Corporate Law in Lithuania

AT A GLANCE

Lithuanian corporate law is governed primarily by the Law on Companies (Akcinių bendrovių įstatymas — ABĮ), which regulates the incorporation, governance, shareholder rights, capital structure, and dissolution of both private (UAB) and public (AB) companies.
The Law on Companies was substantially revised in 2022 to align with EU Directive 2019/1151 (the Company Law Digitalization Directive) — introducing fully digital incorporation and enabling cross-border mergers and conversions within the EU.
Shareholder rights, director duties, and corporate governance obligations under the ABĮ are mandatory — they cannot be excluded by the articles of association or by shareholder agreement, though many can be supplemented or modified within the limits the law allows.
We advise on all aspects of Lithuanian corporate law: incorporation structure, shareholders’ agreements, corporate governance, share transactions, restructuring, M&A, and dispute resolution between shareholders and between shareholders and directors.
Lithuanian corporate law is a civil law system — the mandatory provisions of the ABĮ apply regardless of where the company’s shareholders are based or what governing law the shareholders’ agreement selects.

Short answer

Corporate law services in Lithuania cover the full spectrum of legal matters arising from the ownership, governance, and lifecycle of Lithuanian companies — from structuring the company at incorporation through shareholders’ agreements, share transfers, capital changes, director duties, and M&A transactions, to restructuring and dissolution. The governing framework is the Law on Companies (ABĮ), the Civil Code, and EU company law directives as transposed into Lithuanian law. We advise Lithuanian companies and their foreign shareholders on all aspects of corporate law at fixed fees for defined engagements.

The Lithuanian Corporate Law Framework

The Law on Companies (Akcinių bendrovių įstatymas)

The Law on Companies (ABĮ) is the primary statute governing Lithuanian companies. It was originally enacted in 2000, substantially amended in 2022, and regulates every aspect of the company lifecycle: incorporation and registration, the company’s constitutional documents (articles of association), the governance structure (shareholders, management board, board of directors, supervisory board), shareholder rights and obligations, capital structure, share transfers, corporate transactions (mergers, demergers, transformations), and dissolution and liquidation.

The ABĮ distinguishes between two primary company types: the public limited liability company (akcinė bendrovė — AB), which can issue shares to the public and has a minimum share capital of €40,000; and the private limited liability company (uždaroji akcinė bendrovė — UAB), which cannot issue shares to the public and has a minimum share capital of €2,500. The vast majority of Lithuanian commercial companies — and almost all foreign-owned companies — are UABs.

EU company law directives

Lithuania’s company law has been substantially shaped by EU company law directives. Key EU instruments implemented in Lithuanian law include: Directive 2009/101/EC (publication of company information — implemented through the Centre of Registers public database); Directive 2012/30/EU (capital maintenance — implemented through the ABĮ share capital rules); Directive 2019/1151 (digitalization — implemented through the 2022 ABĮ amendments enabling fully digital incorporation); Directive 2019/2121 (cross-border mergers, demergers, and conversions); and the EU Shareholders’ Rights Directive (Directive 2007/36/EC as amended by 2017/828/EU).

The Civil Code — supplementary application

Where the ABĮ does not specifically regulate a matter, the Civil Code (Civilinis kodeksas) applies as general law. Book Two of the Civil Code (Persons) contains provisions on legal entities that supplement the ABĮ — including general rules on legal capacity, the legal entity’s liability, and the rules on representation. The interaction between the ABĮ (lex specialis) and the Civil Code (lex generalis) is important in areas such as director liability, the validity of corporate decisions, and the consequences of corporate restructuring transactions.

 UAB vs. AB — which structure applies

The UAB (private limited liability company) is the standard structure for foreign-owned Lithuanian businesses. It has a minimum share capital of €2,500, can be incorporated by a single shareholder, has no public share offering capability, and benefits from simpler governance requirements than the AB. The AB is used where public share offering is intended or where the company’s scale or regulatory requirements demand it. We advise exclusively on UAB structures for standard corporate law engagements unless the specific circumstances of the client require otherwise.

