REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA REPUBLIC OF LITHUANIA LAW ON ENTERPRISES CHAPTER 1 GENERAL PROVISIONS Article

1. The Objectives of the Law on Enterprises This Law shall establish the entities which have the right to engage in permanent commercial-economic activities in the Republic of Lithuania on behalf of their firm, and the legal foundation of their establishment and activities. The establishment of various types of enterprises, specified in Article 6 of this Law, their legal status, activities, liquidation and reorganisation shall be regulated by appropriate laws. This Law shall not apply to natural and legal persons engaged in non-commercial (non-profit) activities. The establishment, liquidation, reorganisation and activities of nonprofit enterprises shall be regulated by the Civil Code of the Republic of Lithuania and by the bylaws of these enterprises. Article
2. The Enterprise The enterprise shall be an economic unit having its own name, and is established to carry out certain commercial-economic activities in compliance with the procedures established by law. The enterprise shall comprise material, financial, and intangible assets, as well as its rights and obligations. The enterprise, as a subject of law (the owner), may have the rights of a legal person or may act as a natural person. Article
3. The Owner The owner shall be natural or legal person, or several natural or legal persons united into a corporation (partnership) who control, handle, and dispose of the property of the enterprise, and organise economic and financial activities thereof by the right of ownership. The owner shall acquire the right of ownership to the enterprise in pursuance of the establishment, or purchase and sale of the enterprise, or on the basis of any other civil transaction. If the enterprise belongs to the Republic of Lithuania by the right of ownership, the owner's functions shall be performed by the managing body of the enterprise. If the enterprise is leased, the rights of the owner shall be vested in the lessee for the period of the lease. Article
4. Enterprise Management The system of the enterprise management body, the procedure of its formation, and its powers shall be established by the law which regulates the activities of the corresponding type of enterprises, the bylaws of the enterprise, and other documents related to the founding of the enterprise. Article
5. Labour Relations at the Enterprise Labour relations at the enterprise may be based on the employment contract or on the membership in the partnership. Labour relations maintained on the basis of the employment contract shall be regulated by the employment contract and the Republic of Lithuania laws on labour, which determine the minimum wage, and labour and rest regime, as well as minimum requirements of hygiene and safety at work for employees of all types of enterprises. Relations based on membership in the partnership shall be regulated by enterprise establishment documents. Chapter 2 TYPES OF ENTERPRISES Article
6. Types of Enterprises and Unions of Enterprises (Amended 15 July 1993) In the Republic of Lithuania, the following types of enterprises shall be permitted to function: 1) private (personal) enterprises; 2) partnerships; 3) limited partnerships; 4) stock corporations (public and close); 5) state enterprises; 6) agricultural companies (whose activities shall be regulated by a separate law); (Amended 16 April 1991) and 7) cooperative companies. Their activities shall be regulated by a separate law. (Amended 1 June 1993) Enterprises may form concerns, syndicates, associations and other unions provided this is in conformity with the Law on Competition of the Republic of Lithuania. (Amended 15 July 1993) Article
7. Private (Personal) Enterprise A private (personal) enterprise shall belong to one natural person by the right of ownership or to several natural persons by the right of common joint ownership. Non-production organisations with the rights of a legal person may also own a private (personal) enterprise by the right of ownership. A private (personal) enterprise shall not have the rights of a legal person, and its property shall not be separated from the owner's property. The owner shall be liable for the obligations of the enterprise by way of all his individual property. A private (personal) enterprise must have the name of a firm, in which the owner is indicated. The establishment, liquidation and activities of private (personal) enterprises shall be regulated by the Civil Code and other laws of the Republic of Lithuania. The Government of the Republic of Lithuania may grant the rights of a legal person to the private (personal) enterprises of non-production organisations at the request of their founder. The laws which regulate the activities of state enterprises shall apply to such enterprises. Article
