Lithuania - Draft Law on Amendment of the Law on Companies
- Lithuania
- 12/22/2009
- Raidla Lejins & Norcous
In order to improve business environment, encourage establishment of private and public limited liability companies, reduce certain administrational burden, ensure transparency, make the private limited liability company a more attractive legal form, and simplify certain rules regarding limited liability companies (i.e. rules regarding their establishment, decision making procedures and etc.), on 7 December 2009 the Government of the Republic of Lithuania (the Government) submitted the Draft Law on Amendment of the Law on Companies of the Republic of Lithuania (the Draft Law on Companies).
The authors of the Draft Law on Companies offer to reduce the minimal amount of the authorized capital as a condition for establishment, from LTL 10 000 to LTL 1 000. The Draft Law on Companies also suggests that in case of reduction of a private limited liability company’s authorized capital, the amount of the capital after reduction should not be less than LTL 10 000. Furthermore, since the number of shareholders is not a distinctive feature between a public limited liability company and a private limited liability company, the Draft Law on Companies proposes to withdraw the rule regarding the maximum number of shareholders allowed in private limited liability companies.
The Draft Law on Companies also suggests permitting conclusion of a civil contract (instead of an employment contract) with the head of the company and refusing an obligation to conclude a full material liability agreement with the head of the company. In order to simplify various regulations regarding private limited liability companies, the Draft Law on Companies also offers to grant the shareholders of such companies a possibility to agree on a more comprehensible way to transfer their shares, including the share acquisition priority rule, instead of the requirements for such transfer that are laid down in the Law on Companies. Moreover, despite these and other major amendments, the Draft Law on Companies provides for some minor amendments regarding notification and access to information, representation rules, voting and etc.