Corporate Law Services We Provide

Shareholders' Agreements

A shareholders' agreement (akcininkų sutartis) is a private contract between the shareholders of a Lithuanian company — supplementing the articles of association with provisions that are not publicly disclosed, provide more detailed governance rules, and protect minority shareholder rights in ways the articles cannot. Under Article 2.87 of the Civil Code, shareholders of a UAB may enter a shareholders' agreement that does not contradict the mandatory provisions of the ABĮ.

Reserved matters — decisions requiring shareholder consent above the statutory threshold; protecting minority shareholders from majority action on key matters
Board composition rights — each shareholder's right to nominate directors or supervisory board members proportional to their shareholding
Dividend policy — agreed minimum distribution levels; conditions on profit retention; dividend priority for certain shareholder classes
Transfer restrictions — pre-emption rights, tag-along rights (following a majority sale), drag-along rights (compelling minority sale), right of first refusal
Non-compete and non-solicitation — post-exit restrictions on departing shareholders; must comply with Article 2.164 CK duration limits
Deadlock resolution — mechanisms for resolving governance deadlocks in equal-split structures: mediation, buy-sell provisions, Russian roulette clauses
Exit provisions — put and call options; IPO obligation; compulsory transfer on change of control of a corporate shareholder
Dispute resolution — governing law choice; Lithuanian arbitration or international arbitration (ICC, SCC, VIAC); expert determination for valuation disputes

Corporate Governance and Director Duties

Lithuanian corporate governance is structured around three possible governance bodies: the general meeting of shareholders (visuotinis akcininkų susirinkimas), the board of directors or the single director (valdyba arba direktorius), and — for larger companies or where the articles provide — a supervisory board (stebėtojų taryba). Each body has defined competences under the ABĮ, and the boundaries between them cannot be crossed without legal consequence.

Director duty of loyalty (lojalumo pareiga) — Article 37 ABĮ requires directors to act in the company's interests; directors must disclose conflicts of interest to the supervisory board or shareholders and may not vote on conflicted matters
Director duty of care (rūpestingumo pareiga) — directors must act with the care of a reasonably diligent businessperson; the business judgment rule applies in Lithuania under Article 37 ABĮ
Director personal liability — directors who breach their duties are personally liable to the company for resulting losses; the limitation period is 3 years from the date the company became aware of the loss
Related party transactions — Article 37(3) ABĮ imposes specific disclosure and approval requirements for transactions between the company and related parties (shareholders owning more than 10% or their connected persons)
Governance documentation — board and shareholder meeting procedures; minutes; decision thresholds under the ABĮ and the articles
Corporate secretary function — ongoing compliance with ABĮ governance requirements; annual meeting management; statutory filing calendar

Share Transactions

The transfer of shares in a Lithuanian UAB is governed by Articles 47–49 of the ABĮ and the specific provisions of the company's articles of association. The ABĮ imposes pre-emption rights on share transfers unless the articles of association have disapplied them — which they rarely do. The transfer must be documented, notarised where required, and registered with JAR within 5 days of the transfer taking effect.

Share purchase agreement (SPA) — including representations and warranties, conditions precedent (regulatory approvals, third-party consents), completion mechanics, and post-completion adjustments
Pre-emption right process — notifying existing shareholders of the proposed transfer; managing the statutory response period; documenting waivers where applicable
Share valuation — advising on the basis for share valuation in related-party transfers (which must be at fair market value under Article 37(3) ABĮ); commissioning independent valuations
Minority squeeze-out — Article 54 ABĮ: a shareholder holding at least 95% of shares and voting rights may compulsorily purchase the remaining shares at fair value
Minority buy-out right — Article 54(4) ABĮ: minority shareholders whose shares have been squeezed out have the right to require the majority to purchase their shares
Share pledge and security — pledging UAB shares as security under the Civil Code pledge provisions; registration in the Register of Pledges
ESOP and VSOP arrangements — employee equity participation structures under Lithuanian law; option grant documentation; tax treatment

Capital Structure and Changes

The share capital of a Lithuanian UAB sets the minimum asset base below which dividends cannot be paid and below which the company must take remedial action. Capital changes — increases and reductions — are formal legal processes under Articles 52–54 ABĮ that require shareholder resolutions, notarised articles amendments, and Centre of Registers filings.

