What is the main source of law authorising this entity form?

The main sources of law authorizing the establishment and operation of a private limited liability company in Lithuania are the Civil Code and the Law on Companies of the Republic of Lithuania. This legal framework outlines the requirements and procedures for the formation, management, and operation of private limited liability companies.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

Separate Legal Personality: a private limited liability company is a legal entity that possesses a separate legal personality. This means that the private limited liability company is recognized as a distinct legal entity, separate from its shareholders. It can own property, enter into contracts, and be a party to legal proceedings in its own name.

(Maximum) period of existence

Maximum Period of Existence: a private limited liability company is established for an indefinite period unless specified otherwise in the Articles of Association. There is no maximum period of existence stipulated by law, allowing the company to operate perpetually unless the shareholders decide otherwise or if it is dissolved or liquidated.

Governing document(s)

Governing Documents: the primary governing document of a private limited liability company is its Articles of Association (Įstatai), which outline the company's purpose, share capital, organizational structure, rights and obligations of shareholders, and other essential operational details. The Incorporation Act or Agreement (Steigimo aktas arba sutartis) is another key document executed by the founding shareholders to formalize the company's establishment.

Liability of incorporators / shareholders

Liability of Incorporators/Shareholders/Members: the liability of the shareholders in a private limited liability company is limited to the amount of their contributions to the share capital. This means that shareholders are not personally liable for the company's debts and obligations beyond their investment in the company. The private limited liability company structure provides protection against personal liability, safeguarding the personal assets of its shareholders.

(Governing) bodies

Governing Body or Bodies: typically involves these main bodies:

• The General Meeting of Shareholders: The supreme body, where shareholders exercise their rights, make key decisions, and approve essential matters such as profit distribution, amendments to the Articles of Association, and election of the Board. Although it is the highest authority within the company, it is not a governing body.
• The Supervisory Board: Although the Supervisory Board is often not elected, it is a collegiate supervision body that oversees the company's activities. The Supervisory Board is chaired by its chairman and is elected at the General Meeting of Shareholders. The Supervisory Board is responsible for reviewing and approving the company's business strategy, analyzing and assessing its implementation, and reporting this information to the Annual General Meeting of Shareholders. Additionally, the Supervisory Board elects and, if necessary, removes members of the Board (or the Manager of the Company if no Board is formed). If the company operates at a loss, the Supervisory Board must evaluate whether the Board members (or the Manager of the Company) are suitable for their roles. It also oversees the activities of the Board and the Manager of the Company.
• The Board: While it is not mandatory for all private limited liability companies, the Board is a governing body and it may be elected to oversee the company's strategic direction and management. The Board, if established, is responsible for the strategic management of the company. Its duties include setting business goals, overseeing the Manager's activities, and ensuring the company’s compliance with legal requirements.
• The Manager of the Company: the company must have a manager acting as the head of the company, who performs these duties if the Board is not established. The Manager of the Company may be only a natural person and must be employed by the company. This single person governing body is responsible for the day-to-day operational management of the company. Key responsibilities include executing the decisions of the General Meeting of Shareholders and the Board, representing the company in external relations, managing the company's resources, and ensuring the smooth execution of business operations.

Other particularities

Other particularities of note:

• The minimum share capital required to establish a private limited liability company is EUR 1,000. This capital must be fully paid up before registration.
• Shares in a private limited liability company are not freely transferable, as opposed to a public limited liability company. The transfer of shares is usually subject to the preemptive right of other shareholders and/or to other restrictions outlined in the Articles of Association or the shareholders’ agreement, if any.
• A private limited liability company cannot offer its shares to the public, distinguishing it from public limited liability companies (AB), which can list shares on the stock exchange.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

Yes, a private limited liability company can participate in international transactions and restructurings, including cross-border mergers, asset acquisitions and divestitures, equity acquisitions, and conversions. In accordance with the Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions, which has the force of law in the Republic of Lithuania, a private limited liability company can engage in cross-border mergers with other companies registered in EU member states. A private limited liability company is permitted to engage in other international transactions, including the acquisition and disposal of assets and equity. In addition, one of the solutions to facilitate international activities is known as a European Company (Societas Europaea) that is available under the Council Regulation (EC) 2157/2001 of 8 October 2001 on the Statute for a European company (SE) and the Law on the European Companies of the Republic of Lithuania.

