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Official translation Official translation REPUBLIC OF LITHUANIA LAW ON PARTNERSHIPS 16 October 1990 No. I-676 Vilnius (As last amended on 6 November 2003 No. IX-1804) Version of the Law as of 1 January 2004: Chapter I. GENERAL PART Article

  1. Scope of the Law This Law shall regulate the establishment, reorganisation and liquidation, management and activities, rights and duties of the members as well as capital formation and distribution of general partnerships - GP (TŪB) and limited partnerships - LP (KŪB). Where the text of this Law applies both to the general partnership and to limited partnership, the term “partnership” shall be used. Article
  2. Partnership 1 The partnership is an enterprise established by several natural or legal persons as well as natural and legal persons on the basis of the partnership agreement for engaging in commercial economic activities and other business not prohibited by law under the common name of the firm having united their property under the joint partial ownership plan.
  3. The partnership shall have at least 2 and not more than 20 partners. Bodies of state authority, state government and state control, courts may not be partners of the partnership. State or municipal enterprises shall not be general partners of the partnership.
  4. The partnership shall not be a legal person. Article
  5. General Partnership
  6. The GP (TŪB) shall be an enterprise having unlimited property liability, its property shall not be separable from the property of its partners.
  7. The partners of the .GP shall be jointly and severally liable for the obligations of the GB by way of all their property. The GP shall not be liable for the partners’ obligations not related to the partnership business. Article
  8. Limited Partnership
  9. The LP is formed by the general partners and limited partners carrying on a business under a common name. The limited partnership shall have at least one general partner and at least one limited partner.
  10. The property of the LP shall be separated from the property of the limited partners and not separated from the property of the general partners.
  11. The general partners shall be jointly and severally liable for the obligations of the LP to the extent of their property, while the limited partners shall be liable only to the extent of the property they transferred or had to transfer to the LP but did not by the deadline provided in the agreement. The partnership agreement may provide for a different form of liability of limited partners. The LP shall not be liable for the obligations of its partners that are not related to the partnership business. Article
  12. Name of the Partnership
  13. The partnership shall have its name (name of the firm). The name of the GP shall contain the name of at least one general partner. The name of the LP shall contain the name of at least one limited partner and the words “Limited Partnership” or the acronym LP. The name of the partnership may state full names or only surnames of the partners.
  14. The partnership cannot have a name (name of the firm) that is deceptively similar or identical to the name of any enterprise registered in the Republic of Lithuania and therefore may hinder normal economic activities of the enterprises. The disputes shall be within court jurisdiction. Article
  15. Rights and Duties of the Partnership
  16. The partnership shall have the right to: 1) engage in its name in commercial economic activities provided in the partnership agreement in the Republic of Lithuania and beyond its borders; 2) have accounts with banking institutions registered in the Republic of Lithuania and other states as well as its seal; 3) have its branches, subsidiaries and representations in the Republic of Lithuania and beyond its borders; 4) purchase or otherwise acquire property as well as sell, lease, pledge or otherwise dispose of it; 5) in the cases provided by the partnership agreements conclude contracts, assume obligations, lend (only sums of own capital) and borrow money on interest set in the loan contract; 6) set prices, rates and tariffs of its products, services and other resources, except in cases where prices and other rates are regulated by the state; 7) carry out its liquidation or reorganisation according to the procedure set in the partnership agreement.
  17. The partnership may also have other property and personal non-property rights and duties that are not provided for by this Law if they are not contrary to laws of the Republic of Lithuania and the partnership agreement.
  18. The partnership may not issue securities.
  19. When engaging in commercial-economic activities the partnership shall adhere to the provisions of laws of the Republic of Lithuania and the partnership agreement.
  20. The liabilities of the partnership shall be satisfied first of all out of the partnership assets. Where the partnership assets prove insufficient recovery may be made from the assets belonging to the general partners according to the provisions of the Civil Code of the Republic of Lithuania regulating the discharge of joint and several liabilities. In this case execution may be levied against the assets of the limited partners to the extent of the unpaid contributions due under the agreement and only in proportion to the amount of the unpaid contributions.
