Transfer of a Lithuanian Company to a New Owner
A transfer of a company is defined as a relocation of all or part of the company’s property or company to a new owner (person or company) which ensures further commercial activities of the company. Usually business ownership is transferred along with the management function.
If your Lithuanian company is at the stage where the transition to a new ownership is on the horizon, you may wish to explore and evaluate all the possible ways of a company transfer. Among many other factors, such aspects as continuity of employment relationship, provision of social guarantees for employees and application of government support forms for business continuity should be considered.
In order to accurately assess any possible legal consequences for the participants of the transfer, it’s essential to have an understanding of the legal methods of business transfer as well as properly prepare for the process management.
A dedicated Company in Lithuania UAB team will assist in transferring your Lithuanian company to a new owner or in preparing required documents. A successfully transferred company will have a name, owner, management board, address, telephone number and email address changed. Such changes must be submitted at the State Enterprise Centre of Registers within 5 days. If there are no obstacles in updating the register, the changed data will be registered within 3 working days at the latest.
There are three legal models of changing a Lithuanian company’s ownership:
- Agreement – sale-purchase, gift, lease, inheritance, gift, etc.
- Administrative decision usually applies to the transfer of a business when the decision is taken by an authority with administrative powers, e.g. the transfer of a public service from one company to another.
- Court order refers to a business transfer to its legal successor or return to the transferor, annulment of inheritance and other business transfer agreements under certain legal circumstances.
Key Steps to Consider for Changing Company’s Ownership
Whichever model you may have to apply, a dedicated and highly experienced Company in Lithuania UAB team will step in to guide you through this complex process by offering legal and administrative support in changing ownership of your business in Lithuania. We’ll be glad to arrange certified document translations, notary public services and other necessary steps inherent to a company transfer.
Notary public services aren’t required for a Deed of Gift (transferring shares as a present). Notarisation is, however, obligatory for the purchase and sale agreements of shares of private limited companies (UAB) when 25% or more of the shares of the private limited company are sold, or the sale price is more than 14,500 EUR, except in cases when personal securities accounts of the shareholders have been transferred for management to a legal entity entitled to open and manage personal accounts of financial instruments. Also, the shares of a private limited company can be sold by concluding a privatisation transaction of shares owned by the state or municipality.
Most notaries offer online services through the portal of the Lithuanian Chamber of Notaries to those clients who have certified digital signatures. However, depending on a notary’s decision, it’s likely that all the involved parties will be required to visit a notary’s office in Lithuania, where one of the company’s owners/shareholders will transfer his/her part of the business to another person by signing a notarised contract.
In addition to arranging notary services, the team of Company in Lithuania UAB also offers power of attorney services in case you prefer to give legal power to a representative to act and make these decisions on your behalf. Enquire about a power of attorney here.
In order for us to be able to arrange all the necessary documentation and meetings for your company’s transfer in Lithuania, you should provide the following information:
- Planned date of visit (if the transfer isn’t to be done remotely)
- Company name
- Information about company’s owners/shareholders (passport photocopy, email address, telephone number, residence address, marital status)
- Information about the directors of the company (passport photocopy, email address, telephone number, residence address, marital status)
- Information about the financial activities of the company (bank statement)
- Annual report for the previous year
Before booking an appointment with a notary, Company in Lithuania UAB will prepare the documents for the ownership transfer of your Lithuanian company. For this reason, you should send us all the above-mentioned information about your company via email at least 10 days prior to your planned visit to Lithuania.
Importance of Thorough Preparation for a Company Transfer to a New Owner
A well-managed transfer of company’s ownership is no less critical than business launch or development, as every of these stages holds a promise for growth in terms of generating revenue and either creating or saving jobs, which is why it’s important to ensure the continuity of any viable business.
After all, successful business transfer implementations contribute to a country’s economic sustainability. This is why company’s ownership transfers continue to attract more attention from the policymakers who are looking to simplify, standardise and clarify the procedures of transferring a business to a new owner.
Nevertheless, business transfer is a long process and therefore needs to be properly prepared for. Viable businesses may be forced to close due to the lack of owners’ preparation for this stage. Company in Lithuania UAB team strongly recommends thorough examination of all the complexities of a business ownership transfer prior to starting the process.
Complexities of Company’s Ownership Transfers
There are plentiful and varied complexities of a transfer of a company to a new owner. These processes involve transferring various types of assets, such as machinery, real estate, cars, and other tangible assets. The following aspects add layers of challenge to the process:
- Specific legislation may apply to each type of asset.
- Different tax provisions are related to the transfer of assets.
- There might be more than two stakeholders – sometimes it’s not a simple agreement between the owner and the buyer, as the views of the owner’s family and credit institutions may need to be taken into account too.
- Such intangible assets as owner’s expertise, technology, patents, customer and employee relations should also be considered.
- Difficulties also arise from national legislation, in particular company law, tax and administrative formalities. Examples of this type of problems are high inheritance and gift taxes, finances, problems that prevent the company from changing its legal form when it is about to be transferred and issues that prevent the partnership from continuing after one of the partners is not around anymore.
Indeed, business ownership transfer in Lithuania is a complex process, but you can always request dedicated support. We’ll help you to evaluate local regulations and taxation applied to different models of business transfer, will assist in designing the most effective business ownership transfer plan, as well as help you to navigate through this complex process by offering various legal-support-related services depending on your individual and business needs. We guarantee confidentiality and operational excellence, including effective documentation dispatch schedules. Book an appointment with us now.
Besides qualified legal and accounting services, we also offer a virtual office service, which removes the need for expensive office leases. It’s an advantageous solution for businesses of various sizes who are looking to create a professional image and have functions of a physical office, while reducing costs and maintaining the benefits of remote work.