Business law
Types of companies
The following types of legal entities are permitted to operate in the Republic of Lithuania:
- individual enterprise (sole proprietorship) (PĮ);
- general partnership (TUB);
- limited partnership (KUB);
- public limited liability company (AB);
- private limited liability company (UAB);
- state enterprise;
- municipal enterprise;
- non-profit organization (VŠĮ);
- agricultural company;
- co-operative enterprise;
- European company;
- European Economic Interest Grouping.
The most common method of investment in the Republic of Lithuania is through the incorporation of a private or public limited liability company (UAB or AB) under the Law on Companies of the Republic of Lithuania or acquisition of shares in existing Lithuanian companies. Still, the most popular form of doing business in Lithuania is through a UAB. A comparison of the main features of both types of companies is presented in the table below:
Requirements for the formation of business
| Requirement type | Private Limited Liability Company - UAB | Public Limited Liability Company - AB |
|---|---|---|
| Minimum authorized (share) capital | approx. EUR 2,900 | approx. EUR 43,450 |
| Maximum number of shareholders (if any) | 249 | Not established |
| Minimum number of shareholders (incorporators) | 1 | 1 |
| Liability of shareholders | Limited | Limited |
| Audit | Not mandatory | Mandatory |
| Public trading in securities | Prohibited | Allowed |
Company registration
Registration of a UAB requires taking the following five steps:
- lodging of an application for reservation of the UAB name;
- preparation of the incorporation documents;
- opening of an accumulative bank account;
- submission of documents for certification by a notary public;
- registration of the UAB with the Company Register Office.
The estimated time for incorporating a UAB is about 3 weeks after all the incorporation documents are duly executed.
Shareholders
The shareholders of AB or UAB may be Lithuanian or foreign individuals or legal entities. There are no restrictions or special encumbrances set forth in respect to foreign shareholders under the Law on Companies of the Republic of Lithuania. Lithuanian laws do not restrict in any way the participation of foreigners in the management of Lithuanian companies. Foreign citizens may be freely elected either to the supervisory council or the board or the position of CEO. However, if such foreign citizens are employed in the company (employment is mandatory only for the CEO), they must obtain temporary residence permits. Such permits are normally valid for up to one year, but for EU citizens they may be issued for up to five years (permits are renewable).