  21. Actions may be brought against the partnership or its members within the time limits set in the Civil Code of the Republic of Lithuania. .When the partnership is dissolved or when a partner retires (or is expelled) from the partnership, an action against the partnership or its members may be brought not later than within 3 years of the date of the partnership liquidation or of the amendment of the partnership agreement and the registration of the renewal with the local authority. Chapter II. FORMATION OF THE PARTNERSHIP Article
  22. Partnership Agreement
  23. The basis for the formation and activities of the partnership is the partnership agreement that may be made by legally capable natural persons as well as legal persons.
  24. The partnership agreement shall state: 1) the name of the partnership (name of the firm); 2) the type of the partnership business; 3) names, surnames and addresses of natural persons who are general or limited partners of the partnership; 4) names, head offices, bank account numbers and other account particulars of the enterprises and organisations that are general or limited partners of the partnership; 5) rights and duties of the general and limited partners; 6) share of the general and limited partners in the partnership property expressed in fraction, decimal or percent form and the amount of the initial contribution in cash and contribution other than cash (property and products of intellectual activities that are objects of the right of ownership) of each one of them, evaluation of contributions other than cash, procedure and dates of payment and transfer of the contributions to the partnership; 7) rules of evaluation of work of the general partners and their remuneration for work; 8) procedure for withdrawing partnership money for personal needs; 9) rules for the distribution of income and losses; 10) conditions and procedure for the general and limited partners’ retirement from the partnership, for their expulsion from the partnership and for admitting new partners to the partnership; 11) rules of the partnership management, administration of partnership affairs and terms of changing the rules; 12) names, surnames, addresses and powers of persons authorised to represent the partnership and to manage its other affairs; 13) decision-making (voting) procedure; 14) issues on which decision-making requires unanimous consent of all partners; 15) partnership reorganisation and liquidation procedure.
  25. The partnership agreement may also contain other provisions which are in conformity with this and other laws of the Republic of Lithuania.
  26. The partnership agreement shall be signed by each partner of the partnership being formed. The agreement shall be notarised. The number of notarised copies must correspond to the number of the partners and equal the number of copies necessary for partnership registration.
  27. The partnership shall be deemed formed as from the date of its registration.
  28. When a new general partner is admitted in the place of the general partner who has been expelled or has retired from the partnership, a new partnership agreement must be drawn up and notarised while the partnership must be reregistered. When a new limited partner is admitted in the place of the limited partner who has been expelled or has retired from the partnership, the partnership agreement shall be amended. The amendments to the agreement shall be notarised and shall become effective as of their registration date.
  29. The partnership agreement may be recognised as invalid only according to judicial procedure if there are grounds of invalidity of contracts provided for by the Civil Code of the Republic of Lithuania.
  30. After the partnership agreement has been declared invalid transactions with third persons shall remain valid except for those treated as invalid under the Civil Code of the Republic of Lithuania. Article
  31. Registration of the Partnership
  32. In addition to this Law the partnership registration procedure shall also be regulated by the Law of the Republic of Lithuania on Enterprises and the Law on the Register of Enterprises.
  33. The partnership may commence its commercial-economic activities only after the registration of the partnership. Chapter III. CAPITAL OF THE PARTNERSHIP Article
  34. Compositions of the Capital of the Partnership
  35. The capital of the partnership shall consist of the own capital and loan capital.
  36. The partnership’s minimum own capital shall not be regulated by law.
  37. The property of the partnership shall be accounted for on the balance sheet. Article
  38. Partners’ Contributions
  39. Partners may contribute cash, property, products of intellectual activities and other valuables that are objects of the right of ownership of the partner. Contributions shall not be made in securities as well as in property the owner’s right of disposal of which has been restricted under the laws of the Republic of Lithuania.
  40. Contributions other than cash shall be assessed by common consent of all partners.
  41. The date for making the limited partner’s contributions may be postponed by the unanimous decision of all the general partners.
  42. By the decision taken unanimously by all the general and limited partners of the partnership, a partner may assign his contribution to another partner or to third persons upon the latter’s admission into the partnership.
  43. In case of failure by a partner to make his full contribution by the date set in the partnership agreement, he may be liable to the late payment charge on the unpaid portion of the contribution in the amount provided for in the partnership agreement or the partner may be expelled from the partnership if this is provided in the partnership agreement.
