Types of companies
Most widespread types of companies in Lithuania:
1. Individual enterprise;
2. Private limited liability company;
3. Small partnership.
The main features of and differences between the most popular legal forms of legal entities
Private limited liability company
|Minimum number of participants||1 (member)||1 (shareholder)||1 (owner)|
|Maximum number of participants||10 members. Only natural persons.||Unlimited. Natural persons or legal entities.
|1 owner. Only a natural person can be the owner.|
|Minimum amount of the capital.||Not specified.||Not less than 2 500EUR||This requirement is not applicable.|
|Founders (participants)||Natural persons||Natural and/or legal persons||Natural person|
|Participant’s liability for the commitments of the legal entity||A small partnership member has limited civil liability
(a member of a legal entity bears no responsibility for liabilities of a legal entity).
|A shareholder has limited civil liability (a member of a legal entity bears no responsibility for liabilities of a legal entity).||Owner of an individual enterprise has unlimited civil liability (if the assets of an individual enterprise are not enough to meet all the commitments of the enterprise, the owner of the individual enterprise must cover these liabilities with his own assets).|
|The principle of voting during the process of decision making||Usually it is 1 member per one vote, however, when the small partnership is led by the head, the provisions of the small partnership may specify otherwise.||1 share per 1 vote||The decisions are made by the owner of the individual enterprise.|
|Accounting (legal regulation)||Simplified accounting procedure
Republic of Lithuania Law on Accounting, Republic of Lithuania Law on Financial Statements of Entities, business accounting standard
|Republic of Lithuania Law on Accounting, Republic of Lithuania Law on Financial Statements of Entities, Republic of Lithuania Law on Consolidated Financial Statements of Entities, international accounting standards, business accounting standards.||Simplified accounting procedure, the requirement to produce a set of annual financial statement is not applicable. If the provisions of an individual partnership provide for drafting of financial statements.
Republic of Lithuania Law on Accounting,
Republic of Lithuania Law on Financial Statements of Entities, business accounting standards
|Capital and contributions||Contributions by members of small partnerships can be of monetary or non-monetary form. The value of non-monetary contributions is agreed upon by all members of the small partnership.
Works or services cannot be considered as contributions.
|Shares are the parts to which the capital is divided. Shares are paid with money and/or a non-monetary contribution owned by a shareholder by the right of ownership, the value of which must be established in line with the procedure specified in legal acts.||Contributions are the personal property of the owner of an individual enterprise.|
|Distribution of profit||Profit is distributed proportionally according to the amount of the contributions made, unless the provisions of the small partnership provide otherwise.
Profit can be distributed in advance. In the event it becomes clear following the end of the financial year that the advanced distribution of profit exceeds the established amount, the surplus has to be recovered.
|The amount of dividends paid to shareholders is proportionate to the nominal value of shareholders’ shares. Dividends can be paid for a shorter period than the financial year.||The whole profit goes to the owner of the individual enterprise.|
|Internal structure||Founders (members) of the small partnership can choose one of the two structures of the small partnership:
– when the small partnership is a meeting of members of the small partnership, which is its management authority. In this case, the small partnership does not have other bodies, only a representative elected by its members, however, all the operational decisions are made during meetings of members of the small partnership;
– when the small partnership is the meeting of members of a small partnership and the single-person management body, i.e. the head of the small partnership, with whom a civil agreement is concluded.
|Private limited liability company must have a general shareholders’ meeting and a single-person management body, i.e. the head of the company.
A collegiate supervisory body, i.e. a supervisory council and a collegiate management body, i.e. the board, can be established.
A job agreement is concluded with the head of the company.
|Usually, the owner of an individual enterprise is a single-person management body, i.e. the head of the company.
When another person is appointed the head of an individual enterprise, this person acts on behalf of the individual enterprise, and the owner of the individual enterprise acts only within his competence as a meeting of members.
|A person acting on behalf of the legal person||Depending on the structure of a small partnership, the following persons may act on its behalf:
the meeting of members of a small partnership, the latter represented by its representative or
the head of the small partnership, i.e. the single-person management body.
|A private limited liability company is represented by its head when dealing with other persons.||When there is no head of an individual enterprise appointed by its owner, the owner acts on behalf of the enterprise. When there is a head of an individual enterprise, he acts on behalf of the enterprise.|