Legal forms
Major legal forms of companies:
Individual company (IC)
Private Limited Company (PLC)
Public Limited Company (PLC)
True Partnership (TP)
Commandite Partnership (CP)
Individual company (regulated by the individual company law)
Only one person may be the founder of IC;
IC is a legal person with unlimited liability, i.e. for ICs obligations you will be responsible with all your assets;
While establishing IC the founder signs regulations which will guide his activities.
IC advantages:
To start your IC activity it is enough of a small initial capital;
IC can be handled with a simplified bookkeeping;
you can work alone in your company and, if necessary, employ other people.
IC disadvantages:
IC assets are not separated from its owner’s property;
It is usually difficult to obtain a bank loan for business expansion.
Public limited company and Private limited company (regulations by joint-stock company law)
Planning activities associated with higher risks, it is recommended to establish PLC In that way you separate your own assets from companies and you will receive profits in the form of dividends.
PLC capital should be not less than 10 thousand Lt, and the limit of shareholders is 250.
PLC Owners impact on the company depends on the shares of the company that he has.
Registration of PLC is governed by the Republic of Lithuania JSC act.
PLC advantages:
If your business fails, you as a shareholder, risk only the capital, which you brought to the company;
It is much easier to attract additional funs for business development in PLC.
PLC disadvantages:
Establishment of PLC is much more complicated than IC.
To start PLC activity you must have a start-up capital.
PLC activities are governed by the laws more stringently, it is bound much more complicated accounting and preparation of financial report accountability.
Risks:
PLCs accounts are managed in accordance with the double entry system, which requires detailed knowledge of bookkeeping and staff with appropriate qualifications.
Partnerships (governed by partnerships law)
It is not enough of one person and money to develop the activity.
Partnership must contain at least 2 and not more than 20 members.
Partnerships advantages:
It is optional for Community to employ workers under the employment contract.
It can handle a simplified bookkeeping.
Minimum own capital is not regulated.
Risk: the assets of the partnership are not separated from the assets of its members.
Individual company (IC)
Private Limited Company (PLC)
Public Limited Company (PLC)
True Partnership (TP)
Commandite Partnership (CP)
Individual company (regulated by the individual company law)
Only one person may be the founder of IC;
IC is a legal person with unlimited liability, i.e. for ICs obligations you will be responsible with all your assets;
While establishing IC the founder signs regulations which will guide his activities.
IC advantages:
To start your IC activity it is enough of a small initial capital;
IC can be handled with a simplified bookkeeping;
you can work alone in your company and, if necessary, employ other people.
IC disadvantages:
IC assets are not separated from its owner’s property;
It is usually difficult to obtain a bank loan for business expansion.
Public limited company and Private limited company (regulations by joint-stock company law)
Planning activities associated with higher risks, it is recommended to establish PLC In that way you separate your own assets from companies and you will receive profits in the form of dividends.
PLC capital should be not less than 10 thousand Lt, and the limit of shareholders is 250.
PLC Owners impact on the company depends on the shares of the company that he has.
Registration of PLC is governed by the Republic of Lithuania JSC act.
PLC advantages:
If your business fails, you as a shareholder, risk only the capital, which you brought to the company;
It is much easier to attract additional funs for business development in PLC.
PLC disadvantages:
Establishment of PLC is much more complicated than IC.
To start PLC activity you must have a start-up capital.
PLC activities are governed by the laws more stringently, it is bound much more complicated accounting and preparation of financial report accountability.
Risks:
PLCs accounts are managed in accordance with the double entry system, which requires detailed knowledge of bookkeeping and staff with appropriate qualifications.
Partnerships (governed by partnerships law)
It is not enough of one person and money to develop the activity.
Partnership must contain at least 2 and not more than 20 members.
Partnerships advantages:
It is optional for Community to employ workers under the employment contract.
It can handle a simplified bookkeeping.
Minimum own capital is not regulated.