8. Partnership A general partnership shall be an enterprise with unlimited liability which is established on the basis of a partnership agreement by several natural or legal persons by combining their property under a plan of co-ownership with the aim of conducting joint economic-commercial activities under the common name of a firm. A general partnership shall not have the rights of a legal person, and its property cannot be separated from the property of the individual partners. All partners of a general partnership shall be jointly liable for the obligations of the general partnership by way of all their individual property. A general partnership shall not be liable for the obligations of its partners when such obligations are incurred through activity not related to the activity of the general partnership. A general partnership shall have the name of a firm which must contain the name of at least one of its partners. The establishment, liquidation and activities of a general partnership shall be regulated, in addition to this Law, by the Civil Code of the Republic of Lithuania, the Partnership Law of the Republic of Lithuania, and by the partnership agreement whereby the general partnership is established. Article
9. Limited Partnership A limited partnership shall consist of general and limited partners acting under the common name of the firm who own the property of the enterprise by the right of common joint ownership. A limited partnership shall not be a legal person, and its property cannot be separated from the property of the general partners. The general members of the limited partnership shall be jointly liable by way of all their property for the obligations of the limited partnership, whereas limited partners shall be liable only for contributions made to the limited partnership for joint activity under the partnership agreement. A limited partnership shall not be liable for the obligations of its partners when such obligations are incurred by activity not related to the activity of the partnership. Natural or legal persons may become members of limited partnerships. A limited partnership must have at least one general and at least one limited partner. A limited partnership must have a firm's name which contains the name of at least one general partner of the partnership. The establishment, liquidation and activities of limited partnerships shall be regulated, in addition to this Law, by the Civil Code of the Republic of Lithuania, the Partnership Law of the Republic of Lithuania, and the partnership agreement whereby the limited partnership is established. Article
10. Stock Corporation (Public and Close) Stock corporations (public or close) shall be enterprises with limited liability which have the rights of a legal person, and the capital of which is divided into shares. The share capital by the right of ownership shall belong to the stock corporation (either public or close) as a legal person. The shareholders shall be the members of the corporation who have become members upon acquisition of shares of the stock corporation (public or close) according to the procedure established by law. Natural or legal persons, and the state, which is represented by the corresponding state agency may be shareholders. Shareholders shall have the right of ownership to the shares. The sphere of the share circulation of a close corporation shall be closed. The establishment, liquidation, activities and relations between stock corporations (public or close) and shareholders, creditors, and other relations, connected with the activities of the corporation, shall also be regulated by the Civil Code of the Republic of Lithuania, the Law on Stock Corporations of the Republic of Lithuania, and the bylaws of an individual stock corporation (public or close), approved and registered according to the established procedure. Article
11. State Enterprise A state enterprises shall be owned by the State of Lithuania or a local government body by the right of state ownership; it shall have the rights of a legal person and shall be with limited property liability. The State (local government) shall not be liable for the obligations of the enterprise, whereas the enterprise shall not be liable for the obligations of the State (local government body). The establishment, activities, liquidation and reorganization of state enterprises shall also be regulated by the Civil Code of the Republic of Lithuania, the Law on State Enterprises of the Republic of Lithuania, and by the bylaws of an individual state enterprise, approved and registered according to the procedure established by law. Chapter 3 BASIC PRINCIPLES OF THE ECONOMIC ACTIVITIES OF ENTERPRISES Article
12. The Sphere of Activities of the Enterprise Enterprises shall have the right to engage in any commercial-economic or other activities, which are not restricted by this or other laws, the bylaws of an enterprise, the contract on the establishment of an enterprise or other documents on its establishment, and which are not prohibited in other ways. Article