Capital increase — new share issuance to existing shareholders or third parties; preemptive subscription rights under Article 48(4) ABĮ; shareholder resolution requirements
Capital increase by converting retained earnings — capitalising accumulated profit into share capital; articles amendment process
Capital reduction — compulsory creditor notification period (minimum 30 days under Article 52(5) ABĮ); court non-objection right; conditions for distribution vs. loss absorption purposes
Minimum capital compliance — Article 38(3) ABĮ: if the company's net assets fall below half of the registered share capital, the board must convene a shareholder meeting within 3 months to address the situation
Convertible notes and SAFEs — structuring pre-equity funding instruments under Lithuanian law; conversion mechanics; impact on share register and JADIS
Share class restructuring — creating preference shares or weighted voting shares within the ABĮ limitations; articles amendment

Mergers, Demergers, and Transformations

Corporate restructuring transactions in Lithuania — mergers (jungimas), demergers (skaidymas), and transformations (pertvarkymas) — are governed by Articles 62–76 ABĮ. These are formal statutory processes that involve creditor notification, shareholder approval, court proceedings in some cases, and Centre of Registers filings. EU Directive 2019/2121 has been transposed into Lithuanian law, enabling cross-border mergers, demergers, and conversions within the EU.

Merger (acquisition merger) — one company absorbs another; all assets and liabilities transfer by universal succession; shareholders of the absorbed company receive shares in the acquiring company
Merger (consolidation) — two or more companies merge into a newly incorporated entity; all assets and liabilities transfer to the new company
Demerger (split) — a company's assets and liabilities are divided between two or more successor companies; existing shareholders receive shares in each successor
Demerger (spin-off) — part of a company's business is transferred to a new or existing company while the original company continues; used to separate business divisions
Transformation — changing the company's legal form without dissolution (e.g., UAB to AB or branch to subsidiary); all assets and liabilities continue in the new form
Cross-border merger — merging a Lithuanian UAB with a company from another EU member state under the 2019/2121 framework; specific procedural requirements apply
Due diligence — pre-acquisition review of a Lithuanian target company's corporate, legal, and compliance status

Shareholder Disputes

Disputes between shareholders of a Lithuanian company — or between shareholders and the company or its directors — are resolved under the ABĮ and the Civil Code. The ABĮ provides specific mechanisms for challenging corporate decisions, seeking minority protection, and compelling buy-outs. Lithuanian courts have a developed body of case law on shareholder disputes. We advise on and represent clients in shareholder disputes at all stages.

Challenging corporate decisions — Article 42 ABĮ: shareholders may challenge shareholder meeting decisions that violate the ABĮ, the articles, or good faith within 3 months of the decision
Derivative action — Article 39 ABĮ: shareholders holding at least 1/20 of the share capital may bring an action on the company's behalf against directors for breach of duty
Minority oppression — the Civil Code good faith principle and Article 42 ABĮ protect minority shareholders against action by the majority that is contrary to the principles of good governance
Compulsory liquidation — Article 69 ABĮ: a court may order liquidation where the company's activities are fundamentally deadlocked or where continuing is contrary to public interest
Director removal — Article 37 ABĮ: shareholders may remove a director at any time by simple majority resolution; wrongful removal may give rise to a compensation claim under the director's service agreement
Arbitration and mediation — clause drafting for efficient dispute resolution; representing clients in Lithuanian court or arbitration proceedings

Key Shareholder Rights Under the Law on Companies

The ABĮ grants Lithuanian company shareholders a set of statutory rights that cannot be reduced by the articles of association or by shareholder agreement. Understanding these rights is fundamental for both majority and minority shareholders.