Risk: the assets of the partnership are not separated from the assets of its members.
Individual company
If you are planning to provide services or to undertake some other commercial economic activity in which it is sufficient to carry out the work by family members and a small initial capital, and you can set up an individual company (IC).
IC establishment, management, activities, restructuring, liquidation, these business owners’ rights and obligations are governed by Republic of Lithuania individual company law which inured in the 2004 y. 1st of January.
IC founder may be the only able natural person. Individual companies act restricted the IC owners’ right to be the owner of the other IC, because IC is an unlimited liability person and its owner is responsible for it with all his assets.
IC founder is considered to be its owner from the companies’ incorporation. In IC regulations you can anticipate that the owner of the company can appoint another person as a manager. An IC regulation is the document of companies’ establishment and according to it IC follows its activities.
IC has the following advantages: the company can manage a simplified bookkeeping, it is not necessary to draw up financial statements, it is sufficient to fill in the tax declaration. IC owner can work for his company alone.
The main disadvantage of IC is that, it is necessary to assess the economic commercial activities risks. IC is an unlimited liability legal person. IC assets are not separated from its owner’s property. That means that he is responsible for the IC obligations with all his assets. We should assess the risks associated with the work or the quality of service, dates, and suppliers and so on. Breach of the obligations of the customer, for the States social insurance institution or other creditors of the company’s assets, obligations are directed to the owner’s property. IC debts can not be written off. Before the registration of this legal form it is necessary to assess companies’ advantages and disadvantages.
IC title must contain its legal form representing words like "private company" or shortening as "IC".
Individual company law provides that the IC can be converted into a joint-stock company, limited stock company, as well as into the public institution. IC can not be reorganized, except when a person inherits the IC, which is the owner of the other IC, and when reorganizing and IC which was established until 2004 1st of January, which owners are spouses.
ICs, established before 2004 1st of January, which titles include words "personal company", or the shortening "PC", as well as IC, which has no indication in its title of legal form, since 2004 1st of January are considered as an individual companies.
IC owners, with two or more ICs, from 2005 31st of December in the name of Civil Code must reorganize these companies into a single individual company or leaving only one individual company, as for other companies must be reorganized, transferred or liquidated.
Public Limited Company, Private Limited Company
If you wish to engage in activities related to the bigger risks, you better choose limited liability legal person - a Public limited company (PLC) or Private limited company (PLC), i.e. the legal forms (types of) firms that are liable for their obligations only to their own (company) assets. Shareholder of the Company, which failed the planed business, risks losing only those assets that are contributed to the company.
Public and Private limited companies establishment, reorganization and liquidation, management and activity, shareholders’ rights and obligations governed by the Republic of Lithuania Law on Joint Stock Companies.
Discussing provisions of Public and Private limited company, term "company" is used.
Joint Stock Companies Law defines the Public and Private common and distinctive features - the creation and capital formation method, requirements of founders and shareholders, management and control bodies. The company founder may be from Republic of Lithuania or from other countries, natural and legal person.
The company is an enterprise whose share capital is divided into parts called shares. The company has a limited civil liability legal person. The company’s assets are separated from the shareholders’ assets. In accordance with its obligations it is responsible for its property. Shareholders under the terms of obligations are responsible only for the amount that must be paid for the shares.
Establishing Private limited company and Public limited company, shareholders put their money together to form capital for common activity.
Public limited companies capital can not be less than 150 thousand Lt. Its shares may be distributed and traded publicly, in accordance with the public regulated circulation acts.
Private limited companies capital can not be less than 10 thousand Lt. Private limited companies shares can not be distributed or traded publicly.
Since the Public limited company has the right to distribute shares to the public, it has the right to use the various tools and information to sell its shares for every natural or legal person. Private limited company shares are strictly limited by law and this way narrowing potential fund (capital) resources.
