The upcoming changes to the law on stock companies will increase Lithuania's attractiveness for foreign investors


​published on 30 November 2022 | reading time approx. 3 Minutes


Recently, the Parliament of Lithuania (the Seimas) approved the amendments to the Law on stock companies proposed by the Ministry of the Economy and Innovation of the Republic of Lithuania. What core amendments lie ahead and how they might impact Lithuania's attractiveness for potential foreign investors? Associate Partner Michael Manke overviews all relevant points to be taken into consideration.

The upcoming changes to the Law on stock companies will make Lithuania even more attractive for foreign investors, implementing a long sought after reform of Lithuanian corporate law. These changes will: 

  • significantly reduce the start-up costs during incorporation, 
  • give especially foreign shareholders more flexibility when organizing shareholder meetings, and 
  • make it easier for companies to find investors with a more flexible regime for company shares.


The major amendments to the law on stock companies that lie ahead


The UAB is a closed joint stock company, which is the most popular company form in Lithuania. It fulfils the same role as limited liability companies all around the world as an investment vehicle for small and medium sized investors. The share capital will be reduced from 2500 to 1000 EUR. The shareholders pay the minimum share capital into an accumulative accounting during the incorporation but may no dispose of the amount until the bank or electronic money institute has completed its "Know-your-customer" procedure. For foreign shareholders, especially those with a multi-layered corporate structure, this process may take a significant amount of time during which the share capital is not available. 



While companies could hold shareholder meetings via electronic means in the past, the articles of association may now provide means for attendance and voting purely through electronic means. The minutes of the meeting may be signed remotely by qualified electronic signature. Qualified electronic signatures issued in other EU-Member states are valid for this purpose. In addition, the shareholder's representative may obtain such a signature through the Lithuanian e-residency. Either the general manager or the board will be responsible for approving the respective procedures for participation by electronic means. These procedures should detail the means for identification, required equipment and software as well as registration, voting, the use of secret ballots and recording of the meeting. 



A shareholder or several shareholders acting jointly, who hold at least 95% per cent of the shares, may require all other shareholders to sell those shares to the majority shareholder(s). At the same time minority shareholders may oblige the majority shareholder to buy them out. These buy-out rules will also apply to convertible bonds, which may be converted into voting shares. The value of the shares must be established by an independent evaluator. The new law will not stipulate how the independent evaluator determines a fair value for the buy-out shares. The shareholders will still have to regulate this in their shareholders' agreement. 



Currently, the initial cash contribution for each subscriber of new shares must be at least 1/4 of the sum of the nominal value of all the shares subscribed for and the excess of the nominal value of all the shares subscribed. In the future the law will distinguish between the procedure for the payment of new shares in closed joint-stock companies (UAB) and stock companies (AB). In the UAB the initial cash contribution of each subscriber must be at least 1/4 of the nominal value of the total number of shares. A subscriber to new shares in a UAB will be able to defer for 12 months not only 3/4 of the nominal value of the new shares, but also the full amount.



Currently companies may issue shares with or without the right (1) to receive dividends and/or (2) to vote. However, such shares may not amount to more than 1/3 of the total number of shares in the company. Companies focused on expansion and overall growth, e.g. startups often issue shares without dividends. Shares without voting rights are issued to employees as a way of remuneration and employee benefit. The only remaining restriction in the future will be that shares without voting rights may not amount to more than 50 per cent of the total amount of shares. In addition companies may issue other type of shares, for example with or without certain property or non-property rights, if the articles of association foresee such a possibility. 



In the future the articles of association may foresee the possibility to waive the preemptive right of other shareholders in a UAB. Until then shareholders have to offer their shares first to the other shareholders before selling them to any third party. This possibility will give shareholders more flexibility as will be able to agree on another procedure for exercising preemptive rights than those currently foreseen in the law. 


All aforementioned changes will enter into force 1 May 2023.

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