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Setting up new companies

Setting up new companies

Setting up a new company is one of the first steps of a new business that requires special knowledge and skills. People who consider starting a business in Lithuania often ask themselves, whether it is better to set up a company, buy an already set-up company or invest in an already established and functioning business. All of the options are favourable when starting a business in Lithuania and all have their benefits and drawbacks.

Setting up a new company seems an attractive option to people because one can be sure that the company has no debts, no negative history, it may be given any name and registered at any address, one can define its branch of activity, etc. In the case of setting up a business a person may not always find it easy to create the company's authorised capital, which currently, according to the requirements of the Lithuanian legislation, should not be lower than 3,000 EUR (in the case of Private Limited Liability Company), and in some cases it should even be higher. Meanwhile, the authorised capital of an already set up company is already created, and this is convenient in a way. The name is usually attributed to the company but it can be changed, or the company may be set up and sold to you with the name of your choice. The companies set up for sale usually have carried out no activities, therefore, there should be no worries with regard to their history. 

Investing in the business that is active in Lithuania is a convenient choice because you do not have to worry about starting everything from the beginning. You may purchase a part of the business or an entire business, you may purchase shares of the company that carries out respective activity and continue the activity characteristic of critical mass, experience, necessary knowledge, strategy, etc. In this case it is recommended to check the company/business history, presence or absence of financial debts, obligations undertaken, leases and other agreements, etc. 

Therefore, where should one start upon setting up a company in Lithuania? First of all, you should decide on the company name. Then the name should be registered in the Register of Legal Entities of Lithuania. After the name has been reserved and temporarily listed in the register, the step of documentation shall begin. After the necessary company documents are prepared, an accumulation account of the company is opened in one of the Lithuanian banks. The authorised capital of the company is placed in the accumulation account (in case when, according to the Lithuanian legislation, the authorised capital must be created). After the authorised capital is created, a bank certificate is obtained to confirm that. The set-up company must have the registry address of the residence. After the address of company residence is chosen, you should receive the consent of the owner of the immovable property to which address the company will be registered. The consent issued by a natural person should be in a notarial form, and the consent issued by a legal entity should be in a written form and confirmed with a legal entity's stamp and signed by a representative of the legal entity. This consent along with other documents (company establishment act, articles of association, document of the director appointment, bank certificate on the created authorised capital, etc.) should be transferred to a Lithuanian notary for certification. The company establishment documents, certified by a notary, shall be transferred to the Register of Legal Entities. The company registry fee shall be paid. After registering the company, the Register of Legal Entities issues the statement which confirms this fact or the 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 procedure of purchasing a company (Private Limited Liability Company) usually begins with selecting a company from the list of companies on sale. After choosing the company, the sale documents of the company are prepared. From 01 January 2015 the sale and purchase documents of a company (Private Limited Liability Company) usually must be certified by a Lithuanian notary (in case 25 percent or more than 25 percent of the shares of a Private Limited Liability Company are for sale or the price of the shares is higher than 14,500 EUR). Later the change of data is registered in the Register of Legal Entities and the change of shareholders is registered in the electronic system JADIS.

In case of purchasing a business active in Lithuania, after the business has been found, the business purchase and sale documents are prepared. In case the company shares are not for sale and only the business is purchased, the documents do not need to be certified by a notary.

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. 

Often the clients wonder what activity will my company set-up or purchased in Lithuania carry out. According to current practice, a company in Lithuania may carry out any activity that does not contradict the Lithuanian legislation and has this fact included in its articles of association. Certain branches of activity require licence or special permits.