LAW ON ENTERPRISES official translation LAW ON ENTERPRISES 8 May 1990, No. I-196 Vilnius (As amended by 25 September 1997 No.VIII-422) CHAPTER 1 GENERAL PROVISIONS Article 1. The Objectives of the Law on Enterprises This Law identifies the entities which have the right to engage in continuous commercial-economic activities in the Republic of Lithuania on behalf of their firm, and the legal basis of their setting up and activities. The setting up of various types of enterprises, specified in Article 6 of this Law, their legal status, activities, liquidation and reorganisation shall be regulated by separate laws. This Law shall not apply to natural and legal persons engaged in non-commercial (non-profit) activities, also to natural persons who acquire a patent in the manner prescribed by the Government of the Republic of Lithuania and engage in commercial-economic activities in conformity with the patent, and are not connected by labour relations with other persons as employers, except for the provision of Article 4
(2)of this Law, the application whereof is inclusive of non-profit enterprises. The setting up, liquidation, reorganisation and activities of non-profit enterprises shall be regulated by the Civil Code of the Republic of Lithuania and by the bylaws of these enterprises. Article
- The Enterprise The enterprise is an economic unit having the name of the firm and set up in accordance with the procedure laid down by laws for the purpose of carrying out certain commercial-economic activities. The enterprise consists of tangible, financial and intangible assets, as well as the totality of its rights and obligations. The enterprise, as the subject of law (the enterprise manager), may have the rights of a legal person or may act as a natural person. Article
- The Enterprise Manager The enterprise manager is a natural or legal person, also several natural or legal persons united into a company (partnership) who by the right of ownership manage, use and dispose of the property of the enterprise, also organise its economic and financial activities. The enterprise manager shall acquire the right of ownership to the enterprise under the enterprise foundation agreement, or under the contract of purchase or on the basis of any other civil transaction. If the enterprise is owned by the Republic of Lithuania, the manager's functions shall be performed by the management bodies of the enterprise. If the enterprise is leased, for the period of the lease the rights of the enterprise manager shall be vested in the lessee. Article
- Enterprise Management The system of the enterprise management bodies, the procedure of their formation and their powers shall be established by the law which regulates the activities of the corresponding type of enterprises, the bylaws of the enterprise, and other foundation documents. State or municipal capital may be represented in the enterprise management bodies by state or municipal public servants in the manner prescribed by the Government of the Republic of Lithuania. State or municipal institutions representing state or municipal capital in the enterprise management bodies shall have the right to bring an action for the protection of interests of the respective state or municipal institutions. Article
- 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 which are established on the basis of employment contract shall be regulated by the employment contract and the laws on labour of the Republic of Lithuania, which set the minimum wage and determine the work and rest regime, as well as minimum standards of hygiene and safety at work for the employees of all types of enterprises. Relations based on membership in the partnership shall be regulated by the enterprise foundation documents. CHAPTER 2 TYPES OF ENTERPRISES Article
- Types of Enterprises and Amalgamations of Enterprises The main forms through which economic-commercial activities may be conducted in the Republic of Lithuania are as follows: 1) the individual (personal) enterprise ; 2) the general partnership; 3) the limited partnership; 4) the public company, the private company, and the investment company; 5) the state-owned enterprise; 6) the municipal enterprise; 7) the agricultural company (activities are regulated by a separate law); 8) the cooperative society; its activities are regulated by a separate law. Enterprises may form concerns, consortiums, associations and other amalgamations provided this is in conformity with the Law on Competition of the Republic of Lithuania. Article
- Individual (Personal) Enterprise The individual (personal) enterprise is owned by one natural person or several natural persons by the right of joint ownership. Organisations with the rights of a legal person which do not engage in production may also own an individual (personal) enterprise. The individual (personal) enterprise shall not have the rights of a legal person, and its assets may not be separated from the owner's private assets. The owner shall be liable for the obligations of the enterprise by way of all his property. The individual (personal) enterprise must have the name of the firm, identifying the owner. The setting up, liquidation and activities of individual (personal) enterprises shall be regulated by the Civil Code and other laws of the Republic of Lithuania. Article
- General Partnership The general partnership is an unlimited liability enterprise 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 the firm. The general partnership shall not have the rights of a legal person, and its property shall be inseparable from the property of the individual partners. The general partners shall be jointly and severally liable for the obligations of the general partnership by way of all their individual property. The 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. The general partnership shall have the name of the firm which must contain the name of at least one of its partners. The establishment, liquidation and activities of the 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
