COMPANY FORMATION IN LITHUANIA

Lithuania gained membership in the World Trade Organization and joined the EU in May 2004. Despite Lithuania’s EU accession, Lithuania’s trade with its Central and Eastern European neighbours, and Russia in particular, accounts for a significant share of total trade. Foreign investment and business support have helped in the transition from the old command economy to a market economy. Open to global trade and investment, Lithuania enjoys high degrees of business, fiscal and financial freedom. Regulation is relatively transparent and efficient. With the largest, most diversified, and highly competitive industries in the Baltic, low taxesand costs, and half of the GDP of the Baltic States, Lithuania is a relatively small, but potentially attractive market for investors from EU and other countries.

Lithuania represents an open and rapidly growing economy, with a constant GDP rise over past few years.

The government has given priority to financial discipline, currency stability and other business friendly policies.

Lithuania to be a country with very low economic and political risks. The country is a member of the EU and NATO and follows the Western model of internal and foreign politics.

Lithuania is the easiest place to do business among the Baltic States and all new EU members.

Lithuania is strategically located at the gateway between huge markets in the north, east and south; the European Union has recognized Lithuania as the prime transport centre in the region linking the EU with the East.

Lithuania offers equal protection and guarantees for both local and foreign businesses. The country guarantees the unrestricted movement of capital and dividends and free access to all sectors of the economy.

Lithuania imposes low corporate taxes, and labour costs and secondary costs, such as accountancy and office space, are among the lowest in Europe.

Businesses in Lithuania are fast in implementing the latest technology, and rapidly increase their production efficiencies.

Lithuania is amongst the most competitive in Europe for taxes because of its low corporate and personal income taxes. For investors into the country, particularly those that export goods or services elsewhere, the tax regime is particularly favourable. The government is trying to attract large companies to choose the country for projects. Lithuania has a corporate tax rate of 20 percent and a personal income tax of 15 percent. A decade ago, personal income tax was set at 33 percent.

Individual enterprises: An individual enterprise is owned by a single natural person and is a legal person of unlimited liability. Its assets are not separated from its owner’s assets. The owner is liable for the obligations of the enterprise with all of his property.

Public and private limited liability companies: They are limited liability private legal persons and their assets are separated from their shareholders’ assets. Its shares may be distributed and trade publicly. The authorised capital of a private company may not be lower than EUR 2.900. It must have 1-250 shareholders. The mandatory bodies of a company are the general meeting of shareholders and the head of a company

General partnership: A general partnership is an enterprise of unlimited liability established on the basis of a partnership agreement by joining the property of several natural or legal persons into the joint and several ownership in order to engage into economic-commercial activities with the common name of the firm.

Limited partnership: A limited partnership is a legal person of unlimited liability, however only with respect to the general members thereof. The general members of the limited partnership shall be jointly and severally liable with all of their property for the obligations of the limited partnership, also after its liquidation, whereas limited members are liable only for the part of their property that is transferred for the joint activity of the partnership under the agreement.

State and municipal enterprises: State or municipal enterprises are limited liability legal persons the assets whereof are owned by the Republic of Lithuania or a respective municipality.

Agricultural company: Agricultural Company is a limited liability legal person established by natural and legal persons under an incorporation agreement, where income from agricultural production and services redered to agriculture constitutes over 50 percent of the total income from sales during the business year. There are 2 groups of person participating in the company’s management: members and stakeholders. The company must have at least 2 members.

Cooperative companies: A cooperative company is an enterprise established by natural or legal persons in order to satisfy the economic social and cultural needs of its members. Its members contribute funds to form its capital, share risk and benefits according to the turnover of goods and services of its members with the cooperative company and they are actively involved in the management of such company.

Branches and representative offices of enterprises: Enterprises, including foreign enterprises may establish their branches for performing some elected or all function as well as representative offices which have the right to represent and protect the interests of the legal person, to conclude agreements and perform other actions on behalf of the company that established the representative office.