Accordingly, a private limited liability company is fully empowered to engage in various forms of international transactions and restructuring activities, in accordance with both Lithuanian national law and the law of the European Union.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

A private limited liability company in Lithuania cannot have its shares publicly traded. The shares of a private limited liability company are not eligible for public sale or trading on the stock exchange. This restriction is specified in the legal framework governing private limited liability companies in Lithuania, which mandates that the shares of a private limited liability company are managed through personal securities accounts, either by the company itself or by an external securities account manager. The issuance of shares to the public is therefore prohibited, and any sale of shares must adhere to private sale regulations, including the preemptive rights of existing shareholders.

Can this type of entity be used for a non-profit or charitable organization?

A private limited liability company in Lithuania cannot be used as a non-profit or charitable organization. This type of entity is structured for profit-making purposes, allowing for the distribution of profits among shareholders. For non-profit activities, alternative legal forms such as public institutions (Viešoji įstaiga, VšĮ) or associations (Asociacija) are typically used, as these entities are specifically designed to operate for non-profit purposes and are subject to different legal requirements.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

Incorporation Act or Agreement (Steigimo aktas arba sutartis): signed by the founding shareholders, outlining the terms of the company's formation.

Articles of Association (Įstatai): the foundational document detailing the company’s name, purpose, share capital, structure, and other essential details.

Proof of Share Capital Deposit: a document from a credit or e-money institution confirming that the required share capital has been deposited in the cumulative account of the company.

Consent for the registered office: a document signed by the owner of the premises where the legal entity’s address will be registered. This consent authorizes the legal entity to use those premises as its registered office address. The consent of the mortgage holder must be received as well. This document serves solely to permit the registration of the legal entity’s address and does not constitute a commercial lease agreement.

Involvement of notary, company register, governmental authorities

1. Notary: the Articles of Association must be certified by a notary. This step ensures that all documents comply with legal requirements. 2. Register of Legal Entities (Juridinių asmenų registras): after notarization, the documents are submitted to the Register of Legal Entities. This governmental authority registers the company. 3. Governmental Authorities: depending on the business activity, other governmental approvals or licenses may be required. For example, certain regulated activities require specific permits from relevant authorities.

If a company is established online by using qualified electronic signatures, notary involvement is not required.

Timing (estimate)

The incorporation process generally takes about 1-2 weeks, depending on the efficiency of document preparation by the incorporators (e.g. timely collection, drafting, and signing of required documents), notarization (if required), and registration procedures. Additional time may be required if specific governmental approvals are needed. Opening of the cumulative account and converting it to the current account in a credit or e-money institution is a more detailed and time-consuming procedure that depends on the anti-money laundering and related procedures performed by credit or e-money institutions.

If a company is established online by using qualified electronic signatures, certain incorporation documents, such as the Articles of Association, the Incorporation Act or Agreement (Steigimo aktas arba sutartis), and the consent for the registered office, are automatically generated by the electronic system of the Centre of Registers. Provided that no deficiencies are identified during the review of the submitted documents, the legal entity is registered within one business day (in the case of electronic registration). When the documents are submitted at a client service unit of the Register of Legal Entities, the registration is completed within three business days.

Main costs, including registration and similar fees (excluding legal fees)

Notary Fees: costs for notarization services typically range from EUR 200 to EUR 250 + VAT, depending on the complexity and length of the documents.

State Fees for Registration: the state fee for the registration of a private limited liability company is EUR 30.83 when the documents are submitted by post or at a client service unit of the Register of Legal Entities. If a private limited liability company is established online by using qualified electronic signatures, a reduced state fee of EUR 14.02 applies. The applicable state fees vary depending on the legal form of the entity being registered.

Other Costs: there may be additional costs for obtaining a credit or e-money institution’s statement, proof of the registered office, and any specific business licenses if required.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

Description of the anticipated business or purpose of the entity is required during incorporation. This description is included in the Articles of Association and the Incorporation Act or Agreement, specifying the scope and nature of the business activities the company intends to pursue. It may be broad or specific, depending on the company’s intentions.

Minimum number of incorporators / shareholders and residency requirements

For the incorporation of a private limited liability company in Lithuania, the minimum number of incorporators or shareholders required is one. There are no residency requirements for incorporators or shareholders, meaning that both residents and non-residents can establish and own shares in a private limited liability company.