- Limited Partnership The limited partnership shall consist of the general and limited partners acting under the common name of the firm who own the property of the enterprise by the right of joint ownership. The limited partnership shall not be a legal person, and its property may not be separated from the property of the general partners. The general members of the limited partnership shall be jointly and severally liable by way of all their property for the obligations of the limited partnership, whereas limited partners shall be liable only for the share of their property transferred under the partnership agreement for the joint activity of the limited partnership. The 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. The limited partnership must have at least one general and at least one limited partner. The limited partnership must have the 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
- Public Company, Private Company and Investment Company The public company, the private company and the investment company are limited liability enterprises with the rights of a legal person, the capital whereof is divided into shares. Shareholders shall be members of a public company, a private company or an investment company who have become members upon acquiring, in the manner prescribed by law, shares in the above companies. Natural or legal persons or the state (municipality) represented by a corresponding state institution may be shareholders. The establishment, liquidation, reorganisation and activities of the public company, the private company or the investment company, also the rights and duties of shareholders, relations with shareholders, creditors and relations connected with the company activities shall also be regulated by the Civil Code of the Republic of Lithuania, the Company Law and other legal acts of the Republic of Lithuania, also the articles of association of each respective public company, private company or investment company, registered in the established manner. Article
- State-owned and Municipal Enterprises The state-owned enterprise is the enterprise with the rights of a legal person all the assets whereof are owned by the Republic of Lithuania. The municipal enterprise is the enterprise with the rights of a legal person all the assets whereof are owned by the municipality. State-owned and municipal enterprises shall manage, use and dispose of the enterprise assets held in trust. State-owned and municipal enterprises shall be liable for their obligations only to the extent of the enterprise’s assets on which execution may be levied. The enterprise shall not be liable for the obligations of the state or municipality. The setting up, activities, reorganisation and liquidation of state-owned and municipal enterprises shall also be regulated by the Civil Code of the Republic of Lithuania, the Law on State-owned and Municipal Enterprise, other legal statutes as well as the bylaws of an individual enterprise, approved and registered in the manner established by law. Article
- State-owned Enterprises and State Companies The type of state-owned enterprises and state companies in respect whereof judicial or extrajudicial bankruptcy procedures are being implemented shall not be changed pending the termination of bankruptcy procedures. The type of state-owned enterprises and state companies which are in liquidation shall not be changed. CHAPTER 3 BASIC PRINCIPLES OF THE ECONOMIC ACTIVITIES OF ENTERPRISES Article
- The Sphere of Activities of the Enterprise The enterprise shall have the right to engage in any commercial-economic or other activities, which are not restricted by this or other laws, or the enterprise foundation documents, or are not otherwise prohibited in the manner prescribed by laws. The sphere of economic-commercial activities which requires a licence to engage in, also the institutions which issue licences and the licence issuing procedure shall be established by this and other laws. The setting up and operation of gambling houses and organisation of games of chance shall be prohibited in the Republic of Lithuania. Enterprises and their amalgamations specified in Article 6 of this Law shall be prohibited from engaging in the activities of credit institutions or from borrowing money from natural persons except in cases and in the manner specified by the laws of the Republic of Lithuania. The spheres of activities of free economic zone enterprises where capital investment is prohibited shall be determined by the Republic of Lithuania Law on the Fundamentals of Free Economic Zones. Article