13. Issuing of Licences The following activities shall be prohibited without a licence issued by the Government of Lithuania or other authorized body: prospecting for or utilisation of mineral deposits; utilisation of natural resources; repair of sports and hunting firearms; activities in the sphere of pharmacy; (Amended 31 January 1991) cultivation and sale of crops containing narcotic, highly effective or poisonous substances; brewing of beer and production of non-alcoholic wine; medical treatment and hygiene practices; veterinary practice; legal practice, unless the law provides otherwise; establishment of educational institutions; establishment and maintenance of gambling houses or organisation of games of chance; carrying out of geodetic and topographical works, publishing and printing of topographical plans and maps as well as cartographic charts; (Amended 29 October 1991) economic activities in the sphere of transportation, unless the law provides otherwise; (Amended 29 October 1991) manufacturing of tobacco products ; activities related to the purchasing in the Republic of Lithuania of copper and other non-ferrous metals as well as their alloys and scrap, and the melting thereof; (Amended 29 October 1992); importing to and exporting from the Republic of Lithuania as well as selling alcoholic beverages; (Amended 14 January 1993) and providing tourist services. (Amended 17 June 1993) Only state enterprises shall be permitted: to manufacture and sell narcotics and highly effective and poisonous substances (which are not used for pharmaceutical purposes); (Amended 31 July 1990) to manufacture wine, liqueur and other spirits; to manufacture tobacco products; to manufacture weapons and explosives; to treat patients ill with dangerous and especially dangerous infectious diseases, including venereal and contagious skin diseases, and aggressive forms of psychic (mental) diseases; and to treat animals ill with especially dangerous diseases. The licence to prospect for deposits of mineral resources and to utilise natural resources shall be issued only on coordination with the Department of Environmental Protection of the Republic of Lithuania. (Amended 31 July 1990) Natural or legal persons of other states must obtain licences from the Government of Lithuania for any activities on the territory of the Republic of Lithuania. Natural or legal persons of other states who wish to buy shares of stock corporations (public or close) or state stock enterprises shall not need a special licence therefor. Licences to engage in economic activities must be issued within 30 days from the receipt of an application. If an application for licence is rejected, the applicant must be sent a justified response within said period of time. Refusal to issue a licence may not be based on the inexpediency of the enterprise activity. Article
14. Relations between Enterprises and State Bodies Enterprises shall function independently, and orders of the bodies of state power and governance shall not be compulsory. State bodies shall not have the right to manage the affairs of enterprises or to regulate by administrative methods their economic activities, except in cases when according to the procedure established by law, a special supervision procedure is applied to the enterprise for legal infringement, or a liquidator of the enterprise is appointed in the case of bankruptcy or in other cases specified by law. All enterprises shall have equal legal-economic conditions. When a state of emergency is declared or a certain territory is declared to be a disaster area upon the resolution of the Supreme Council of the Republic of Lithuania, enterprises must carry out the instructions of the Government of the Republic of Lithuania or local government bodies. Enterprises may acquire financial, material and other benefits allotted (sold) by the state in the centralised procedure at a price determined by the state or by agreement, and for the certain agreed obligations taken upon by an enterprise before the state (local-government) body. Article
15. Control of Enterprise Activities Enterprises shall keep accounts in the obligatory procedure, and, in pursuance of the laws of the Republic of Lithuania, shall submit information concerning their accounts to state bodies for the purposes of taxation and financial accounting of the enterprise. Enterprises shall have the right to keep documents concerning their commercial activities confidential. The inspection and auditing of an enterprise's activities shall only be permitted in cases specified by the laws of the Republic of Lithuania. Article
16. Liability for the Violation of the Laws on Enterprises Legal actions may be instituted in the manner established by law against the enterprises (owners) and administrative officials for the violation of this or other laws which regulate the establishment of enterprises and their activities. CHAPTER 4 ESTABLISHMENT OF ENTERPRISES AND TERMINATION OF THEIR ACTIVITIES Article
17. The Enterprise Founder The founder of an enterprise may be a natural or legal person, or the state (local government body), represented by its bodies or by the managing body of the enterprise which is being established. The enterprise may be established by one or several founders. Article
18. The Procedure for the Establishment of Enterprises The procedure for the establishment of enterprises shall be determined by this and other legal documents which regulate the establishment of different types of enterprises. Article
