Before starting a business, the Lithuanian or the foreign investors willing to open a company in Lithuania must choose the type of entity appropriate for their activity. The following types of businesses are the most popular in Lithuania: the sole proprietorships, the public limited liability companies, the private limited liability companies, the general partnerships, the limited partnerships.
Below our company formation consultants in Lithuania explain the steps required to open a company and the services you can find with us.
Incorporating a Lithuanian private limited liability company (UAB) can be rewarding for small and medium businesses as it grants high profits with small incorporation requirements. For example, for a Lithuanian UAB the minimum share capital is approximately 2,500 euros, divided into shares with nominal value and non-transferable. The liability of its members is limited by their contribution to the company’s capital. The maximum number of shareholders allowed in a Lithuanian UAB is 249. The management is assured by the general meeting of the shareholders and a director appointed by it. The UAB can have an availability period, stated in the articles of association but it is not mandatory.
A form of entity for major businesses is the public limited liability company, or the Lithuanian AB which requires a higher amount of money: close to 40,000 euros. In the Lithuanian AB there is no maximum number of shareholders. The shares of the public limited liability companies can be registered on the Stock Market. Just like in a private limited liability company, the liability of its members is limited by the contribution to the capital. Just like in the case of Cypriot businesses, the management is assured by the general meeting of the shareholders but is mandatory to also appoint a board of directors, in charge with taking the daily decisions.
The simplest form of Lithuanian business is the sole proprietorship which is formed by a single entrepreneur. The main advantages of the Lithuanian sole proprietorship are that it is not necessary to submit a minimum share capital and the whole profits can be claimed by the owner. The main disadvantage of incorporating a Lithuanian sole proprietorship is that the liability of the entity is owned by this investor so in case of bankruptcy, his/her assets can be claimed to cover the debts.
Other forms of small businesses in Lithuania. Other form of business where the liability of the owners is unlimited is the Lithuanian general partnerships which are formed by at least two individuals joined together by the same objectives under a single name (usually a combination of the general partners’ names). Just like in the case of the sole proprietorship, in case of bankruptcy the personal assets of the members are not protected.
The second type of partnership which can be incorporated in Lithuania is the limited partnership formed by at least one general partner and a silent partner. In this type of partnership, the general partner is fully liable for the entity’s actions but have the right to take all the managerial actions. At the opposite side is the silent partner which must bring a contribution and his/her liability depends on that contribution.
Foreign companies also have several types of business forms available for registration. These are:
Our company registration agents in Lithuania can help you choose the right type of entity based on the activities you want to undertake here. We can also advise on the types of licenses needed to start a business in this country.
In the beginning of company incorporation in Lithuania, the company’s representatives must open a bank account and deposit the minimum share capital in it, operation which requires one day and has as a result the issuing of a deposit certificate. Then the elected name must be checked and reserved if available. The procedure is the same in many other countries from Europe, such as Italy, and applies also when you want to start a business in the Netherlands.
The articles of association are the main documents siting at the base of each legal entity so it’s necessary to draft one and notarize it in front of a public notary. The notarized articles of association along with the certificate proving the bank deposit and the name reservation must be deposit at the Company Register.
In the same time, the managing board must submit the registration for Lithuanian State Tax Inspectorate (the Lithuanian Revenue Authority) for corporate tax, VAT, and State Social Insurance Fund Board (SODRA).
After that a settlement bank account must be opened and a company seal must be obtained in order to perform daily activities. After this last step, the newly formed company can start to operate in Lithuania.
Foreign investors who want to open companies in Lithuania must also consider the fees related to the registration of the business. Among the costs which must be taken into account are the bank account opening fee which depends on the bank, the company name reservation and registration fees which are fix and must be paid at the moment of the reservation, respectively filing of the documents with the Trade Register.
The preparation and notarization of the Articles of Association must also be taken into consideration when opening a company in Lithuania. Another cost which must be calculated is the rental contract for the legal address of the company, as it is mandatory for local companies to have registered addresses in the country.
In order to help foreign enterprisers, our local specialists can prepare personalized company formation packages which usually include:
On demand, we offer virtual office packages. The virtual office address can be used as a legal address for the company. These are usually cheaper than renting office space. Accounting services are also available for those in need of bookkeeping and payroll.
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.
For full information our company registration services in Lithuania, please contact us.
Companyformationlithuania.com is a part of Bridgewest.eu, an international network which has affiliated partners throughout the world, including French lawyers and lawyers from Lithuania which can provide local legal assistance to foreign investors.