- Issuing of Licences The following activities shall be prohibited without a licence issued in accordance with the procedure established by the Government of the Republic Lithuania: 1) manufacturing guns and their parts, ammunition, explosive chemicals, explosives, pyrotechnics, also repairing guns, unless other laws provide otherwise; 2) engaging in pharmaceutical activity; 3) growing and selling plants which contain narcotic, psychotropic, deadly and poisonous substances, also manufacturing, importing, exporting, narcotic, psychotropic substances, precursors, and engaging in their wholesale and retail; 4) manufacturing alcohol products with the volume of ethyl alcohol not exceeding 22°; 5) providing health care services, unless other laws establish otherwise; 6) engaging in teaching activities, provided that a certificate of education recognised by the state is issued upon completion; 7) performing state land surveying, geodetic topographical works; 8) providing transportation of passengers services within the Republic of Lithuania, also international passenger and cargo transportation services, unless other laws establish otherwise; 9) manufacturing, importing into the Republic of Lithuania tobacco and tobacco products, also engaging in the wholesale of tobacco and tobacco products; 10) purchasing in the Republic of Lithuania non-ferrous metals as well as their alloys scrap and scrap metal for resale; 11) importing into the Republic of Lithuania alcohol products and engaging in the wholesale thereof, engaging in the retail of alcoholic beverages; 12) organising cash and cash-and-prize lotteries; 13) purchasing in the Republic of Lithuania scrap and waste of ferrous metals for sale; 14) setting up and operating general telecommunications network, providing telecommunications services; 15) manufacturing seals, stamps; 16) establishing and operating shooting-ranges, shooting-galleries, hunting shooting-ranges; 17) engaging in the manufacture, wholesale, transportation or storage of dangerous chemical, nuclear and radioactive materials specified in the list approved by the Ministry of Environmental Protection, also in the collection, decontamination, storage and landfilling of hazardous waste; 18) importing, exporting, engaging in the wholesale and retail of unprepacked oil products which are on the list compiled by the Government of the Republic of Lithuania; 19) engaging in the servicing of energy facilities (electricity generation, heat generation, natural gas and liquefied gas facilities); 20) importing and selling pirotechnics (in accordance with the list drawn up by the Ministry of the Interior), firearms and ammunition for civilian use (with the exception of handguns and ammunition) for self-defence; 21) providing shipping broker’s services; 22) carrying out audits; 23) engaging in insurance activities; 24) providing tourist services; 25) printing securities and document forms. Only state-owned enterprises, municipal enterprises and special purpose companies (public and private) shall have the right to engage in the following activities, provided that they have licences issued in the manner established by the Government of the Republic of Lithuania: 1) manufacturing alcohol products in which the volume of ethyl alcohol exceeds 22°. This right shall be vested only in state-owned enterprises unless the Law on Alcohol Control establishes otherwise; 2) printing currency, stamps and minting coins. The licensing regulations shall specify: 1) the licensed activity; 2) the institution issuing the licence, and its powers; 3) documents required for the issuance of licences and their prescribed form; 4) document consideration procedure and time limits; 5) types of licences and their issuance conditions, repeated issuance of a licence; 6) requisites of the licence form; 7) the procedure for registering and re-registering the issued licences; 8) cases where the licence is refused; 9) conditions of activities requiring licences, including the rights and duties of the licensees; 10) procedure for monitoring compliance with the licence conditions; 11) cases and procedure of licence suspension and revocation. The licensing regulations may also prescribe other requirements and conditions. The conditions of licence issuance and of the activities subject to licensing must not be determined by the type of the enterprise obtaining a licence. A licence shall be issued for an unlimited period, with a provision for its re-registration in accordance with the procedure established by the Government of the Republic of Lithuania. On the instruction of the Government of the Republic of Lithuania, licences shall be issued, compliance with the conditions of activities subject to licensing shall be monitored, licences shall be suspended and revoked by ministries (departments, inspectorates and agencies at the ministries) or by the Government institutions, unless other laws provide otherwise. The applicant must be either issued a license to engage in economic-commercial activity or presented with a motivated written refusal of a licence within 30 days from the filing of the documents required for the granting of a licence, unless otherwise provided by law. The Government of the Republic of Lithuania shall have the right to extend the time limits for the issuance of licenses for the activities under paragraph 1
(14)and
(17)hereof. Refusal of a licence may not be based on the inexpediency of the economic-commercial activity. Notice of the issuance of a license, its suspension or revocation shall be published in the “Valstybës þinios” by the issuing institution. Article
- Relations between the Enterprises and State Bodies Enterprises shall operate independently. Public authorities shall have no right to manage the affairs of the enterprises or regulate their economic activities by administrative methods, except in cases provided for by the Law on State-owned and Municipal Enterprises, and the Company Law of the Republic of Lithuania when the above authorities are founders of state-owned enterprises or special purpose public company or private company shareholders as well as when, in accordance with the procedure established by law, a special supervision procedure is applied to the enterprise for the violations of law, or when the enterprise liquidator is appointed in the case of bankruptcy or in other cases specified by law. All enterprises shall have equal legal-economic conditions for doing their business. All enterprises must present to the local territorial military institutions lists with the names of young people who are required