Company founders represent the company’s founding treaty (if there is only one founder - he signs the Act). This contract gives the right to open a savings account in the name of the company and to be registered in the Republic of Lithuania Bank, while establishing Public limited company you must register the share in the Funds Commission.
Established companies shares are signed by the company founders. When all the original contributions for the shares are paid, the founders of the company have to summon the Constituent Assembly. Constituent Assembly approves the Public limited company establishment report, elects firm audit managing members, and solves other Constituent Assemblies competence issues. After Constituent Assembly the company is registered in the Register of Legal Persons. From the date of the company registration it is established and acquires legal person rights.
Joint Stock Companies Law provides that, while establishing the company, the initial contributions of shares must be paid in cash only and transferred to company’s savings account. Company can use money that is in this account only after the company is incorporated.
Shareholders of the company may be the Republic of Lithuania or other countries, natural or legal persons who in the law of holders has at least one share. Each shareholder of the company has the following rights, which was given to them by the property of the company’s shares.
The company is guided by its own statutes, which is the main legal document.
Company’s management bodies are the general meeting of shareholders, the Supervisory Board, Administration manager. Public limited companies required governing bodies are the general meeting of shareholders, the Administration manager and at least one collegial management body - the supervisory board or the board. Private limited companies required governing bodies are the general meeting of shareholders and the Administration manager. The Supervisory Board and the Board of Private limited company can be unsatisfactory.
An essential feature of the management of Public and Private limited companies – Private or Public limited companies owners impact on the company depends on how much shares does he have. The most important decisions, including the formation of organs, are made by the shareholders voting, and each of their votes depends on the amount of shares that they have.
Private and public limited companies bookkeeping are managed in accordance with the double entry system, which requires detailed knowledge of bookkeeping and staff with appropriate qualifications. At the end of the financial year, until the ordinary general meeting of shareholders in all public limited companies general meeting that was elected for the firms audit must verify the financial statements.
In Private limited companies audit must be done, if it satisfies at least two of the following conditions:
• sales revenue exceeding 10 million Lt. during the financial year;
• the average listed number of employees during the financial year is not less than 50;
• the balance of the asset exceeds the sum of 5 million Lt.
IC establishment, management, activities, restructuring, liquidation, these business owners’ rights and obligations are governed by Republic of Lithuania individual company law which inured in the 2004 y. 1st of January.
IC founder may be the only able natural person. Individual companies act restricted the IC owners’ right to be the owner of the other IC, because IC is an unlimited liability person and its owner is responsible for it with all his assets.
IC founder is considered to be its owner from the companies’ incorporation. In IC regulations you can anticipate that the owner of the company can appoint another person as a manager. An IC regulation is the document of companies’ establishment and according to it IC follows its activities.
IC has the following advantages: the company can manage a simplified bookkeeping, it is not necessary to draw up financial statements, it is sufficient to fill in the tax declaration. IC owner can work for his company alone.
The main disadvantage of IC is that, it is necessary to assess the economic commercial activities risks. IC is an unlimited liability legal person. IC assets are not separated from its owner’s property. That means that he is responsible for the IC obligations with all his assets. We should assess the risks associated with the work or the quality of service, dates, and suppliers and so on. Breach of the obligations of the customer, for the States social insurance institution or other creditors of the company’s assets, obligations are directed to the owner’s property. IC debts can not be written off. Before the registration of this legal form it is necessary to assess companies’ advantages and disadvantages.
IC title must contain its legal form representing words like "private company" or shortening as "IC".
Individual company law provides that the IC can be converted into a joint-stock company, limited stock company, as well as into the public institution. IC can not be reorganized, except when a person inherits the IC, which is the owner of the other IC, and when reorganizing and IC which was established until 2004 1st of January, which owners are spouses.
ICs, established before 2004 1st of January, which titles include words "personal company", or the shortening "PC", as well as IC, which has no indication in its title of legal form, since 2004 1st of January are considered as an individual companies.