  44. Execution may not be levied against the contribution of the general partner to satisfy his creditors’ claims. Where the assets of the general partner prove insufficient to cover his liabilities his creditors shall be entitled to request through court to liquidate the partnership and allocate his share. In this case other partners who seek to preserve the partnership may allocate the share owned by the debtor as specified in the balance sheet drawn on the day of the debtor’s retirement from the partnership. Article
  45. Distribution of Partnership Income
  46. At the end of the business year a balance sheet of the partnership shall be drawn up and the income of the partnership shall be distributed among the partners in proportion to their shares. When determining the share of income due to a general partner arrears in the contributions shall not be taken into account. The share of income due to the limited partner shall be established in proportion to the actual amount of his contribution. The share of income whereby the partners’ initial contributions may be increased in proportion to their shares may be left undistributed at the partnerships The partnership agreement may also provide other rules for income distribution. Partnership income distribution shall be established by the decision of all general partners taken unanimously.
  47. The partnership business year shall be set from 1 January throughout 31 December each year.
  48. The general partner or the limited partner shall be entitled to request access to the share of income due to him not earlier than 2 months after the distribution of the income. Chapter IV. RIGHTS AND DUTIES OF PARTNERS Article
  49. Rights and Duties of Partners
  50. General and limited partners shall have property and personal non-property rights, as provided in the partnership agreement, this Law, and other laws of the Republic of Lithuania.
  51. Each general partner shall have the right to represent the partnership, unless otherwise provided in the partnership agreement. Limited partners shall not be entitled to represent the partnership. If a limited partner, in breach of this provision, enters into a transaction on behalf of the partnership, he shall be jointly and severally liable with the general partners to the extent of their entire property in respect to the obligations arising under the transaction. The general partners authorised to represent the partnership may transfer the representation actions to (re-authorise) another general partner if this is provided for in the partnership agreement. A transaction concluded on behalf of the partnership shall create obligations for the partnership only where conclusion of such transactions was provided for in the partnership agreement or if the transaction is accepted by all general partners by a decision taken by a unanimous vote. In the cases provided for in the partnership agreement the partnership may be represented by a third-party under contract who is not an actual partners. His powers shall be defined in the notarised power of attorney .
  52. The general partner may manage and dispose of his property not transferred to the partnership until this is contested by the other partners or creditors seeking to protect future property claims.
  53. Any partner shall have be entitled to demand amending or supplementing the partnership agreement.
  54. General and limited partners shall have the right of access to the balance sheet of the partnership, to the income-and-loss account and shall be entitled to check their veracity against earlier documents. They shall have the right to demand forming the internal audit commission to review the accounting documents.
  55. Each general partner shall have the right to address jointly with other partners the issues of management, use and disposal of the partnership property as well as other issues relating to the partnership business. In decision-making, each general partner shall be entitled to one vote irrespective of his share in the common property of the partnership. Decisions shall be taken by a simple majority vote, unless another rule is set forth in this Law or in the partnership agreement. In the cases provided for in this Law or the partnership agreement the limited partners shall also be entitled to vote in the taking of decisions. A partner shall not be entitled to vote, if the decision on his expulsion or retirement from the partnership is put to the vote.
  56. A general partner shall have the right to file an action in court for the liquidation of the partnership if other partners either ignore their duties provided for in the partnership agreement or are not capable of fulfilling them. A limited partner may on the same grounds institute an action in court requesting to be released from the partnership. Such actions may be brought and a court order in favor of the claimant maybe issued only upon the expiry of the business year. On the issuance of the order in favour of the claimant, the losses incurred by him shall be compensated by the partners who ignored or were not capable of fulfill their duties.
  57. The general partners shall have no right to conclude transactions with the partnership whose partners they are. The limited partners may conclude such transactions, however, claims arising from such transactions shall be satisfied only after the satisfaction of claims of other creditors.
  58. A limited partner who is a natural person shall have the right to be employed in the partnership only under the contract of employment concluded in the manner prescribed by law. Article
  59. Prohibition to Engage in the Same Commercial-Economic Activities in another Enterprise
  60. Without the consent of all general partners a general partner shall have no right to own an individual (personal) enterprise engaged in the same type of business or be a general partner of another partnership engaged in commercial-economic activities of the same type.