to register with the reception commission, or documents necessary for managing the registration of men liable for call-up. When, upon the resolution of the Seimas of the Republic of Lithuania, the state of emergency is declared or a certain territory is declared a disaster area, enterprises must comply with the orders of the Government of the Republic of Lithuania or local authorities. The enterprises may receive (acquire) financial, material and other benefits allotted (sold) by the state in the centralised manner at the price approved by the state or at contract price, provided the enterprise assumes certain agreed obligations in respect of the state (or local government) body. The enterprise must have permits, licenses and other documents issued by state institutions, if such permits, licences and other documents are required under this Law and other laws (a licence (permission) to engage in certain commercial-economic activity, permission for the utilisation of mineral resources, permission-hygiene certificate, permission to run an enterprise, real estate title documents, etc.). Article
- Control of Enterprise Activities The enterprise shall keep accounts in the obligatory manner, and, in pursuance of the laws of the Republic of Lithuania, shall submit relevant information about its accounts to state bodies for the purposes of taxation and financial accounting of the enterprise. The enterprises shall have the right to keep documents concerning its commercial activities confidential. The inspection and auditing of the enterprise's activities shall only be permitted in the cases specified by the laws of the Republic of Lithuania. Upon issuing the enterprise with a licence (permission) granting the right to engage in certain economic-commercial activities, or any other permission provided by law, the state institution shall be entitled to request from the enterprise the information necessary for the monitoring and supervision of said activities. The enterprise may not hinder the monitoring and supervising state institutions (their authorised representatives) from performing the functions of monitoring and supervision assigned to their competence. Article
- Liability for the Violation of Laws on Enterprises Legal action may be brought, in the manner prescribed by law, against the enterprises (enterprise managers) 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
- The Enterprise Founder The founder of an enterprise may be the State of Lithuania, local governments of the Republic of Lithuania represented by their respective institutions, also natural and legal persons of the Republic of Lithuania or foreign states. Article
- Enterprise Establishment Procedure The procedure for the establishment of enterprises shall be specified in this and other legal acts which regulate the establishment of different types of enterprises. Article
- Documents of Enterprise Establishment and Registration The enterprise foundation documents shall comprise the enterprise foundation deed (foundation agreement, joint activities agreement), bylaws of the enterprise, other foundation documents prescribed by law. The contents and form of the enterprise foundation documents shall be specified by legal acts which regulate the establishment of enterprises of the corresponding types. The enterprise registration documents shall be documents required under law for the registration of the enterprise. Article
- Local Government’s Licence to Engage in Economic Activities The licence of the local government institution to engage in economic activities shall be required only in cases where the enterprise is registered with the Ministry of Economy of the Republic of Lithuania. In other cases, the registration of the enterprise shall be equivalent to the licence to engage in economic activities. The licence to engage in economic activities shall be issued by the municipal body upon receipt of all enterprise foundation documents. The licence to engage in economic activities may specify the term of the enterprise operation. The municipal body shall deny a licence to engage in economic activities if: 1) the setting up of the enterprise would pose a serious threat or be detrimental to the health of the population or the environment; 2) the bylaws of the enterprise or other documents relating to its setting up are not in compliance with the law; and 3) in other cases specified by law. The local government body must consider the application for a licence to engage in economic activities within 15 days from the receipt of the documents on the setting up of the enterprise and must within 3 days notify the founder of the enterprise of its decision in writing. The municipal body must revoke the licence to engage in economic activities if the existence of the circumstances specified in paragraph 4 hereof is subsequently discovered. The municipal body shall notify in writing the enterprise manager, the administration of the enterprise, and the state bodies which supervise the economic and commercial activities of the enterprise, also the health activities provided by it, of the revocation of the licence. If, upon the receipt of the licence to engage in economic activities, the enterprise manager fails to register the enterprise within a year’s period, the licence shall become invalid. The founder of the enterprise may appeal to court against the refusal of the municipal body to issue a licence or against the decision to revoke the licence to engage in economic activities within 30 days after the delivery of the municipal body’s decision. Article