Minimum number of directors (or other applicable officers) and residency requirements

The mandatory bodies of a private limited liability company in Lithuania are the General Meeting of Shareholders and the Manager of the Company (a single-person management body). The governance structure may also include optional, non-obligatory bodies such as a Supervisory Board (a supervisory body) and/or the Board (a collegial management body).

If established, both the Supervisory Board and the Board must each consist of at least three members. The Supervisory Board may not have more than 15 members, and the maximum number of Board members is not established. There are no residency requirements for the Manager of the Company or other members of these governance bodies. This means that both residents and non-residents can serve as directors or hold other governance roles within the company. However, employment-related residency regulations apply to the Manager of the Company and other positions in the company that require entering into employment contracts.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The minimum share capital required to establish a private limited liability company in Lithuania is EUR 1,000. Additional requirements may apply to specific types of private limited liability companies, e.g. in case of activities that are subject to licensing.

Initial contributions for the shares subscribed for must be paid according to the procedure specified in the company's incorporation documents, such as the Incorporation Act or Agreement.

To incorporate a private limited liability company, the founders must open a cumulative account in a credit or e-money institution where the equity capital is deposited. Once the necessary initial contributions are paid, the credit or e-money institution issues a statement, which is required for the company’s incorporation procedure. After the incorporation procedure is finalized, the cumulative account must be converted to a regular bank or another credit or e-money institution account.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

Physical presence of incorporators, directors, or shareholders is not mandatory for the incorporation of a private limited liability company. The incorporation process can be carried out by using notarial services, by an authorized representative, or completed online, utilizing qualified electronic signatures. Lithuanian citizens, individuals with temporary residence permits in Lithuania, or EU citizens with access to the State Enterprise Centre of Registers self-service portal using a qualified electronic signature can use the online incorporation service. If the founder of a legal entity is another legal entity, only Lithuanian legal entities are eligible to establish a new legal entity online, as only such entities are recorded in the Register of Legal Entities and have access to the State Enterprise Centre of Registers self-service portal through their legal representatives or authorized persons.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

A tax identification number is automatically assigned to a newly established company upon its registration with the Register of Legal Entities. This process includes automatic registration with the State Tax Inspectorate, which then provides the necessary tax identification details for the company to fulfil its tax obligations. Specifically, the law states that a business must register for VAT if its taxable supply exceeds EUR 45,000 during the current or previous calendar year. The registration as a VAT payer is not automatic and requires a separate application to the tax authorities.

What is the title of the applicable company registry?

The applicable company registry in Lithuania is the Register of Legal Entities (Juridinių asmenų registras or JAR). This registry is a governmental body responsible for the registration and management of data related to legal entities, including companies, public institutions, and other organizations. It collects and stores essential information about legal entities, such as incorporation documents, changes in registration data, and other relevant information.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles or other formation document, Articles or other formation document, Group structure, Share capital, Directors, Accounts, Insolvency, good-standing, liquidation, Liens and encumbrances on the shares, Liens and encumbrances on assets of the entity, Other (e.g. litigation, tax matters)

Most of the information required by the Register of Legal Entities is provided at the time of establishing the private limited liability company and is detailed in the incorporation documents. These documents include fundamental data such as the company's name, address, purpose of activities, share capital, governance structure, and the data of the members of the company’s bodies.

After the company's establishment, additional information regarding the shareholders and beneficial owners is submitted to the public register. Ownership information, including direct and indirect ownership and details on beneficial owners, must be recorded. If the private limited liability company is part of a larger group, the group structure must be disclosed, showing relationships within the corporate group. This information is recorded in the Information System of the Participants of Legal Entities (JADIS) and the Information System of the Ultimate Beneficiaries of Legal Entities (JANGIS). However, the Register of Legal Entities publicly discloses only the company's name, address, company code, and details about the documents submitted, names and dates (such as shareholders’ resolutions, the Articles of Association, etc.).

To obtain more detailed information about the company's participants or beneficiaries, a formal request must be submitted to the Register of Legal Entities. This request must include relevant records showing the number of shares held by shareholders, the structure of the management bodies, and details about the Manager of the Company. While anyone can request information on the beneficiaries of the company, stating the purpose for this information, access to records containing detailed information on the legal person or its participants may be more restricted.

