Liquidation of a Lithuanian company

Liquidation of a Lithuanian company – termination of a legal entity. Liquidate companies that have no debts or if the owners of the company agree to repay the debts. Regulated United Europe provides company liquidation services for the following organisational and legal forms :

• Closed Joint Stock Company (CJSC);
• Small Community (MB);
• Individualised Company (IC);

Liquidation of a company usually takes about 3-4 months. Regulated United Europe can provide this service completely remotely.

The Lithuanian company liquidation service includes the following:

•  Complete preparation and filing of liquidation documents with the authorities
•  Representation of the company at the Registration Centre, SODRA, Tax Inspectorate, in relations with creditors
•  Notification of liquidation in accordance with the procedure established by the constituent documents
•  Advice on dismissal of employees, preparation of a liquidation balance sheet, sale or transfer of assets and other related matters

Steps to liquidate a Lithuanian company

• It is necessary to prepare a resolution of the participants of a legal entity on liquidation of the company;
• It is necessary to prepare for the Registration Centre to declare the status of the company in liquidation;
• Regulated United Europe will declare liquidation in accordance with the procedure set out in its constituent documents;
• Our staff will advise on employee terminations, creditor notification and property inventory issues;
• Regulated United Europe will advise on the sale or transfer of real estate to a Lithuanian company;
• Regulated United Europe will represent your company in dealings with the IRS and SODRA;
• Regulated United Europe will represent your company in dealing with creditors;
• We will advise on the preparation of the liquidation balance sheet;
• Drawing up a liquidation certificate;
• We will help to deregister the company from the Registration Centre.

How is the liquidation of companies carried out?

When plans to liquidate the company have become a reality and the decision to close the legal entity has been made, a liquidator is appointed. The commencement of the liquidation may be postponed to an earlier date, but cannot be retrospective. All the functions and operational powers of the receiver are transferred to the liquidator and from that moment the board of the company loses its powers. On the first day, the liquidator must give notice of the commencement of the liquidation process and the Registration Centre registers the legal status “Liquidated”. All documents that are transferred to other persons must be marked as documents of the company being liquidated.

A company in liquidation must first pay off the company’s creditors. Only after this step is completed and it is confirmed that the company is free of legal disputes can shareholders receive their dividends. Later, the shareholders of the company divide the remaining assets. The amount of assets depends on how much of the shares the owner owned, the assets are divided in the same proportions.

A resolution on the liquidation of a company may be revoked until at least one of the owners has received its share of assets. If this happens, it is no longer possible to cancel the liquidation. The intention to cancel the liquidation must be immediately notified to the Register of Legal Entities.

Types of company liquidation in Lithuania

The liquidation or closure of a company may be initiated by the owner of the company (IĮ) or by a general resolution of the shareholders (UAB). A liquidator, who must be a natural person, is appointed to liquidate the company and carry out the related processes.

If a company is liquidated due to bankruptcy and a court judgement enters into force, the bankruptcy administrator takes over the further liquidation. If the bankruptcy process proceeds without court intervention, a bankruptcy administrator is still necessary.

What do you need to know about liquidation?

The process of liquidating a company is complicated because many liabilities are long term and closing a company often conflicts with existing obligations. Starting a business is legally easier because you start with a “clean” history, with no obligations or liabilities.

The liquidation process takes less time and is easier when many business processes have been finalised and other parties have no claims. To make the process go smoothly and avoid losses, you can always consult with Regulated United Europe who deal with similar situations on a daily basis and can suggest a suitable strategy.

Main factors in the liquidation of a company

When a company is declared bankrupt, it must also be liquidated. Of course, the liquidation processes of a bankrupt company are slightly different. All liquidation procedures are carried out by a bankruptcy trustee. He takes over the management of the bankrupt company and disposes of its assets.

The next step is the sale of the company’s assets. This is most often done through tenders. Sometimes assets can be settled with creditors if it suits both parties. The bankruptcy trustee tries to satisfy the creditors’ claims. Existing assets can be sold, but sometimes there are still waste products, hazardous materials and other tangible assets that need to be properly cared for.

If assets remain after settlement of creditors and payment of all taxes and discharged debts, the remaining assets are returned to the owners. The set of documents to be retained is transferred by the bankruptcy administrator to the archives, where they are to be kept for an appropriate period of time.

And only after all these works have been completed and the report has been drawn up and submitted to the relevant authorities, the liquidation of the bankrupt company is considered to be complete.

Required documents for winding up Lithuanian company

• Financial statements at the beginning and end of the liquidation.
• The company’s founding document, articles of association/statute.
• Securities Report.
• Data on the liquidator (name, surname, personal code, declared place of residence).
• The Company’s documents on personnel issues (applications for hiring/firing, applications for unpaid leave, orders for hiring/firing, orders for unpaid leave, labour contracts, documents on salary calculation, labour contract registration log).