Shareholder Right	Legal Basis	Threshold / Conditions
Right to attend and vote at general meetings	Article 41 ABĮ	All shareholders; proportional to shareholding unless articles provide otherwise
Right to information — access to company documents	Article 18 ABĮ	All shareholders; documents include accounts, shareholder register, meeting minutes, director service agreements
Right to receive dividends	Article 59 ABĮ	All shareholders; subject to distributable profit; cannot reduce net assets below share capital
Pre-emption right on new share issuance	Article 48(4) ABĮ	All shareholders; proportional to existing shareholding; can be disapplied by shareholder vote
Pre-emption right on share transfer	Article 47(2) ABĮ	All shareholders; articles may disapply; standard for most UABs
Right to call an extraordinary general meeting	Article 28(3) ABĮ	Shareholders holding ≥1/10 of shares
Right to add items to the general meeting agenda	Article 28(4) ABĮ	Shareholders holding ≥1/20 of shares
Derivative action on company’s behalf	Article 39(2) ABĮ	Shareholders holding ≥1/20 of shares; action against directors for breach of duty
Right to challenge corporate decisions	Article 42 ABĮ	All shareholders; 3-month limitation period from decision date
Right to require company buy-out (squeeze-out counter-right)	Article 54(4) ABĮ	Minority shareholders after 95%+ squeeze-out by majority
Right to liquidation distributions	Article 77 ABĮ	All shareholders; after satisfaction of creditors

Director Duties and Liability Under Lithuanian Law

Every director of a Lithuanian company — whether a Lithuanian resident or a foreign national serving remotely — is subject to the director duty provisions of Article 37 of the Law on Companies. These duties are mandatory and cannot be excluded or limited by the articles of association or by the director’s service agreement.

Duty of loyalty — avoiding conflicts of interest

Article 37(3) ABĮ requires directors to act exclusively in the interests of the company and to avoid situations where their personal interests conflict with the company’s interests. Specific obligations include: disclosing any direct or indirect personal interest in any transaction the company proposes to enter; not participating in the decision-making on a transaction where there is a conflict of interest; not using company assets, information, or relationships for personal gain; and not competing with the company without shareholder consent. Breach of the loyalty duty entitles the company to void the conflicted transaction and claim damages from the director.

Duty of care — the business judgment rule

Directors must act with the care and prudence of a reasonably diligent businessperson (Article 37(1) ABĮ). Lithuanian courts have adopted a business judgment rule: courts will not second-guess a business decision made by a director in good faith, on the basis of adequate information, and without a conflict of interest — even if the decision resulted in loss to the company. The business judgment rule protects directors from personal liability for commercially unsuccessful decisions; it does not protect decisions made in bad faith, with inadequate information, or under a conflict of interest.

Director personal liability

Under Article 37(4) ABĮ, a director who causes loss to the company through breach of their duties is personally liable for the resulting loss. The liability is unlimited in principle — there is no statutory cap. Shareholders can bring a derivative action against the director under Article 39(2) ABĮ. The limitation period for director liability claims is 3 years from the date the company (or its shareholders) became aware of the loss and the director’s breach. Directors of insolvent companies may also face personal liability under the Law on Insolvency for actions taken in the period before insolvency was declared.

Related party transactions — disclosure and approval

Article 37(3) ABĮ imposes specific requirements for transactions between the company and related parties — including shareholders owning more than 10% of shares, directors, supervisory board members, and their connected persons (family members, companies they control). Before entering such a transaction, the director must disclose the nature of their interest to the supervisory board (if there is one) or to the general meeting of shareholders (if there is no supervisory board). The supervisory board or the general meeting must approve the transaction. Approval given without proper disclosure is voidable under Article 1.91 CK.