Any changes in the registry data (e.g. change of members of managing bodies of a company, address, share capital, legal form, branch offices and representative offices) must be entered into the Register of Legal Entities. The Manager of the Company is responsible for the timely submission of the necessary information and documents to the Register of Legal Entities.

The company must also file annual financial statements, reflecting its financial position in accordance with applicable accounting standards. Information regarding the company's status, such as insolvency, good-standing, or liquidation, must be reported.

Moreover, any liens or encumbrances on the company's shares or assets must be disclosed, indicating if they are used as collateral or subject to other claims. Other relevant details, such as ongoing litigation or significant tax matters, may also be required. This comprehensive disclosure ensures transparency and provides public access to critical information about the company.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The primary bodies of a private limited liability company in Lithuania are the Manager of the Company and the shareholders, acting collectively at a General Meeting of Shareholders (Visuotinis akcininkų susirinkimas). The company may also choose to establish a collegial management body - Board (Valdyba), and a collegial supervisory body – Supervisory Board (Stebėtojų taryba); however, their formation is optional.

The shareholders, acting collectively at a General Meeting of Shareholders, is the highest body of a private limited liability company. It is not a management (executive) body. The General Meeting of Shareholders has the power to take the most crucial decisions in the company’s development – approving financial reports, allocating dividends, electing and recalling members of the Supervisory Board оr the Board, amending the Articles of Association, determining the class, number, nominal value and minimum issue price of shares and other powers indicated in the legal acts and the Articles of Association.

The Board, if established, is responsible for the strategic management of the company. Its duties include setting business goals, overseeing the Manager’s activities, and ensuring the company’s compliance with legal requirements. The Board has the authority to make decisions on major transactions, approve the company's annual budget, as well as oversee the preparation of financial statements. Additionally, the Board is empowered to make decisions regarding the company's participation as a founder or member of other legal entities.

The Manager of the Company is responsible for the day-to-day operational management of the company. Key responsibilities include executing the decisions of the General Meeting of Shareholders and the Board, representing the company in external relations, managing the company's resources, and ensuring the smooth execution of business operations. The Manager is guided by the Articles of Association of the company, the resolutions of the General Meeting of Shareholders, the decisions of the Board and internal procedures of the company.

How are the members of the executive body appointed, dismissed and replaced?

The procedure for the appointment, dismissal, and replacement of members of the executive body, such as the Board or the Manager of the Company, is typically governed by the Law on Companies of the Republic of Lithuania and the company’s Articles of Association.

The Manager of the Company is elected (appointed), dismissed, and replaced by the Board. The Board also sets his/her remuneration, approves the terms of employment, and handles promotions and disciplinary actions. If the Board is not established, these responsibilities fall to the Supervisory Board. In the absence of both the Board and the Supervisory Board, the General Meeting of Shareholders assumes these duties. The initial Manager of the Company is appointed by the incorporators at the time of the company's incorporation. Upon the dismissal or resignation of the Manager of the Company, a new one must be appointed as a replacement.

The Board is elected by the Supervisory Board for a term of up to 4 years, as specified in the company's Articles of Association. If the Supervisory Board is not established, the Board is elected by the General Meeting of Shareholders. The Board selects its chairman from among its members. There is no limit to the number of terms a member of the Board may serve. A member may resign before the end of their term by providing the company with at least 14 days' written notice. The Supervisory Board (or, in the absence of a Supervisory Board, the General Meeting of Shareholders) may dismiss the Board in its entirety or individual members before the expiry of their term of office.

These actions must be recorded and filed with the Register of Legal Entities to ensure proper update of the company’s official records and compliance with legal requirements.

Is it possible to appoint corporate directors or must all directors be natural persons?

In Lithuania, only natural persons can be appointed as directors (the Manager of the Company) of a private limited liability company. The law does not permit legal entities to serve as directors unless specified otherwise in laws regulating exceptional legal forms.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

In Lithuania, there is no legal requirement for private limited liability companies to have non-executive directors. However, Lithuanian law provides flexibility in terms of management structure.

