UAB STEIGIMAS

A private limited company (UAB) is one of the most stable and popular forms of company in Lithuania. It is often chosen both by start-up entrepreneurs and by existing businesses seeking a new stage of growth. The main advantage of this form is the limited liability of shareholders. This means that they are liable only for the capital they have contributed, while their personal assets remain protected.

If you are considering where to start your business, the LLC form allows you to build a long-term, clearly structured business model. It is particularly relevant for those planning expansion, looking for partners or investors and wanting more flexibility in managing the shareholder structure. One of the main advantages of a limited liability company is the possibility of transferring shares to both natural and legal persons according to predetermined conditions, which is particularly convenient when attracting external investors.

LLCs are suitable for a wide range of activities – from service, manufacturing, retail or wholesale to financial institutions or crypto businesses.

How to prepare
For setting up an LLC
?

Proper preparation is an essential step before setting up an LLC. It avoids any problems and ensures that the registration process itself runs quickly and smoothly.

The first step is to clearly define the business idea: what activities you plan to carry out, what the main sources of income will be, whether the activity will require licences, what resources will be needed, whether the action will be carried out with partners. This is particularly important because when registering a new LLC you will need to choose which economic activities to include in the articles of association.

The first thing to do is to be clear about your business idea, what activities you plan to carry out, what your main sources of income will be, what resources you will need and whether you need partners. Next, the name of the company. When choosing a company name, it is important to make sure that it is unique and in line with the language norms. In addition to the registry of the Centre of Registers, you should also check the EUIPO, WIPO databases and domain registries – especially if you are planning an expansion or a trademark registration. This will help avoid legal problems and ensure that the name is suitable for long-term use.

The next important step is to choose the founders and the manager. An LLC can have one or more shareholders – there is no limit on the number of shareholders, unlike small partnerships, which allow a maximum of 10 members. This allows for the inclusion of both natural and legal persons, the attraction of partners or investors, and the manager can be anyone you choose, not necessarily a shareholder.

Share capital is another key element. The minimum amount is currently €1 000. The capital can be monetary or non-monetary (e.g. assets), but monetary capital is the most common choice due to the simplicity of the payment procedure. The funds are deposited in a special savings account opened with a bank or electronic money institution.

You must also provide a legal address, which is the official registered office of the company. If the company is registered at an address that does not belong to it (i.e. the premises are rented or owned by another natural or legal person), the written consent of the owner is required. This applies to all legal forms. To avoid additional coordination, it is also possible to choose the registration address offered by service providers.

If you are planning to carry out activities with licensing or permit requirements (e.g. in the financial, health or education sectors), this should be assessed at the preparatory stage. Once all these details have been thought through and gathered, you can move on to the preparation of documents and other steps.

Establishment of UAB
Steps from A to Z

Once the preparation is done and all the data is clear, the technical steps for setting up are taken. When setting up online, it is important to have a valid qualified electronic signature, without which you will not be able to sign documents. The whole process consists of several logically sequential steps. In order to set up a company smoothly, it is essential to know and implement them properly.

1. Define the fields of activity and the activity classifications (EWC codes) that will help you to accurately register your business.
2. A set of incorporation documents is then drawn up: the memorandum and articles of association (or deed if there is only one founder), the articles of association, the list of shareholders, and the documents appointing the manager. At this stage it is important to correctly identify the shareholders’ contributions as this will form the basis for the share capital.
3. The contribution must be paid into a special savings account, for which a certificate will be required at a later stage. This account can be opened electronically with the bank or electronic money institution of your choice.
4. Once all the documents are ready, the company is registered in the Register of Legal Entities. Setting up a private limited liability company electronically makes this process quick, convenient and without additional visits to the authorities.

What should I do after registering my LLC?

Setting up is only the first step. Once a company is registered in the Register of Legal Entities, it is not ready to operate unless important practical steps have been taken. One of them is the opening of a permanent current account with a credit institution of your choice. After registration, the authorised capital becomes available for the company’s activities and can be used to cover current expenses.

If you don’t plan to spend the time and financial resources on recruiting and retaining an accountant in-house, it’s a good idea to choose a trusted accounting service provider. This will avoid mistakes and ensure a smooth start. It is particularly important not to delay registration with the VAT authorities – this is relevant if the company is going to become VAT-registered or if it has employees. In this case, notifications must also be made to Sodra.

It is important to have contracts for work, services, rentals and internal rules to help ensure smooth day-to-day operation and management. Depending on the nature of the activity, additional permits, contracts with suppliers or insurance may be required, and it is worth planning for these before you start. It is also important to take care of data protection, which must be carried out legally, in accordance with current legislation and in compliance with GDPR requirements.

Forming share capital: what is important to know?

Although the minimum authorised capital for setting up a limited liability company is €1,000, it is important to know how and when this money can be used. The share capital becomes the property of the company only after registration in the Register of Legal Entities. From that moment on, it can be used for the company’s activities, such as the acquisition of fixed or short-term assets, payment for services or salaries.

Capital can be built up not only in cash but also in assets (e.g. equipment, vehicles). In this case, an asset valuation is required, which must be certified by independent experts. Deferred capital contributions are also possible, where the company’s articles of association provide for the possibility of paying in the capital at a later date. This is useful when the founders plan to invest gradually but require a clear timetable and commitment.

If future expansion is foreseen or if additional financing is to be raised, the share capital can be increased. This is done through a resolution of the General Meeting of Shareholders, by registering the change with the registry office. This step strengthens the company’s image and financial credibility and is therefore often used as the company grows.