IC owners, with two or more ICs, from 2005 31st of December in the name of Civil Code must reorganize these companies into a single individual company or leaving only one individual company, as for other companies must be reorganized, transferred or liquidated.
Public Limited Company, Private Limited Company
If you wish to engage in activities related to the bigger risks, you better choose limited liability legal person - a Public limited company (PLC) or Private limited company (PLC), i.e. the legal forms (types of) firms that are liable for their obligations only to their own (company) assets. Shareholder of the Company, which failed the planed business, risks losing only those assets that are contributed to the company.
Public and Private limited companies establishment, reorganization and liquidation, management and activity, shareholders’ rights and obligations governed by the Republic of Lithuania Law on Joint Stock Companies.
Discussing provisions of Public and Private limited company, term "company" is used.
Joint Stock Companies Law defines the Public and Private common and distinctive features - the creation and capital formation method, requirements of founders and shareholders, management and control bodies. The company founder may be from Republic of Lithuania or from other countries, natural and legal person.
The company is an enterprise whose share capital is divided into parts called shares. The company has a limited civil liability legal person. The company’s assets are separated from the shareholders’ assets. In accordance with its obligations it is responsible for its property. Shareholders under the terms of obligations are responsible only for the amount that must be paid for the shares.
Establishing Private limited company and Public limited company, shareholders put their money together to form capital for common activity.
Public limited companies capital can not be less than 150 thousand Lt. Its shares may be distributed and traded publicly, in accordance with the public regulated circulation acts.
Private limited companies capital can not be less than 10 thousand Lt. Private limited companies shares can not be distributed or traded publicly.
Since the Public limited company has the right to distribute shares to the public, it has the right to use the various tools and information to sell its shares for every natural or legal person. Private limited company shares are strictly limited by law and this way narrowing potential fund (capital) resources.
Company founders represent the company’s founding treaty (if there is only one founder - he signs the Act). This contract gives the right to open a savings account in the name of the company and to be registered in the Republic of Lithuania Bank, while establishing Public limited company you must register the share in the Funds Commission.
Established companies shares are signed by the company founders. When all the original contributions for the shares are paid, the founders of the company have to summon the Constituent Assembly. Constituent Assembly approves the Public limited company establishment report, elects firm audit managing members, and solves other Constituent Assemblies competence issues. After Constituent Assembly the company is registered in the Register of Legal Persons. From the date of the company registration it is established and acquires legal person rights.
Joint Stock Companies Law provides that, while establishing the company, the initial contributions of shares must be paid in cash only and transferred to company’s savings account. Company can use money that is in this account only after the company is incorporated.
Shareholders of the company may be the Republic of Lithuania or other countries, natural or legal persons who in the law of holders has at least one share. Each shareholder of the company has the following rights, which was given to them by the property of the company’s shares.
The company is guided by its own statutes, which is the main legal document.
Company’s management bodies are the general meeting of shareholders, the Supervisory Board, Administration manager. Public limited companies required governing bodies are the general meeting of shareholders, the Administration manager and at least one collegial management body - the supervisory board or the board. Private limited companies required governing bodies are the general meeting of shareholders and the Administration manager. The Supervisory Board and the Board of Private limited company can be unsatisfactory.
An essential feature of the management of Public and Private limited companies – Private or Public limited companies owners impact on the company depends on how much shares does he have. The most important decisions, including the formation of organs, are made by the shareholders voting, and each of their votes depends on the amount of shares that they have.
Private and public limited companies bookkeeping are managed in accordance with the double entry system, which requires detailed knowledge of bookkeeping and staff with appropriate qualifications. At the end of the financial year, until the ordinary general meeting of shareholders in all public limited companies general meeting that was elected for the firms audit must verify the financial statements.
In Private limited companies audit must be done, if it satisfies at least two of the following conditions:
• sales revenue exceeding 10 million Lt. during the financial year;
• the average listed number of employees during the financial year is not less than 50;
• the balance of the asset exceeds the sum of 5 million Lt.