The management structure can be either a one-tier or two-tier system:

• One-tier structure: the company must have a single-member management body (the Manager of the Company), and the Board and (or) Supervisory Board are only optional bodies.
• Two-tier structure: this setup consists of a Supervisory Board and (or) the Board in addition to the Manager of the Company. The Supervisory Board oversees the activities of the Board and the overall functioning of the company. This structure is common in public limited companies (AB), where it is mandatory to have either a Supervisory Board or a Board in addition to the Manager of the Company. Private limited liability companies are permitted to choose such a structure if needed.

This flexible approach allows companies to tailor their governance structures according to their specific needs and legal requirements.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The title of the body of the owners or shareholders of a private limited liability company in Lithuania is the General Meeting of Shareholders (Visuotinis akcininkų susirinkimas). This body holds the highest authority in the company and is responsible for making key decisions regarding the company's governance and operations:

• Approval of financial statements: General Meeting of Shareholders is responsible for reviewing and approving the company’s annual and interim financial statements.
• Election of members of other bodies: General Meeting of Shareholders elects members of the Supervisory Board, the Board, or the Manager of the Company, depending on the composition of the company’s bodies.
• Amendment of Articles of Association: any changes to the Articles of Association require approval from the General Meeting of Shareholders.
• Capital alterations: decisions related to the alteration of the company's capital, such as increasing or decreasing the share capital, are within the purview of the General Meeting of Shareholders.
• Dividend distribution: the General Meeting of Shareholders approves the distribution of profits, including the declaration and payment of dividends.
• Mergers and reorganizations: General Meeting of Shareholders has the power to approve mergers, reorganizations, divisions and other significant corporate transactions.
• Dissolution and liquidation: decisions to wind up the company, whether voluntary or otherwise, are made by the General Meeting of Shareholders.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

The majority and quorum requirements for decisions by the shareholders of a private limited liability company are defined in the Law on Companies of the Republic of Lithuania and the company's Articles of Association.

A quorum is established when shareholders representing more than 50% of the total voting rights are present.

For ordinary resolutions, a simple majority of the votes cast (i.e. more than 50% of votes participating in the meeting) is sufficient. For special resolutions, such as changes to the Articles of Association, allocation of profit, increase and decrease of the share capital, etc., a higher majority of 2/3 of the votes cast is required. To revoke the pre-emptive right of all shareholders to acquire the shares or the convertible bonds of a specific issue of the company, a qualified majority of not less than 3/4 of the total number of votes attached to the shares of all shareholders present and entitled to vote at the General Meeting of Shareholders on the matter is required.

The Articles of Association of a company may provide for a higher majority than that indicated by law. Amendments to the majority requirements themselves require a resolution passed by a qualified majority, as specified by law (2/3) or in the Articles of Association of the company.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

There are no special governance regimes solely based on the size of a private limited liability company. Shares of a private limited liability company may not be publicly traded and therefore such companies generally have less stringent governance requirements compared to public companies, unless they operate in a regulated sector, e.g. the financial sector. However, private limited liability companies must still adhere to general corporate governance rules, such as those outlined in the Law on Companies of the Republic of Lithuania, which include basic requirements for the management structure, duties of management bodies, etc.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

In Lithuania, legal entities are required to prepare and submit annual financial statements. These financial statements must comply with either the Lithuanian Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), depending on the entity's classification and specific requirements.

The annual financial statements must be submitted to the Register of Legal Entities within 30 days after their approval by the General Meeting of Shareholders. Failure to submit the annual financial statements on time may result in a fine for the manager of the company. In addition, in case of failure to submit the annual financial statements within 12 months as of expiration of the term for their submission, the Register of Legal Entities has the right to initiate the liquidation of a legal person.

The data and information submitted to the Register of Legal Entities, including the annual financial statements, are publicly accessible.

Is the entity permitted to determine its own financial year?

Private limited liability companies are permitted to determine their own financial year, consisting of any twelve-month period. However, the financial year typically coincides with the calendar year, beginning on 1 January and ending on 31 December. The financial year must be specified in the company's incorporation documents. The financial year of a company may be changed no more than once every five years, unless the financial year is changed to a financial year that coincides with the calendar year.

Is the entity subject to any statutory (external) auditor obligations?

Audit of annual financial statements of private limited liability companies is compulsory if the company meets at least one of the following 2 conditions:

• At least 2 indicators on the last day of the financial year exceed the following values:
• the value of the assets listed in the balance sheet - EUR 2,500,000;
• net proceeds from sale of companies or revenue of non-profit legal entities during the financial year under review - EUR 4,500,000;
• the average annual number of employees, calculated in accordance with the procedure laid down by the Minister of Finance, for the financial year under review - 50 employees;

funding received from the State and/or municipal budget(s) and/or the financial support received or used during the financial year under review - EUR 500,000.

