OPEN A COMPANY IN LITHUANIA
AND START A BUSINESS IN EUROPE
The European Union is considered by many entrepreneurs as one of the best regions for business expansion and tax optimisation. To start your business in the EU, it is worth considering establishing or acquiring a company in Lithuania. The current list of ready-made companies is available here.
Advantages of doing business in Lithuania
ACTIVITIES OF FOREIGN STARTUPS THAT ARE POPULAR IN LITHUANIA:
PRICE OF SERVICES
Registration / sale of a new or established company, branch
Sale of an established company (full set of documents)
Company‘s legal address
Purchase in normal order with a notary / in urgent order without a notary
Submission of documents to the Center of Registers
Sale of an established company (full set of documents)
Company‘s legal address
Purchase in normal order with a notary / in urgent order without a notary
Submission of documents to the Center of Registers
Stamp
Consultation on opening a bank account
Financial and legal consultation
Company registration and full support of your business!
The most popular legal forms of business companies
Starting a business in Lithuania is really very favourable, all the advantages are outlined above. The next step you should think about is choosing a legal form for your future company. There are not so many legal forms of business companies in Lithuania, each of them has its own advantages and disadvantages.
In order to make the right choice of legal form for your company, it is important to determine your plans, objectives of future activities. Below are the possible legal forms of a company that may be registered in Lithuania.
One of the most popular forms of legal entity with limited liability, in which the members own shares in the company, but these shares are not traded on the open market and usually cannot be freely sold or transferred to others without the consent of the members (shareholders) of the company. A Private Limited Company (UAB) is a popular form for small and medium-sized enterprises.
The main characteristics of a Private Limited Company include:
- Limited number of shareholders: UAB may be established by one or more natural persons and/or legal entities, but there may be up to 2 of them.
- Limited tradability of shares: Shares of UAB are usually not freely tradable on the open market. Transfer of shares to other persons often requires the consent of existing shareholders or appropriate conditions set out in the Articles of Association of the company.
- Limited liability of members: Members (shareholders) of UAB are liable only to the extent of their contribution in the company’s authorised capital. Their personal property is not exposed to the risk associated with the debts and liabilities of the company.
- Authorised capital: UAB is obliged to have an authorised capital, which is divided into shares. The authorised capital can be used to finance the business and fulfil liabilities.
- The minimum authorised capital must be at least EUR 1,000.
- Organisational structure: Usually UAB may have a management body, such as a board of directors, which makes strategic decisions and manages the company.
A Small Partnership (MB) is a form of business organisation with limited liability, i.e. its members are not liable for unfulfilled obligations with their personal property. It is a popular form for small and medium-sized enterprises. The law does not set the amount of members’ contributions to the Small Partnership, they are set by the members themselves. This form is very similar to the Private Limited Company (UAB). Both legal forms are governed by the same laws.
The main characteristics of a Small Partnership:
- Limited number of members: A Small Partnership may have a limited number of members, which is determined by Lithuanian legislation. Usually it is not more than 10 persons (only natural persons).
- Liability of the members: The members of the Small Partnership shall be liable only to the extent of their contributions in the company.
- Authorised capital: The minimum initial contribution to a Small Partnership is EUR 1.
- Management: A Small Partnership is managed by its members (founders) or an appointed director. Important decisions, such as amending the Articles of Association or winding up of the company, may require the consent of a majority of the members.
- In a MB, a member can be appointed as a director, but the director is not employed (he/she works on the basis of a civil law contract for the provision of management services). Only the minimum social security tax is paid for the director.
- Activity restrictions: A Small Partnership may engage in any commercial and entrepreneurial activity (like UAB).
- Accounting and reporting: A Small Partnership must comply with accounting and reporting requirements, provide financial information and fulfil tax obligations (like UAB).
An Individual Enterprise is a legal entity with unlimited liability, i.e. the owner is liable for unfulfilled obligations of the Individual Enterprise with its personal property. This form of business organisation is popular among freelancers and small businesses. An Individual Enterprise is managed by a director – chief executive, who is the owner of the company, or another person can be appointed as a director – chief executive.
The main characteristics of an Individual Enterprise:
- Individual Enterprise: IĮ (Individual Enterprise) is owned and managed by one person. The owner of the Sole Proprietorship is its main and only founder.
- Unlimited liability: The owner is personally liable for all the obligations of the company. This means that his/her personal property is at risk in case of failures or debts of the Sole Proprietorship.
- Simple registration: The IĮ registration process is usually quick and does not require a lot of paperwork. It is usually sufficient to submit a few documents to the tax office.
- Limited capital: The owner of the Sole Proprietorship is not required to contribute share capital as is required for the establishment of legal entities of other legal forms (such as UAB, MB, AB).
- Simplified accounting: IĮ can apply a simplified accounting system, which makes it easier to keep financial records.
- Self-management: The owner of the IĮ makes all decisions and manages the company independently. He/she does not have to coordinate his/her actions with other members or shareholders.
Joint stock company (AB) is a publicly traded company. It is required publicly to disclose its activities and has stricter accounting and reporting requirements. This form is most often used for large enterprises that are going to conduct public share offerings. In Lithuania, the minimum authorised capital for a Public Limited Company is EUR 25,000. The number of shareholders is unlimited and shares can be traded publicly. The management body of the Public Limited Company is a director, chief executive or board of directors. Liability is limited, i.e. its sharers (shareholders, owners, members) are not liable for the obligations of the Public Limited Company with their personal property.
