Company formation in Lithuania
In this article we will discuss company formation in Lithuania and the process of company establishment in Lithuania.
A micro company (MB) is a legal form of business that was introduced in Lithuania in 2012.
MB is not required to have a minimum share capital, thus a micro company may be established with 1 EUR or any other tangible property contribution. And yet, it is still a limited liability company with certain unique traits and limitations for this legal form of business.
Company establishment in Lithuania
A founder can only be a natural person (max. 10 persons). Founders of MB work for company without employment contract (except CEO) and receive payments for personal needs out of company account or distributed profits. In fact, micro company has less corporate compliance regulations and more similarities to a joint venture partnership. Founders may choose whether MB will have only the meeting of members (and a representative appointed by the members) or both the CEO and the meeting of members. Corporate structure and relationships between members are regulated less thoroughly for this type of company when compared with a common form of a limited liability company (UAB).
Advantages in comparison to common limited liability company
Micro companies (or “mažoji bendrija” in Lithuanian) have become quite popular among start-ups and small family businesses also due to lower accounting requirements and ability to use company funds for founder’s personal needs (e. g. services, representation etc.). For the purposes of an annual financial report of the MB, only a balance sheet, profit and loss statement and an explanatory note are necessary, this is one of the reasons why micro companies are popular, when company formation in Lithuania is required.
In this part we explained the aspects of Company establishment in Lithuania. Next part will discuss the taxation of micro company in Lithuania.
If you are interested to learn more about incorporation and taxation of company formation regulation in Lithuania and setting up in Lithuania, please refer to our Baltic lawyers at email@example.com.