New simplified form to establish a limited liability company in Lithuania
In summer 2012 the Lithuanian Parliament (Seimas) has adopted a new Law on Small Communities which will allow to establish of a new form of a limited liability company – a small community. For small communities there will be smaller requirements and simplified establishment procedure. The small community will be based on personal trust and cooperation between its members.
It is believed that this new form of a limited liability company would stimulate small business.
Establishers of a small community can be individual persons only. Maximal number of establishers and shareholders is 10. A very important and beneficial difference from the most common company form UAB is that there is no minimal share capital requirement for a small community. The Law on Small Companies says that establishers of the small company would put their contributions to the company and they are entitled to decide the size of such contributions. Moreover, members of the small community will have a possibility to withdraw funds as in advance payable profits for their personal needs. Furthermore, profits of the small community can be allocated not waiting the end of the financial year.
Regarding management of the small community, there are 2 possible options: either general meeting of members, or general meeting of members and a director.
From the taxation point of view, there are no exemptions and general rates of corporate income tax in Lithuania are applicable.
The Lithuanian Law on Small Communities comes into force 1st September 2012.