The main characteristics of a Joint stock company:
- Authorised capital: A Public Limited Company is required to have an authorised capital, which is divided into shares. The authorised capital determines the financial basis of the company and can be used to cover debts and investments. In some jurisdictions there may be a minimum required amount of the authorised capital.
- Limited liability of members: Members (shareholders) of AB are liable only to the extent of their contribution in the company’s shares. Their personal property is not at risk related to the debts and obligations of the company.
- Trading of shares: Shares of AB may be sold, transferred or acquired by others on the open market or through private transactions. This ensures the liquidity of the shares and the possibility of attracting new investors.
- Board of Directors: AB is obliged to have a Board of Directors or a similar management body. The Board of Directors manages the company’s activities, makes strategic decisions and hires executive directors.
- Accounting and reporting: AB is required to comply with accounting and reporting legislation, provide financial information and fulfil tax obligations.
- Public or Closed Companies: Public Limited Companies can be public or closed. Public AB may offer their shares to the general public and often have stricter reporting and transparency requirements than closed companies.
- Stock trading: Some ABs may have shares that are traded on stock exchanges, which provides access to additional sources of funding and increases the visibility of the company.
The process of registering a company in Lithuania includes the following main steps:
- Choosing a legal form. First you need to decide which legal form suits your business. In Lithuania, such forms as UAB (Private Limited Company), MB (Small Partnership), IĮ (Individual Enterprise), etc. are common. Each of them has its own peculiarities and requirements.
- Choosing the name of your company. The name should be checked in several information databases – Lithuanian, European Union and international. The name should not be used or too similar to the names of other companies or trade marks. It is advisable to prepare several possible variants at once and consult us.
- Determination of the capital structure. Laws set requirements for the authorised capital for companies of all legal forms. If, for example, UAB (Private Limited Company) is established, it is necessary to determine the capital structure, including the number of shares and their par value.
- Drawing up of incorporation documents. In the process of establishing a company, it is necessary to draw up incorporation documents, such as Articles of Association or Regulations or minutes of the management body (depending on the choice of legal form of business organisation). The requirements for incorporation documents are set out in the Republic of Lithuania Law on Companies and the Republic of Lithuania Law on Small Partnerships. In addition to other information, the articles of association should specify the types of the company’s activities.
- Legal address of a company in Lithuania. The company is not obliged to be located or conduct business at this address, however, the written consent of the owner of the premises is required to register the company at this address in Lithuania. A company may use a different address to conduct business, but it must be notified by filling in a special form. If there is a need, we can offer you the service of providing a legal address.
- Providing information about the shareholders of the company. If the shareholders of the company will be natural persons, we need to provide a copy of their passports, address of their residence, telephone number and e-mail address for registration of the company. If the shareholders will be 2 or more persons, we need information about their shareholdings in percentage ratio. If the shareholder will be a legal entity(ies), we need to provide an extract of the shareholder from the State Register, the Articles of Association, a copy of the director’s passport, his/her residential address, telephone number and e-mail address.
- Providing information on the director of the company to be established. It is necessary to provide a copy of the director’s passport, his/her residence address, telephone number and e-mail address.
- Drawing up of the Memorandum of Association. Next, it is necessary to draw up a Memorandum of Association, which must contain all the necessary and legally required clauses.
- Formation of the authorised capital. The next step is to open a cumulative account in a bank, into which the amount of the authorised capital must be deposited. The requirements for the amount of the authorised capital differ depending on the choice of legal form of business organisation.
- Company registration with the Centre of Registers. The next step is to fill in and submit all the necessary legal forms for company registration with the Centre of Registers.
- Receipt of registration documents. After successful registration, you will be issued official registration documents, including an extract from the register, registration certificate and other necessary documents.
- Registering a company with public offices. After completing the registration of your company, do not forget to register your company with the Lithuanian State Tax Inspectorate (VMI) and the Lithuanian State Social Insurance Fund Board (Sodra). Our accountants will assist you with this. More information about this service can be found on our website: ACCOUNTING SERVICES IN LITHUANIA | InLegal PRO
- Opening a company bank account. The next step is to open a bank account for your company. We can assist you with this. We can offer our assistance in opening an account both in Lithuania and Poland. More information about this service can be found on our website: OPEN A BANK ACCOUNT IN LITHUANIA | InLegal PRO
Alternative solution
ACQUIRE AN ESTABLISHED COMPANY
On the other hand, in order to avoid the procedure of registering a new company, it is possible to open a company in Lithuania in another, faster way. You can contact our specialists and acquire an established, registered company in Lithuania with a minimum authorised capital. You will be able to start your activity immediately after the purchase. Each company can conduct any type of activity (this is already prescribed in advance when registering).
When you acquire a new company from us, you get a full package of documents, legal address, company seal. All documentation can be signed either at our office or remotely.
If necessary, it may be necessary to change the name of the company, increase the authorised capital or make other changes. All these procedures are not very complicated and can be carried out by specialists in a fairly short time.
