Topic 1 Steps and tips on how to set up a business in Lithuania/Legal framework for starting up a business in Lithuania as a TCN

• Small partnership (MB) is a private legal person with limited liability. Its members are not liable for the outstanding obligations of the LLP in respect of their assets. A small partnership may be set up by up to 10 natural persons (there may also be only one founder).
• Sole proprietorship is a private legal entity with unlimited liability. The owner is liable for the unfulfilled obligations of the sole proprietorship in respect to his/her assets. Only one natural person may be the founder and owner of the sole proprietorship, and he/she cannot be the owner of another sole proprietorship.
• Public Institution (PI) is a non-profit public legal entity with limited liability, and with purpose to serve public interest through the pursuit of activities that are of public benefit. The public institution may be established by one or more natural and/or legal persons, and the number of its founders is unlimited.
• Private Limited Liability Company (UAB) is a private legal person with limited liability. Its shareholders are not liable for the outstanding obligations of the private limited liability company in respect of its assets. The authorised capital of a private limited liability company must be at least EUR 2 500. A private limited liability company may be founded by one or more natural and/or legal persons and the number of its shareholders is unlimited.
• An association is defined as a public legal entity with limited liability, and with purpose to coordinate the activities of its members, to represent and defend the interests of its members, and to serve other public interests (State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania, 2022).

The company to be established in Lithuania must have a registered office and a registered address. Once you have chosen the registered office address, you should obtain the consent of the owner of the real estate where the company will be registered. The consent issued by a natural person should be in notarial form, while the consent issued by a legal person should be in written form, certified by the seal of the legal person and signed by a representative of the legal person.

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• Once you have come up with a company name, you should reserve it in the Lithuanian Register of Legal Entities. After the name has been reserved and temporarily entered in the register, the document preparation phase starts.
• There is an option of submitting a request to the registrar of the Register of Legal Entities for the temporary entry of the name in the Register of Legal Entities (JAR-5: https://www.registrucentras.lt/bylos/dokumentai/jar/e-gidas/JAR-5.pdf)

The founders have the right to choose their preferred bank. The persons authorised by the LE who are opening a bank account on behalf of the LE must have an identity document and the constituent document (memorandum of association or document of incorporation). Later, after registering the LE, the accumulation account is changed to a current bank account (upon presentation of the registration certificate of the LE, the document certifying the appointment of the manager, the identity document of the manager, and the stamp of the LE).

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• Documents (the company’s founding deed, articles of association, the document appointing the director, the bank’s certificate on the formation of the share capital, etc.) should be submitted to a Lithuanian notary for approval. The documents establishing the company, certified by the notary, are submitted to the Register of Legal Entities. A company registration fee is payable. Once the company has been registered, the Register of Legal Entities issues the statement which confirms this fact or an access key to the electronic system (you can login to this system and print the statement there). After the receipt of the statement the company stamp is ordered.
  The company may be established, company shares or business may be purchased on the basis of the mandate. It is unnecessary to arrive at Lithuania.
• Information about the establishment of companies and the documents to be filled in and submitted to a notary and the Register of Legal Entities can also be found on the website of the State Enterprise Centre of Registers (VĮ Registrų centras): https://www.registrucentras.lt/jar/e-gidas_en/
  All the JAR forms to be filled in can also be found on this page. (Consultancy Service of the Centre of Registers, tel. +370 5 268 8262, short number: 1637).
  When establishing a small partnership, individual enterprise, private limited liability company, association or public institution, documents may be submitted electronically directly to the Registrar through the electronic self-service system of the Centre of Registers.

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• Under Lithuanian law, investing in a business in Lithuania is the basis for legal immigration to Lithuania for a foreigner. By allowing foreigners to enter and reside in Lithuania on the basis of a legal activity, i.e. investment in business, the State aims to attract capital, more efficient working methods and new ideas.
• Foreigners have the right to join the management of an already established legal entity in Lithuania (to become a shareholder) or to set up a new legal entity themselves. Establishing a company and doing business in Lithuania is easy, as it can be opened in just a few days, and with the use of electronic signatures, registering a company in Lithuania is also extremely easy and saves a lot of time and money.

In the case of the establishment or purchase of a company, a foreigner entrepreneur who is a participant, shareholder or member of the management body of a company established or purchased in Lithuania may apply for a residence permit in Lithuania if the following conditions are met:

1. The Lithuanian company has been operating for at least 6 months before applying for a residence permit;
2. The company’s equity capital is at least EUR 28,000, of which EUR 14,000 is invested by the foreigner;
3. The value of the shares owned by the foreigner is at least 1/3 of the value of the company’s shares;
4. The Lithuanian company employs full-time citizens of Lithuania, citizens of another Member State of the European Union or a Member State of the European Free Trade Association, or foreigners permanently residing in Lithuania, whose monthly salary (of the entire staff) is not less than 2 average monthly salaries in Lithuania.

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The process of establishing a company includes previously described stages: collecting the necessary data and documents, reserving the company name, preparing the documents, opening a savings account in one of the Lithuanian banks and forming the authorised capital, notarising the documents, registering the company in the Register of Legal Entities. The process of sale and purchase of an established company is quicker, requires less investment and the company’s authorised capital is already formed. Both the incorporation of the company and the sale and purchase require a power of attorney.

Free advice from public bodies is available for people looking to set up their own business. For example, the State Tax Inspectorate provides advice on taxes. The Employment Service can provide information on support for setting up your first job, etc.

Versli Lietuva (Enterprise Lithuania) also provides all the necessary information. This is an agency set up by the Ministry of Economy to promote entrepreneurship, the development of sustainable and modern businesses, the start-up ecosystem and exports in Lithuania. The website www.verslilietuva.lt offers a wide range of information, from finding ideas to the necessary prerequisites for setting up a business.

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