Corporate Lifecycle: From Incorporation to Dissolution

Lithuanian company law governs every stage of a company’s life. The key legal events and their statutory frameworks are summarised below.

Lifecycle Stage	Key Legal Requirements	Legal Basis
Incorporation	Articles of association (notarised); share capital payment; JAR registration; JADIS registration within 1 month	ABĮ Articles 3–10; Civil Code Article 2.68
Annual governance	AGM within 4 months of year-end; accounts approval; JAR annual confirmation; JADIS annual confirmation	ABĮ Article 34; ABĮ Article 58
Capital increase	Shareholder resolution (simple majority unless articles require more); articles amendment (notarised); JAR filing	ABĮ Articles 48–51
Capital reduction	Shareholder resolution; creditor notification (min 30 days); court non-objection period; articles amendment; JAR filing	ABĮ Article 52
Share transfer	Share purchase agreement; pre-emption compliance; notarisation (if required by articles); JAR and JADIS update within 5 days	ABĮ Article 47; CK Articles 6.47–6.60
Director change	Shareholder resolution (simple majority); JAR filing within 5 days of decision	ABĮ Article 37; ABĮ Article 35
Merger	Merger plan (valdybos nutarimas); shareholders’ approval (75% or more); creditor notification; court filing; JAR registration	ABĮ Articles 62–71
Demerger	Demerger plan; shareholder approval (75% or more); creditor notification; court filing; JAR registration	ABĮ Articles 72–76
Voluntary dissolution	Shareholder resolution (75% or more); liquidator appointment; creditor notification (min 3 months); asset distribution; JAR deregistration	ABĮ Articles 77–80
Insolvency	Board notifies shareholders when net assets fall below ½ of share capital; insolvency administrator appointed by court	ABĮ Article 38(3); Law on Insolvency

Corporate Law Services Pricing

Defined corporate law engagements are priced at fixed fees. M&A transactions, cross-border restructuring, and shareholder dispute litigation are quoted individually based on complexity.

Service	Price
Shareholders’ agreement — standard (2 parties) Reserved matters, transfer restrictions, governance, deadlock, exit provisions; English	€900
Shareholders’ agreement — complex / multi-party 3+ parties; international arbitration clause; complex governance or exit structures	€1,400
SHA amendment Amending specific provisions; updating for changed circumstances or new shareholders	€450
Corporate governance review and recommendations Reviewing articles, governance documents, and director practices against ABĮ compliance requirements	€700
Director service agreement ABĮ-compliant; scope of authority, remuneration, notice period, liability, and indemnification	€350
Related party transaction advisory Article 37(3) ABĮ compliance; disclosure and approval procedure for a specific transaction	€400
Share purchase agreement — standard Representations and warranties, conditions, completion mechanics; English + Lithuanian	€1,000
Share purchase agreement — complex (M&A transaction) Full deal with due diligence, W&I insurance, and complex conditions; quoted by complexity	On request
Pre-emption right process management Statutory notification, response period management, and waiver documentation	€200
Capital increase documentation Shareholder resolution, articles amendment, notarisation, and JAR filing	€500
Capital reduction advisory and documentation Creditor notification period; court filing; articles amendment; quoted by complexity	On request
Merger / demerger advisory and process management Full statutory process; quoted by number of entities and complexity	On request
Voluntary dissolution (liquidation) Full process from shareholder resolution through creditor notification to JAR deregistration	From €1,500
Corporate due diligence (target company review) Corporate, legal, and compliance review of a Lithuanian target; written report	€1,200
Director liability assessment Written assessment of director’s exposure for a specific act or omission; litigation risk analysis	€500
Shareholder dispute — initial assessment Advising on rights, remedies, applicable law, and recommended approach	€600
Shareholder dispute — litigation or arbitration Court or arbitration proceedings; quoted by complexity and anticipated duration	On request

Frequently Asked Questions

Yes — under Article 2(1) of the Law on Companies, a UAB can be incorporated and owned by a single shareholder (fizinis asmuo — a natural person — or juridinis asmuo — a legal entity). A sole shareholder can also serve as the sole director. There is no requirement for multiple shareholders or for a locally resident shareholder. This is one of the most important features of the UAB structure for foreign investors — full ownership and control without any local partnership or co-shareholder requirement.