  61. If, when joining the partnership as a general partner, the person concealed the fact that he owns an individual (personal) enterprise engaged in the same type of business or that he is a general partner of a partnership engaged in the same commercial-economic activities or if, being a partner of the partnership, he acquired, without the consent of the partnership, an individual (personal) enterprise conducting the same type of business or joined another partnership engaged in the same type of commercial-economic activities, the partnership shall have the rights to demand within 3 moths after having found out about the violation that damage be compensated or that the transactions concluded by the said partner representing another partnership be recognised as the transactions of this partnership and the received income be transferred to the account of the partnership. Article
  62. Expiration (Termination) of Membership
  63. Grounds for expiration of membership in the partnership are as follows: 1) death of the partner; 2) declaration of the partner legally incapable; 3) the partner’s retirement from the partnership; 4) the partner’s expulsion from the partnership
  64. The general or the limited partner may retire from the partnership if the partner has gone bankrupt and for this reason cannot take part in the partnership business. In other cases the general partner may retire from the partnership if no general partner objects to that. The partnership agreement may also provide for other terms for retirement from the partnership.
  65. Within 3 months of the day of receipt of the notice from the bankrupt partner, the guardian of the partner declared legally incapable, the application for retirement (distribution of the share) of the deceased limited partner’s heir, the partnership must make the distribution of the share in the common property to which the partner is entitled on the day of filing of the application.
  66. The outgoing partner, the guardian of the person recognised legally incapable or the heir of the diseased partner shall notify other partners or, in the cases provided for in the partnership agreements, the representative of the partnership of his intent regarding the application of his share, whereas the partnership shall advise the outgoing partner (the guardian, the heir) of the potential losses the partner would incur by immediately withdrawing his share and notify him of the date whereafter the losses would be avoided. If the outgoing partner (the guardian, the heir) consents to withdraw his share in the partnership assets at the time specified by the partnership he shall be entitled to the share of the profits of the business for the period. In case of refusal by the outgoing partner (the guardian, the heir) to accept the above proposal, the losses incurred by the partnership by reason of the refusal shall be covered from the share of the outgoing partner.
  67. Accounts for transaction concluded prior to the partner’s retirement (recognition as legally incapable, death) that are still being implemented shall be settled upon full completion of the transactions. Claims against the retired partner (the guardian, the heir) in respect of the partnership obligations incurred before his retirement may be filed within 3 years from the partner’s retirement or expulsion from the partnership.
  68. Unless otherwise agreed, the partnership must settle accounts with the retired partner (the guardian, the heir) not later than within 4 months from the date of receipt of the application for retirement (allocation of the partner’s share).
  69. The retired partner (the guardian, the heir) shall be returned the property: 1) by paying out the partner’s share in cash; 2) by allocating the partner’s share in kind where the property is divisible;
  70. For serious breach of his duties the general partner or the limited partner may be expelled from the partnership by a unanimous decision of the other general partners. If the partner being expelled objects to the decision he shall be entitled to apply to court.
  71. A bankrupt general partner may be expelled from the partnership.
  72. The expelled partner shall be returned his property according to the same procedure and by the same dates as the retired partner. Article
  73. Rights of Heirs of the Deceased Partner
  74. The heirs of the deceased partner shall be entitled to inherit the deceased partner’s share of property in the partnership The inherited property shall be transferred to the heirs according to the same procedure and by the same dates as to the retired partner.
  75. Upon the death of the general or limited partner one of his heirs may become a partner if this is provided for in the partnership agreement. Upon joining the partnership the heir shall take over all the rights and duties of the deceased partner. In this case a new partnership agreement shall not be drafted, instead the effective agreement shall be amended. If the heir of the diseased general partner becomes a limited partner, whereas the heir of the limited partner becomes a general partner, a new partnership agreement shall be drawn up and the partnership shall be reregistered.
  76. If the heir of the diseased general partner files a written refusal to join the partnership as a general partner the partnership business shall be terminated and the heir shall be transferred the inherited property upon deduction of partnership liquidation losses. V chapter. ACCOUNTING AND CONTROL OF PARTNERSHIP BUSINESS Article
  77. Accounting of Partnership Business
  78. The partnership shall at its own discretion establish the procedure for its business accounting in compliance with the legal provisions regulating the above-mentioned matters. The partnership shall be entitled to keep the information relating to it commercial activities confidential.