Companies that are obliged to prepare consolidated financial statements are also required to have these statements audited.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

In accordance with the Law on Companies of the Republic of Lithuania, private limited liability companies must appoint a single person management body of a company (the Manager of the Company), who is responsible for the day-to-day activities of the company and acts in the name of the company in relations with any third persons. The company is obliged to enter into an employment contract with the appointed Manager of the Company. There are no residency requirements. i.e. the Manager of the Company may be either a Lithuanian citizen or a citizen of any other country and he/she is not required to reside in Lithuania. However, migration regulation applies in case the person’s place of employment is in Lithuania.

Appointment of other executive officers, entity secretary, internal auditor/accountants is subject to migration regulation as well if they are employed by the company.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

For a private limited liability company, the title designated for ownership interests is "shares" (“akcijos”). Shares represent the ownership stake of the shareholders in the company, granting them rights such as dividends, voting rights, and a proportionate share in the residual assets of the company upon its dissolution.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

All shares of private limited liability companies are registered shares, which means that they are owned by a specific natural or legal person.

The most common type of shares is the ordinary registered shares, which must all have the same nominal value. Each ordinary registered share gives its owner one vote at the General Meeting of Shareholders.

Private limited liability companies may also issue preferred shares of different classes, which may or may not carry a voting right. Non-voting preferred shares may not represent more than 1/2 of the share capital of a company. The classes of preferred shares and the rights vested in such shares must be described in the Articles of Association of a company.

What documentation is required for the transfer of ownership interests?

Unless provided otherwise in the Articles of Association of a private limited liability company, the share transfer transaction must be carried out in accordance with the procedure described in the Law on Companies of the Republic of Lithuania, and the following documentation is required:

• Documents waiving the pre-emptive rights. If applicable, a waiver of pre-emptive rights must be obtained from the existing shareholders.
• Share Sale-Purchase Agreement.
• Personal securities account of the seller, indicating the ownership right to the shares, and share acquisition documents.
• Extracts from the public register and Articles of Association of the seller and/or the buyer, if they are legal persons.
• Decisions on the transfer/acquisition of shares, if required in accordance with the incorporation documents of the seller and/or the buyer.
• AML documentation of the seller and the buyer.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

If the share sale-purchase involves 25% or more of the company’s shares or if the total value of the transaction exceeds EUR 14,500, the share transfer must be notarized, except where the personal securities accounts of the shareholders of a private limited liability company have been transferred to a legal person authorized to open and manage personal accounts for financial instruments, or where the shares of a private limited liability company are sold following a privatization transaction of shares owned by the State or a municipality.

After the completion of the share transfer and making entries in the personal securities accounts of the parties, the change of shareholders must be registered at the State Enterprise Centre of Registers. Corresponding changes to the beneficiary owners must be made as well. Such changes can only be made online using the e-systems of the State Enterprise Centre of Registers.

Depending on the financial results, the sector, experience and other details of the companies, approval of the Competition Council of the Republic of Lithuania, Coordination Commission for the Protection of Objects of Importance for National Security, the Bank of Lithuania or other public authorities may be required for the transfer of shares.

Are there any applicable stamp duties imposed when transferring ownership interests?

No stamp duties are applicable to the transfer of shares of a private limited liability company.

It is worth noting though that notary fees or the fees of the legal person managing personal securities accounts apply when carrying out the share transfer using the respective services, which depends on the share sale price. In addition, the registration of the shareholders after the share transfer is subject to the fees of the State Enterprise Centre of Registers.

How are shares issued? (including information on payment obligations, registration requirements)

The procedure of issuing new shares of a private limited liability company is outlined in the Law on Companies of the Republic of Lithuania and includes the following steps:

• Adoption of a decision of the shareholders on the increase of the share capital;
• Submission of the decision to the Register of Legal Entities for registration;
• Preparation of the new Articles of Association of the company;
• Preparation and signing of the share subscription agreements (signed between the company and the persons acquiring the new shares);
• Payment of the shares or at least the initial contributions (the initial cash contribution must be at least 1/4 of the nominal value of the total number of shares subscribed. The remaining amount for the subscribed shares may be paid either in cash or in kind).
• Submission of the share capital increase documents to the notary for approval or submission to the State Enterprise Centre of Registers through the online e-system, in case the standard form of the Articles of Association is being used.

