Operate as a Financial Institution License in Lithuania
All financial service activities conducted in Lithuania are regulated by the Bank of Lithuania who’s currently supervising over 650 financial market participants, such as banks, credit unions, insurance companies, payment institutions and financial management companies. The top priority is to reinforce stability of the financial system by mitigating the greatest risks that might be posed to the consumers, which is where a variety of financial licences become of use.
The Bank of Lithuania issues financial licences enabling financial market participants to provide financial services that meet the standards of reliability, transparency, financial viability and impeccable reputation. On top of that, companies holding licences issued by the competent authorities of other EU member states and foreign countries also have the right to provide financial services in Lithuania.
A required type of licence is determined by defining the specifics of the financial services, territory of operations, planned activities and size of investments.
All applications are submitted to the supervisory authority of the Bank of Lithuania, who assesses the applications within 5 working days to either reject or accept them for consideration. If all the documents attached to the application are well-prepared, it’s likely your application will be put forward for processing.
Licence applications are usually processed within 3 months of the submission of all required documents. If you’re asked to supply additional documents due to the incomplete application, the date of submission will be updated accordingly. To avoid such delays, it’s highly advised to consult with the Bank of Lithuania prior to submitting the application.
After the evaluation of all the submitted documentation, the summary will be submitted to the Board of the Bank of Lithuania, which will ultimately make a decision on granting or refusing to grant the licence.
Before submitting an application for the issuance of a banking licence, it is necessary to pay a state fee of 4,157 EUR to the account of the State Tax Inspectorate. It’s advised that the minimum number of bank management staff should reach 10 people, although it’s ultimately determined by the complexity of the bank. Reach out to the Company in Lithuania UAB team today to receive a personalised consultation on exact requirements for your planned activities.
Key requirements for the bank:
- All submitted documents must comply with the requirements established by the legal acts regulating banking activities, all correct data specified in the legal acts or additionally required must be submitted.
- The bank’s capital must be at least 5 mln. EUR, and 1 mln. EUR for a specialised bank; the capital requirements may be higher depending on the activities of the bank.
- Founders, shareholders and/or voting rights holders must be of good reputation and financially reliable.
- The managers must be of impeccable reputation, have qualifications and experience that allow them to perform their duties properly (in addition, at least one head of the bank’s administration must speak Lithuanian and be a permanent resident of Lithuania).
- Founders, shareholders and/or voting rights holders must demonstrate their ability to execute their proposed business plan, including preparation to provide financial services safely and reliably at the time the licence is issued.
Electronic Money Institution Licence
With the goal to create a favourable environment for Lithuanian and foreign Fintech startups, the Bank of Lithuania introduced a limited activity licence for the electronic money institutions, the aim of which is to facilitate the entry of new market participants into the Lithuanian market and later into the EEA market. The most notable differences compared to the regular licence are: 1) the minimum initial capital requirement doesn’t apply to a limited activity electronic money institution, 2) such an institution can only operate in the territory of Lithuania.
The average amount of outstanding electronic money (if the activity is not performed, the average planned amount) of a limited activity licensee must not exceed 900,000 EUR per month over the preceding six calendar months. If this limit is exceeded, the institution is obligated to apply for the issuance of a regular (unlimited activities) licence within 30 days of the date on which that fact became apparent.
Key requirements for the electronic money institutions:
- All submitted documents must comply with the requirements established by the legal acts regulating the activities of such institutions in Lithuania.
- The minimum initial capital must be at least 350,000 EUR (again, this requirement doesn’t apply to an applicant for a limited activities licence).
- Shareholders and/or voting rights holders must be able to ensure reliable and prudent management of the institution, have excellent reputation and demonstrate financial stability.
- The managers must be of impeccable reputation, have qualifications and experience that allow them to perform their duties properly.
- The founders (holders of shares or voting rights) must demonstrate the capabilities for the proposed business plan implementation, as well as be prepared to provide financial services in a safe and sound manner at the time of receiving a licence.
Although it’s still referred to as an alternative source of raising capital, crowdfunding has been rapidly gaining popularity among progressive investors and innovative entrepreneurs as a means of financing business growth and the implementation of various projects.
All the elements of the crowdfunding licence application and requirements for the activities of crowdfunding service providers are laid out in the Crowdfunding Regulation, and elaborated in the report on technical standards under the Crowdfunding Regulation published by the European Securities and Markets Authority (ESMA). If the licence is granted by the Bank of Lithuania, it can also facilitate the authorisation of crowdfunding services in other EU member states, provided that all the required information is supplied.
There’s an extensive list of requirements that a crowdfunding service provider must meet when applying for the licence. It includes the following key elements:
- The applicant’s operational programme must specify the types of crowdfunding services it intends to provide and the crowdfunding platform it intends to manage, including where and how the crowdfunding offer will be marketed.
- The applicant must indicate how payment services are provided in the context of the provision of crowdfunding services.
- The applicant must have a description of the management arrangements and internal control mechanisms which ensure compliance with the crowdfunding regulation, including various aspects of risk management and accounting procedures.
- The applicant must establish a business continuity plan that, taking into account the nature, scale and complexity of the crowdfunding of the services provided by the applicant, sets out measures and procedures to ensure the continuity of critical services related to existing investments.
- The applicant must provide information on the persons responsible for the management of the institution and evidence that these persons are of good reputation as well as have appropriate knowledge and skills.
- The applicant must have an adequate description of the internal rules preventing employees from applying for crowdfunding features of the applicant’s shareholders, managers, employees or natural or legal persons controlled by those persons as project owners.
In addition to the above-mentioned licences, the Bank of Lithuania also grants financial licences for currency exchange operators, credit unions, payment institutions, consumer credit intermediaries and other financial services businesses.
If you’re seeking qualified assistance in applying for a financial services licence in Lithuania, our team here at Company in Lithuania UAB will be more than happy to step in. We’ll help you with the preparation of all the required documents, as well as guide you through all the procedures. Reach out to us today to book a personalised consultation.
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