19. Documents Concerning the Establishment of an Enterprise Documents concerning the establishment of an enterprise shall comprise the bylaws of the enterprise, a licence to engage in certain economic activities, a qualification certificate, the act on the allotment of a land plot if in accordance with this or other laws these documents are required, and a licence to engage in economic activities issued by a local government when an enterprise is to be established on its territory with the State budget funds. In the case of certain types of enterprises, the contract on the establishment of the enterprise, the agreement on common joint activity or the lease agreement may be documents on the establishment of the enterprise. Enterprises which are engaged in production activity must also have an ecological certificate-licence issued by the Department of Environmental Protection of the Republic of Lithuania. Other documents on the establishment of enterprises may also be specified by separate laws. (Amended 31 July 1990). The contents and form of the documents on the establishment of an enterprise shall be specified by the standard acts which regulate the establishment of enterprises of the corresponding types. Article
20. The Licence of Local Government to Engage in Economic Activities The licence of the local government to engage in economic activities shall be required only in cases when the enterprise is established with the State budget funds and is registered with the Ministry of Economics of the Republic of Lithuania. In other cases, the registration of the enterprise (the registration of the contract on its establishment or of the bylaws of the enterprise) with a local government body shall be equivalent to a licence to engage in economic activities. The licence to engage in economic activities shall be issued by a local government body upon receipt of all the documents on the establishment of the enterprise. The licence to engage in economic activities may specify the term of functioning of the enterprise. A local government body may deny a licence to engage in economic activities if: 1) the establishment of the enterprise would inflict harm upon the health of the population or the environment; 2) the bylaws of the enterprise or other documents concerning its establishment are not in compliance with the law; and 3) in other cases specified by law. The local government body must, within 15 days from the receipt of the documents on the establishment of the enterprise, consider the application for a licence to engage in economic activities, and must within 3 days inform the founder of the enterprise of its decision in writing. If there are circumstances specified in Part 4 hereof, the local government body may issue a conditional licence for economic activities and fix the term within which the founder or the enterprise must eliminate the circumstances which hinder the issuing of the licence. If these requirements are not complied with, the local government body shall have the right to revoke the conditional licence to engage in economic activities. The local government body may revoke the licence to engage in economic activities in the event that the existence of the circumstances specified in Part 4 hereof is subsequently discovered. The local government body shall inform in writing the owner, the administration of the enterprise, and the state agency which controls the economic and commercial activities of the enterprise of the revocation of the licence. If the owner, upon the receipt of the licence to engage in economic activities, fails to register the enterprise within 1 year, the licence shall become invalid. The founder of the enterprise may appeal to court against the refusal of the local government body to issue a licence, or the decision to revoke the licence to engage in economic activities, or the decision to issue a conditional licence within 30 days after the decision of the local government body is delivered. Article
21. Registration and Re-registration of an Enterprise Before starting its economic activities, every enterprise shall be registered in the obligatory manner. The activities of an unregistered enterprise shall be prohibited. The bodies of the Ministry of Finance of the Republic of Lithuania shall bring a legal action to recover to the budget the owner's income from the activities of the unregistered enterprise. An enterprise shall be considered as having been established from the date of its registration. Enterprises shall be registered with the higher level local government body, and the enterprises established with State funds shall be registered with the Ministry of Economics of the Republic of Lithuania or other State body commissioned by it. The registration of enterprises shall be regulated by the Republic of Lithuania Law on the Register of Enterprises. The following documents shall be filed for the registration of an enterprise: 1) the founder's (founders') application to register the enterprise, containing the