SMP

TAKE A SEAT

Lithuania

Typical legal form for start-ups

uždaroji akcinė bendrovė (UAB)

Brief information

Lithuanian start-ups usually choose the legal form of the UAB. It offers the advantages of an individual legal personality, limited shareholder liability, flexible corporate governance and a minimum share capital of only EUR 2,500. Also, its popularity contributes to its spread. The UAB is similar to the German GmbH.

If the UAB has a Supervisory Board, an investor can participate in it. He/She can also in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.

The management of UAB is the responsibility of either a single Director or a Board of Directors as a collective body. As a rule, a Management Board is established at the latest from the Seed or Series A financing round. In addition, a Supervisory Board can be set up as an option. The latter is responsible for supervising the Management Board. A contractual observer seat status is also possible. The observer may attend meetings of the management but has no right to vote.

If the UAB has a Supervisory Board, an investor can participate in it. He/She can also in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
PE/VC Funds may not participate in the Board of Directors or the Management Board.

Other legal form

akcinė bendrovė (AB)

Brief information

A conversion into an AB usually only takes place in preparation for an IPO.

If the AB has a Supervisory Board, an investor can participate in it. It can also in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.

Required bodies of the AB are the shareholders' meeting and the director(s). In addition, the Management Board and Supervisory Board may be established as further facultative bodies. The Management Board appoints the Director(s). The Supervisory Board monitors the General Management (director(s) or Management Board).
In addition, observer seat status can be granted by contract.

If the AB has a Supervisory Board, an investor can participate in it, as the supervisory duties are strictly separated from the management duties. In principle an observer seat can be accepted, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
PE/VC Funds may not participate in the Board of Directors.

The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. Before taking over a board seat in a portfolio company, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.

In collaboration with: Sorainen

Sources: Wegen/Spahlinger/Barth, Gesellschaftsrecht des Auslands 2. EL Januar 2018