Lithuanian corporate law distinguishes between two governance structures for companies with a management board. In the one-tier structure: a single director (vadovas) or a board of directors (valdyba) manages the company; there is no supervisory body. In the two-tier structure: a board of directors (valdyba) manages operations, and a supervisory board (stebėtojų taryba) oversees the board. A supervisory board is mandatory for companies with more than 10 employees and share capital exceeding €149,000, or for companies that are state-owned or banking and insurance regulated. For most foreign-owned UABs, the one-tier structure with a single director is standard and does not require a supervisory board.

The ABĮ sets different majority thresholds for different categories of shareholder decision. Ordinary decisions (electing directors, approving accounts, declaring dividends) require a simple majority (more than 50%) of votes cast where a quorum is present. Important decisions (amending the articles of association, approving major transactions, issuing new shares disapplying pre-emption rights) require a two-thirds majority. Fundamental decisions (dissolution, merger, demerger, transformation) require a three-quarters majority. The articles of association can increase these thresholds — requiring unanimous consent for certain decisions — but cannot reduce below the statutory minimums.

Yes — under Article 54 of the ABĮ, a shareholder holding at least 95% of all shares and voting rights may compulsorily purchase the remaining shares (squeeze-out). The price paid must be fair value, determined by an independent expert if the parties cannot agree. The minority shareholder has a corresponding right: under Article 54(4) ABĮ, a minority shareholder who has been subject to a squeeze-out may require the majority to purchase their shares at the same price. The squeeze-out mechanism prevents minority shareholders from blocking the majority’s control of the company at the 95% threshold. Below 95%, a compulsory buy-out is only available through a court order in exceptional circumstances.

Under Article 38(3) of the ABĮ, if the company’s net assets fall below half of the company’s registered share capital, the board of directors must convene an extraordinary general meeting of shareholders within 3 months to address the situation. The meeting must decide either to reduce the share capital to bring it into alignment with the reduced net assets, to increase the net assets by additional shareholder contributions, or to dissolve the company. Failure to convene this meeting and take one of these actions makes the directors personally liable for any resulting damage to creditors. This provision is the most frequently triggered financial distress mechanism for Lithuanian companies.

A shareholders’ agreement and the articles of association serve different purposes and interact in a specific way. The articles of association are a constitutional document that is binding on the company and on all shareholders — including future shareholders. A shareholders’ agreement is a private contract between specific shareholders that is not binding on the company itself or on future shareholders who did not sign it. Where the articles and the SHA conflict, the articles govern as against third parties and the company. Between the signatory shareholders, the SHA governs. This means that a SHA cannot grant rights against the company that the articles do not support — but it can create contractual obligations between shareholders that the articles do not contain. The standard approach is to make the articles and SHA consistent, with the SHA providing additional detail on governance and exit mechanisms.

Under Article 37(4) of the ABĮ and Article 123 of the Law on Tax Administration, a director who negligently or deliberately failed to ensure that the company met its tax obligations may be personally liable for the company’s tax debts to VMI. This liability arises where: the company has been declared insolvent; its tax debts are not satisfied from company assets; and it can be shown that the director’s breach of duty caused or contributed to the company’s failure to pay its taxes. This personal liability risk is one of the most significant reasons why directors of distressed Lithuanian companies seek early legal advice on insolvency procedures.

Ready to discuss your corporate law matter?

Contact us with a description of your situation — whether it is a shareholders’ agreement, a share transaction, a director dispute, or a restructuring question. We will confirm the applicable ABĮ framework, assess the options available, and provide a fixed-fee quote for the engagement within 24 hours.