation for the next two centuries.
Lithuania is the biggest of the Baltic states and regards itself as the region’s economic powerhouse. Certainly, it has succeeded in attracting significant inflows of foreign direct investment, with investors encouraged by a combination of a stable economy, low inflation, low labor costs, and a liberal business environment. Corporation tax is 15%, one of the lowest rates in the EU. But investors are advised to tread carefully. If you are thinking of opening a company in Lithuania, please contact us and we will help you every step of the way.
Lithuania is a developed country, with a high-income advanced economy; ranking very high in the Human Development Index. It ranks favorably in terms of civil liberties, press freedom, and internet freedom. However, Lithuania has experienced a gradual population decline since the 1990s, with social issues such as income inequality and high suicide rates remaining a problem. Lithuania is a member of the European Union, the Council of Europe, the Eurozone, the Nordic Investment Bank, the Schengen Agreement, NATO, and OECD. It participates in the Nordic-Baltic Eight (NB8) regional co-operation format.
Types of companies
- public company (AB) is similar to a limited liability company (LLC) or joint-stock company (JSC)
A public limited liability company is the most common business vehicle for medium or large companies in Lithuania.
Authorized capital: When establishing a public limited liability company, the minimum registered capital is EUR 40,000. The minimum registered capital must be formed in a bank account; at least 25% have to be paid up. The capital is divided into shares, which may be traded or offered for sale publicly.
Founder: One or more persons can be the founder/s (shareholder/s) of a public limited liability company, and they can be both natural persons and legal entities. The founder may be a resident or non-resident of the Republic of Lithuania.
Status: A public limited liability company is considered a legal entity
Liability: The company and its shareholders have limited liability, they are liable for their obligations to the extent of the entire property. A founder or shareholder is not liable for the public limited liability company's obligation, as well as the public limited liability company is not liable for the founder's or shareholder's obligations.
Management body: The decision-making body of a limited liability company is the board with a minimum of three board or supervisory council directors. The management bodies of the company are determined by the general shareholder's meeting.
- a private company (UAB)
- The most common way to invest in the Republic of Lithuania for smaller foreign investors is to establish a private company.
Authorized capital: When establishing a private limited liability company, the minimum registered capital is EUR 2,500. The minimum registered capital must be formed in a bank account; at least 25% has to be paid up. The capital is divided into shares, which may not be traded or offered for sale publicly.
Founder: One or more persons can be the founder/s (shareholder/s) of a private limited liability company. The founder may be a resident or non-resident of the Republic of Lithuania.
Status: A private limited liability company is considered a legal entity.
Liability: The company and its shareholders have limited liability. The shareholders' undertaking is limited to the amount of the capital invested only.
Management body: A private limited liability company is determined by the general shareholders meeting, there is no requirement for board or supervisory council. The maximum number of shareholders in a private limited liability company must not exceed 250.
- general partnership (TUB) or limited partnership (KUB)
There are two types of partnership in the Republic of Lithuania. The main difference is the range of liability.
Status: Both partnerships are considered legal entities.
Liability: General partnerships have unlimited liability and limited partnerships have limited liability, which means that the limited partners are liable to the extent of their contributions, while there must be at least one General Partner with unlimited liability.
For both general partnerships and limited partnerships, there needs to be an agreement between the partners, signed by all of them and notarized.
- branch or representative Office
Foreign companies or organizations may establish their representative offices and branches. The representative office or the branch is a part of a foreign company or organization, which is situated in the territory of the Republic of Lithuania. At least one manager must reside in Lithuania.
The branch or the representative office is the unit of a legal person (foreign company) but is not a legal person.
A branch office is a structural unit of a legal person, which has its registered office and performs all or a part of the legal person's functions. The branch office can conduct trade within the scope set by a foreign company.
The representative office is a unit of a legal person, which has its registered office, and enjoys the right to perform the operations specified, i.e. to represent the interests of the legal person and safeguard them. The representative office can promote but cannot trade.
The main feature of the representative office or the branch is that a foreign company is responsible for all liabilities.
Step-by-step overview of what you need to do to start your business in Lithuania:
1. Prepare articles of association, along with the founding act/founding agreement:
You will need:
- a Lithuanian business address (required for the company registration documents);
- to appoint a general manager.
2. Reserve a temporary company name (optional)
Submit an application (form JAR-5) to the Register of Legal Entities. This name will be reserved for 6 months.
3. Open an accumulative bank account
This accumulative bank account is only used for depositing share capital. Later any bank can be chosen for operations. Minimum required share capital
4. Transfer share capital to that accumulative account
If the share capital is higher than 2500 EUR, then at least 25% must be transferred to the accumulative account (with the remaining amount paid in 12 months).
5. Notaries the founding documents at a registered notary’s office
If your country has joined the 1961 Hague Convention, your documents need to be certified by an Apostille.
In Lithuania, legalization or certification by Apostille is not required for documents issued in Russia, Ukraine, Belarus, Moldova, Estonia, and Latvia.
6. Register the company in the Register of Legal Entities
The documents may be submitted to the register only after they have been notarised
7. Convert the accumulative bank account into a settlement account
What are the main features of a public limited company?
- the most common business vehicle for medium/large companies
- minimum share capital is approx. €44,000, at least 25% to be paid up
- one or more shareholders are required in order to register a public company
- auditors required to prepare annual financial statement
- company and its shareholders have limited liability
- you must appoint a supervisory council or “board of management”
What are the documents necessary for company registration in Lithuania?
The documents an investor should prepare when registering a local company will differ based on the legal entity that he or she has decided to register in this country; however, all corporate entities, such as private and public limited companies, will require the same papers.
For these company types, investors will have to prepare a file for registration, containing the following: the application for company registration, the articles of association, any license that may be required (this can vary and it is not always a compulsory document), the minutes of the statutory meeting where the investors have decided on the registration of the company, the founding act of the company and the list of shareholders who have contributed at the incorporation of the company.
What documents are required to register a private limited company?
- incorporation agreement or act of incorporation
- the company’s articles of association
- minutes of the founding meeting
- confirmation of Lithuanian bank account
How easy is it to recruit staff in Lithuania?
- Lithuania used to be known as Soviet Silicon Valley, such as the reputation of its workforce for innovation and productivity. The Soviet era may now be over but its reputation remains intact. Lithuania’s workforce is generally young, well-educated, and highly motivated, while labor costs are among the lowest in Europe. Recruitment is straightforward – contact us if you require local help with this, as well as information on setting up a company in Lithuania
What about banking facilities?
- Lithuanian banks offer a standard range of facilities, including foreign exchange and international payments. There are no foreign exchange restrictions. You will need a local bank account if you open a company in Lithuania and we will be happy to help you with this.
Governmental plan for investments in Lithuania by 2025
According to the press release issued by the Ministry of Economy and Innovation of the Republic of Lithuania, the local government is planning to attract on the local market more investments, which will be able to create more than 20,000 new jobs in the following five years.
This means that those who want to open a company in Lithuania can benefit from multiple business opportunities, as the investment plan takes into consideration multiple industries, such as the services sector, the manufacturing sector, the ICT industry, the financial industry sector, or the life sciences sector.
Currently, the plan is to attract investors from both the neighboring countries, but also from the countries that are important investors in the local economy, such as the USA or UK. In order to be able to achieve this plan, the local authorities want to implement various reforms in key economic sectors, to create better conditions.
Thus, the regulatory framework for investments is set to include better rules, and the education system as well, but also the manner in which the country can gain foreign talent workforce is of importance. The local authorities also want to improve the rules on immigration, with the purpose of retaining the immigrants which can increase the quality of the society
.