  79. Demanding that the partnership apply other accounting than the accounting provided for in the laws of the Republic of Lithuania shall be prohibited. Article
  80. Control over Partnership Activities Besides the partners, only the prosecutor, financial, judicial and preliminary investigation institutions shall also be entitled to review the partnership activities in the cases provide for by the laws of the Republic of Lithuania. If by their actions the officers of the above institutions violate the rights of the partnership or interfere in its normal activities and thereby inflict losses on the partnership, the partnership shall be entitled to demand according to the judicial procedure that the losses be reimbursed by the institutions. VI chapter. DISSOLUTION OF THE PARTNERSHIP Article
  81. Dissolution of the Partnership
  82. The partnership shall be dissolved: 1) upon the expiration of the term of the partnership agreement; 2) on a unanimous decision of all the general partners of the partnership 3) in case of bankruptcy of the partnership; 4) when the state authorities take a decision to cancel the partnership registration for breaches of law provided for in legal acts; 5) if the court decrees to satisfy the claim of the municipal authority for the dissolution of the partnership where the partnership, disregarding the warning, continues to grossly violate laws of the Republic of Lithuania; 6) after the court satisfies the claim of the general partner on the grounds provided for in paragraph 7 of Article 12 of this Law; 7) in case of death of the general partner unless the partnership agreement provides otherwise. In case of death of the limited partner the partnership shall not be subject to dissolution; 8) on other grounds provided for in the partnership agreement.
  83. Dissolution of the partnership shall be subject to registration. Article
  84. Partnership Liquidation
  85. The partnership liquidation procedure shall be regulated by this Law and other laws of the Republic of Lithuania as well as the partnership agreement.
  86. Where the partnership is liquidated on the expiration of the term of the partnership agreement or after the partners take a decision on the dissolution of the partnership, they shall have the discretionary right to appoint the liquidator from the general partners. In other cases of liquidation the liquidator shall be appointed by the court or the creditors’ meeting.
  87. On the appointment of the liquidators the partnership shall acquire the status of the entity in liquidation. The partnership representatives shall lose their powers, their functions shall be taken over by the liquidators. Article
  88. Rights and Duties of the Liquidators
  89. Staring and completing the liquidation process the liquidators shall prepare the partnership balance sheets.
  90. The liquidator shall wind up the current commercial-economic activities of the partnership, determine its creditors and debitors, as necessary, sell by auction the ultimate residue after the payment of liabilities and pay debts to creditors of the firm. Article
  91. Distribution of Property of Partnership in Liquidation
  92. After discharging the partnership liabilities to creditors, including debts to the state social insurance fund budget as well as the amounts due, including penalties and default interest, calculated by the tax administrator’s officers and other state institutions prior to the registration of the partnership dissolution in the manner prescribed by law the liquidators shall distribute the residue among the partners. First of all accounts shall be settled with the limited partners. The limited partners who have made their full contribution shall be returned the entire amount in respect of the capital of their contribution. The residue shall be distributed by the liquidators among the general partners and the limited partners who have not made their full contributions in proportion to the amount of their respective share in the partnership. The losses of the partnership shall be distributed among the general partners in proportion to the amount of their share in the partnership and among the limited partners - in proportion to the amount of their unmade contribution.
  93. If disputable liabilities are discovered in the course of liquidation, an appropriate amount shall be withdrawn from the common property for the provision for the liabilities and transferred to the deposit account of the notary’s office.
  94. Should a dispute arise between the partners about the distribution of the residue assets remaining after the satisfaction of the creditors’ claims, the liquidator shall suspend the distribution of the property. Disputes between the partners of the partnership in liquidation as well as their disputes with the liquidator shall be heard in court.
  95. After the payment of the creditors’ property claims the former partners may agree, under the supervision of the liquidator, on other terms and conditions of distribution of the residue assets.
  96. The general partners shall together with the liquidator draw up and register the deed of liquidation of the partnership.
  97. When liquidating a bankrupt partnership its assets shall be distributed according to the procedure set forth by the Enterprise Bankruptcy Law of the Republic of Lithuania.
  98. Long-term and temporary preservation documents of the liquidated partnership shall be transferred for preservation to the local authority. The former partners and their heirs shall be entitled to be granted access to the preserved documents and to receive their copies. PRESIDENT OF THE SUPREME COUNCIL OF THE REPUBLIC OF LITHUANIA

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