After the Articles of Association with the increased share capital are registered, the respective changes on the shareholders and ultimate beneficiaries must be updated in the personal securities accounts of the shareholders of the company and in the State Enterprise Centre of Registers.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Shares can be paid for with non-cash contributions. Non-cash contributions can be any assets, including property rights. The value of the non-cash contributions must be determined by an independent expert in accordance with the applicable laws.

Shares may be issued for a price higher than the nominal value of a share. In such a case the share capital is increased only by the nominal value of the issued shares and the difference between the share issue price and the nominal price of the share is accounted for as share premium. Contributions of the shareholders may be made without the issuance of ‘ownership interests’ when these contributions are made to cover losses of the company.

The Law on Companies of the Republic of Lithuania allows for partial payment of shares, which must be made in cash and must amount to at least 1/4 of the nominal value of the total number of shares subscribed. The remaining amount must be paid not later than within 12 months from the date of conclusion of the share subscription agreement. During this period of deferred payment, the unpaid shares do not carry votes (with exception of the first issue of the shares upon incorporation).

Any requirements with respect to share cancellation, share repurchase and other capital reductions

The share capital may be reduced by a decision of the General Meeting of Shareholders or, in the cases provided for by applicable legal acts, by a court decision.

The share capital may be reduced by a decision of the General Meeting of Shareholders for the following purposes only:

• For the sole purpose of eliminating losses on the company's balance sheet;
• For the purpose of cancelling shares acquired by the company itself;
• For the purpose of making a distribution to the shareholders of the company (if the conditions indicated in the Law on Companies of the Republic of Lithuania are met); and
• To correct errors made in the formation or increase of the share capital.

The share capital can be reduced by decreasing the nominal value of shares or by cancelling shares. The General Meeting of Shareholders must decide on the reduction, stating the purpose of the reduction, and ensuring that the company complies with the statutory minimum share capital requirements.

When a private limited liability company decides to reduce its share capital, it must notify each creditor in writing and publish the decision publicly. The company is required to provide additional security for the performance of its obligations to any creditor who requests it, unless specific exemptions apply (e.g. if the amount of creditors' claims does not exceed 1/2 of the amount of the company's equity after the reduction of the share capital, unless the authorized capital is reduced for the purpose of making a distribution to the shareholders).

Any requirements with respect to distributions to shareholders?

Dividends are allocated to shareholders by decision of the General Meeting of Shareholders for the financial year or for a period shorter than the financial year of the company. In the latter case, specific conditions, such as the approval of interim financial statements, positive net income for the period, etc., must be met.

Dividends must be paid in cash no later than one month from the date of the decision to allocate them. Payment of dividends in advance is prohibited.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Shareholders are entitled to sign shareholders' agreements, which govern the relations among themselves that are not specified by law, and to coordinate their actions as a group.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The typical annual maintenance costs for maintaining a private limited liability company include:

• Accounting and auditing costs: costs associated with preparing and submitting annual financial statements, which may include fees for accounting services and statutory audits, if required by law. These costs vary depending on the complexity and size of the company.
• Salary and related taxes for the company’s manager and other employees.
• Tax filings: costs associated with the preparation and filing of corporate tax returns, VAT, and other taxes.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

In Lithuania, the general corporate tax rate for a private limited liability company is a flat rate of 16% (or 17% starting from 01.01.2026) on the taxable income. Taxable income is calculated by deducting non-taxable income, allowable deductions and limited allowable deductions from the total income. There is no distinction between national and local corporate taxes, as Lithuania applies a uniform corporate income tax rate across the entire country. However, small companies meeting specific criteria, such as having fewer than ten employees and an annual income not exceeding EUR 300,000, may qualify for a reduced corporate income tax rate of 6% (or 7% starting from 01.01.2026). Additionally, certain tax incentives or exemptions may apply under specific circumstances, such as for entities involved in research and development activities.

Summary of any specific matters, e.g. recent or prospective major legal developments

Additional matters depend on the size of the companies, also on the sector that they operate in.