What is important to know if a limited liability company is set up by several shareholders?

When setting up an LLC with several shareholders, it is important to discuss the relationship in advance and clearly define the terms of cooperation. One of the most important aspects is the allocation of shares. It is often the case that one founder contributes more capital, while the other contributes more knowledge or labour. In this case, it is useful to agree in advance how this will be reflected in the shareholder structure.

Second, it is necessary to establish a decision-making procedure. Resolutions of the General Meeting of Shareholders may be adopted by a majority or by a qualified majority, depending on how it is provided for in the statutes. If these issues are not harmonised, conflicts may arise even on simple decisions.

For those who want to clearly define their relationship, it is useful to have a shareholders’ agreement, which additionally regulates liabilities, dividend distribution, conditions for accepting new shareholders, transfer of shares or exit scenarios. Such an agreement is not binding, but helps to avoid misunderstandings and maintain a relationship of trust.

Disagreements without a clear internal procedure can hamper operations or lead to long-term legal disputes. Therefore, when setting up a company with partners, it is a good idea not only to divide responsibilities but also to have all the important conditions in place before the company is registered.

How much does it cost
Setting up an LLC
?

One of the most frequently asked questions is how much does it cost to set up a limited liability company? While e-formation allows you to reduce some of the costs, the final price depends on the process, the scope of the services and individual needs.

The main potential costs of setting up a UAB:

■ State fee for registration in the Register of Legal Persons;
■ acquiring an electronic signature (if the founder does not already have one);
■ Notarial services (if the incorporation is not electronic or requires specific documents)
■ Drafting of articles of association and incorporation documents;
■ Providing a legal address;
■ Advice or assistance from a start-up service provider.

If you are setting up on your own, you will have to take care of the formation of the share capital, which cannot be less than €1,000. In contrast, if you opt for incorporation services, the formation of the share capital is usually included in the total cost of the services, as well as the preparation of the documents, registration and additional assistance.

It is important to note that professional companies often offer complete incorporation packages to avoid any complications and ensure that all formalities are completed accurately and quickly. This saves time and reduces risks.

Management structure of UAB

The governance structure of an LLC depends on the complexity of the company itself and the number of shareholders involved in its management. The main bodies are: the general meeting of shareholders, the director/manager and, where appropriate, the board.

The General Meeting of Shareholders is the supreme governing body of the company. It decides on the most important issues: approving the annual financial statements, appointing or dismissing the chief executive officer, distributing profits, appointing or dismissing directors, amending the share capital, etc.

The Director is responsible for the day-to-day running of the company, from financial accounting and reporting to signing contracts, ensuring workplace safety, the accuracy of the company’s documentation and the timely fulfilment of its obligations. It is his/her responsibility to ensure that the company complies with legal requirements, is properly represented vis-à-vis third parties and is transparent.

In some cases, companies choose to set up a board of directors – a collegiate management body that helps make strategic decisions and provides oversight of management. The establishment of a board becomes relevant when the company has more shareholders or when the activities are on a larger scale.

The governance of an LLC must be clearly defined in its articles of association, as this reduces the risk of conflicts and helps to ensure smooth coordination of processes and allocation of responsibilities.

Reorganisation, liquidation or bankruptcy

The choice of a limited liability company is made for a variety of reasons, such as a clear shareholder structure, plans to attract partners or investors, or to operate in certain regulated areas such as finance or IT. However, business can change over time, so it is worth knowing in advance how the liquidation or conversion to another legal form takes place.

One scenario is the conversion of a limited liability company into a small partnership or a sole proprietorship, where the business is downsizing, the search for investors has been abandoned, or more flexible management is desired. Reorganisation (e.g. merger, division) or complete liquidation of the company are also relevant. Such processes require specific knowledge and well-planned actions, so it is useful to consult specialists in advance.

Liquidation can be voluntary, where the owners decide to cease operations, or compulsory, where the decision is taken by a court or other authorities because of irregularities or insolvency. In either case, the process involves the settlement of debts and assets, informing employees, filing tax returns and de-registering the company from the Register of Legal Entities.

If a company is facing bankruptcy, it is essential to seek legal or insolvency advice as soon as possible. This allows for a timely assessment of options ranging from restructuring to negotiations with creditors or other legal actions. Bankruptcy is a complex process, but if managed properly it helps to avoid personal liability and to ensure a legal and formal winding-up.

Reorganisations can merge several LLCs into one, or separate activities into separate legal entities, to manage risks or activities more efficiently. The decision to reorganise or dissolve an LLC should be well-founded and well-considered, and it is advisable to consult with specialists to ensure a smooth and legal process.

Why choose Baulera.lt?

When you trust the Baulera.lt team, you not only get professional help, but also clarity – every step is explained, recommendations are given, and all actions are carried out accurately and in accordance with the applicable laws of the Republic of Lithuania. Our specialists have been assisting clients all over Lithuania for many years – both in establishing companies and changing their structure: form, authorised capital, shareholders’ composition or other data of the Centre of Registers. We have many years of practical experience, so we know exactly what documents need to be prepared, how to efficiently set up a private limited liability company, what is important when planning activities and how to avoid costly mistakes.

We work quickly and seamlessly – physically and electronically– and we strive to communicate clearly and understandably on all issues. Whether you’re just thinking about where to start or you’ve already made up your mind about signing a company formation agreement. We’ll take care of the whole process from start to finish. Baulera.lt is your partner for a smooth and hassle-free company formation.