requisite data to be recorded in the register; 2) officially registered documents concerning the establishment of the enterprise; and 3) certificate concerning the payment of state taxes. The decision to register or to refuse to register an enterprise must be adopted no later than 15 days after the receipt of all the documents specified in Part 4 hereof. The registrar shall announce about the registration of the enterprise in the local and national press. In the cases, where the registration of an enterprise ( the contract on the establishment of an enterprise or its bylaws) is equivalent to the licence of its establishment, Article 20 of this Law shall apply. If the documents on the establishment of an enterprise are amended or supplemented, the enterprise shall be re-registered in pursuance of the requirements of this Article. An enterprise must also be re-registered if it is sold, leased or in any other way transferred to other natural or legal persons or the state according to the procedure established by law. Article
22. Refusal to Register or Re-register an Enterprise Refusal to register an enterprise shall be permitted when the documents specified in Article 21 of this Law are not filed or when said documents do not comply with the requirements established by law. Refusal to register an enterprise on other grounds shall be unlawful. The corresponding body must within 3 days inform the founder of the enterprise in writing about the unfavourable decision to register the enterprise. Refusal to register an enterprise may be appealed against in court. The founder of the enterprise may bring a legal action to recover the loss inflicted by the unlawful refusal to register the enterprise. In the event that the founder of the enterprise cannot assess and specify the actual amount of the loss, the registrar must make reimbursement to the founder in the amount of 1000 Roubles for each month that the enterprise remained unregistered. (Amended 16 October 1990) In the cases, where the registration of an enterprise (the contract on the establishment of an enterprise or its bylaws) is equivalent to the licence to engage in economic activities, the disputes concerning registration shall be considered according to Article 20 of this Law. The regulations set forth in this Article shall also apply to the re-registration of enterprises. Article
23. Liquidation and Reorganisation of an Enterprise The basis for the liquidation of an enterprise may be: 1) the owner's decision to terminate the activities of the enterprise; 2) the court order or the decision of the meeting of creditors declaring the enterprise insolvent; (Amended 28 September 1993) and 3) the decision adopted by the government bodies to revoke the registration of the enterprise for the violations of law specified in the laws of the Republic of Lithuania. The body, upon adopting the decision to terminate the activities of the enterprise, shall appoint or authorise the owner to appoint the liquidator of the enterprise. After the appointment of the liquidator, the enterprise shall acquire the status of the enterprise under liquidation: the bodies of the enterprise shall lose their powers, the functions of the body of the enterprise shall be performed by the liquidator of the enterprise, and the enterprise may conclude only such contracts which do not contradict the laws regulating the activities of the enterprise under liquidation. The enterprise under liquidation must be re-registered. The procedure for liquidating an enterprise and the legal consequences shall also be regulated by the Civil Code of the Republic of Lithuania, the Republic of Lithuania Law on Enterprise Bankruptcy, and other legal acts, and the documents on the establishment of an enterprise.(Amended 28 September 1993) Enterprises may be reorganized when they: unite into production amalgamations and associations, or merge with other enterprises or associations, or split up into several enterprises. The procedure and consequences of the re- organisation of an enterprise shall be established by the Civil Code of the Republic of Lithuania, the Law on Competition, and the Law on Enterprise Bankruptcy of the Republic of Lithuania as well as other legal documents, bylaws of the enterprise, and other documents on the establishment of the enterprise. (Amended 28 September 1993) After the liquidation or re-organisation of an enterprise, appropriate records shall be made in the Register of Enterprises. This shall be announced in the local and national press. Article
24. Subsidiaries and Representative Offices of an Enterprise Enterprises may establish their subsidiaries and representative offices. The subsidiaries and representative offices of an enterprise shall function under the authorisation of the enterprise. The regulations of the establishment and registration of enterprises shall apply to the establishment of subsidiaries. The establishment of representative offices of enterprises shall be regulated by a special law of the Republic of Lithuania. Vytautas Landsbergis President Supreme Council Republic of Lithuania Vilnius 8 May 1990 No. I-196