- Registration and Re-registration of the Enterprise The enterprise shall be considered as having been established from the date of its registration in the Register of Enterprises of the Republic of Lithuania. It shall be prohibited to engage in commercial-economic activities on behalf of the enterprise without prior registration of the enterprise in the manner prescribed by the laws of the Republic of Lithuania. The State Tax Inspectorate shall recover into the budget the income received by individuals from economic-commercial activities engaged in unlawfully under the name of the enterprise. The registration of enterprises shall be regulated by the Law of the Republic of Lithuania on the Register of Enterprises. For the purpose of enterprise registration, the registrar shall be presented the founder's (founders') application for the enterprise registration, containing the requisite data to be recorded in the register, also other registration documents prescribed by law. The decision to register the enterprise or to refuse registration must be adopted within 15 days after the filing of all the documents specified in paragraph 3 hereof. Notice of the enterprise registration or removal from the register shall be announced in the manner specified by the Law on the Register of Enterprises. Article
- Refusal to Register or Re-register the Enterprise The enterprise may be refused registration or re-registration in the event of failure to file the documents specified in Article 21 of this Law or if the documents are not in conformity with the requirements specified by law. Refusal to register the enterprise on any other grounds shall be unlawful. The appropriate body must within 3 days inform the enterprise founder in writing of the decision to refuse registration. Refusal to register the enterprise may be appealed against in court. The founder of the enterprise may bring a legal action to recover the losses inflicted by the unlawful refusal to register the enterprise. In the cases where the registration of the enterprise (the enterprise foundation agreement or its bylaws) is equivalent to the licence to engage in economic activities, disputes concerning registration shall be considered as prescribed by Article 20 of this Law. The regulations set forth in this Article shall also apply to the re-registration of enterprises. Article
- Enterprise Liquidation and Reorganisation The enterprise may be liquidated following: 1) the enterprise owner's decision to terminate the activities of the enterprise; 2) the adjudication order or the decision of the creditors’ meeting to declare the enterprise bankrupt; 3) the decision of government bodies to revoke registration of the enterprise for the violation of law as specified in the laws of the Republic of Lithuania, and in the case of enterprises of free economic zones - also as prescribed by the Law on the Fundamentals of Free Economic Zones. Upon adopting a decision to terminate the activities of the enterprise, the Government body shall appoint or shall authorise the founder to appoint the liquidator of the enterprise. After the appointment of the liquidator, the enterprise shall acquire the status of the enterprise in liquidation: the enterprise management bodies shall lose their powers, the functions of the enterprise body shall be performed by the enterprise liquidator, the enterprise shall be required to pay the unpaid amounts into the state social insurance fund budget, as well as paying other amounts calculated as due by other state institutions, including penalties and default interest, and the enterprise may conclude only such contracts which do not contradict the laws regulating the activities of the enterprise in liquidation. The enterprise in liquidation must be re-registered. The enterprise liquidation procedure and the legal consequences thereof shall also be regulated by the Civil Code of the Republic of Lithuania, the Law on Enterprise Bankruptcy, and other subordinate legislation of the Republic of Lithuania and the enterprise foundation documents. Enterprises may be re-organised when they: combine to form production amalgamations and associations, or merge with other enterprises or associations, or split up into several enterprises. The procedure and consequences of the enterprise re-organisation 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 acts, the bylaws of the enterprise, and other enterprise foundation documents. After the enterprise re-organisation the rights and obligations, including the undischarged liabilities to the state social insurance fund budget, also the amounts calculated as due by the tax administrator’s officers, including penalties and default interest, shall be taken over by the new legal entity until the removal of the re-organised enterprise form the register in the manner prescribed by law.. After the liquidation or re-organisation of the enterprise, appropriate records shall be made in the Register of Enterprises. A notice to the effect shall be published in the local and national press. Article
- Subsidiaries and Representative Offices of the Enterprise Enterprises may establish their subsidiaries and representative offices. The enterprise’s subsidiaries and representative offices shall operate by the enterprise’s authorisation.. The regulations applicable to the enterprise establishment and registration shall also apply to the establishment of subsidiaries. Only enterprises registered in the Register of Enterprises of the Republic of Lithuania may set up subsidiaries in accordance with the procedure established by the law on the appropriate type of enterprises. The procedure for setting up representative offices of enterprises, also the manner of their operation and liquidation shall be established by the Government of the Republic of Lithuania. Vytautas Landsbergis President Supreme Council Republic of Lithuania Vilnius 8 May 1990 No. I-196