Duties of the liquidator of a Lithuanian company

The liquidation of a company is inseparable from the liquidator, who performs extremely important work and holds a significant position in this process. The liquidator of a Lithuanian company may be elected by the shareholders. A meeting may also be convened for this purpose. He may also be appointed on the initiative of the registration centre.

The liquidator must submit documents to the Registry Centre to ensure the continuity of the process. Documents required to start the process:

• A shareholder’s certificate emphasising the need for liquidation.
• Request to deregister the company from the Legal Entities Centre.
• A signed deed of liquidation of the UAB is required.
• The liquidator should take care of a statement from the VHI, which indicates whether UAB has no debts.
• It is important to take care of the certification of documents submitted to the authorities. It must be sent to the county data archive of the company.

A company can be liquidated only if it has no debts. If a Lithuanian company has debts, it must first declare bankruptcy and then the liquidation process is declared.

Law on Joint-Stock Companies of the Republic of Lithuania –  Article 73

1. The Company may be liquidated on the grounds of liquidation of legal entities established by the Civil Code.
2. The decision on liquidation of a company shall be made by the General meeting of shareholders, the administrator of the register of legal entities or court in cases provided for by the Civil Code. When the decision on liquidation of a company is taken by the administrator of the register of legal entities, liquidation of a company shall be carried out with application of provisions of the Civil Code regulating liquidation of a legal entity at the initiative of the administrator of the register of legal entities. legal entities.
3. The General Meeting of Shareholders may not pass a resolution on liquidation of an insolvent company.
4. In connection with bankruptcy, the company shall be liquidated in accordance with the procedure established by the Law on Insolvency of Legal Entities .
5. General meeting of shareholders or court after making decision on liquidation of a company shall be obliged to elect (appoint) its liquidator .
6. From the date of adoption by General shareholders of decision on liquidation of a company a company shall acquire a status of a liquidated company. At election (appointment) to liquidator rights and duties of head and board of a company shall be acquired. The head of a company and the board shall lose their powers after appointment of a liquidator. General meeting of shareholders can be called in order established by the present Law.
7. The documents of the liquidated company, which it uses in relations with other persons, should indicate, among other things, its legal status “in liquidation”.
8. The General Meeting of Shareholders may appoint another date (other than the date of adoption of the resolution) from which the resolution on liquidation of the company becomes effective, but this date may not be earlier than the date of adoption of the resolution on liquidation of the company. .
9. If the basis for liquidation is the end of the term for which the company was established, not later than 3 months before the end of this term, the general meeting of shareholders should make a decision on liquidation of the company and elect a liquidator. or make a decision on extension of the term of activity and change of the charter of the company. In this case, after the adoption of the resolution on the liquidation of the company, the company acquires the status of a liquidated company on the day following the end of the term of activity established by the articles of association. If the general meeting of shareholders fails to elect a liquidator within the prescribed period, shareholders whose shares have at least 1/10 of all votes, as well as the administrator of the register of legal entities, have the right to apply to the court to appoint a liquidator.
10. The liquidator must publicly announce the liquidation of the company in the source specified in the articles of association three times at intervals of at least 30 days or publicly announce it in the source specified in the articles of association once and notify all creditors of the company in writing. The announcement or notice must contain all the information about the company specified in Article 2.44 of the Civil Code.
11. The liquidator shall be obliged not later than the first day of the public announcement on the liquidation of the company to submit to the administrator of the register of legal entities the documents confirming the decision on the liquidation of the company and personal data.
12. At liquidation of a company persons who signed shares but did not pay for them shall be obliged to pay for them in the order established in the agreement on signing of shares. Persons who signed the shares may be released from unpaid contributions of the part they would have received at distribution of property of the liquidated company only in the case if the basis for liquidation of the company is the recognition of the establishment of the company. invalid in accordance with Article 2.114 of the Civil Code and the company can satisfy the assumed obligations to creditors.
13. A liquidated company shall preliminarily settle the company’s creditors in accordance with the procedure for satisfaction of creditors’ claims established by the Civil Code. After settlement with the creditors of the liquidated company, the accumulated dividend shall be paid to the holders of preference shares together with the accumulated dividend. The remaining assets of the liquidated company are distributed among the shareholders in proportion to the nominal value of their shares. The assets of the company later discovered are divided in the same manner. If the company’s shares give unequal rights, they must be taken into account when dividing the property.
14. Property of a company can be distributed among shareholders not earlier than in 2 months after fulfilment of all actions provided by item 10 of this article .
15. If there are legal disputes regarding the repayment of the company’s debts, the company’s property may not be distributed among shareholders until the court resolves these disputes and settles creditors.
16. The decision on cancellation of liquidation of a company may be made by the General meeting of shareholders or by the court which made a decision on liquidation of a company. A decision on liquidation of a company may not be cancelled if at least one shareholder has received a part of property of a company being liquidated.
17. Documents confirming the decision on liquidation of the company as well as on cancellation of liquidation shall be submitted to the administrator of the register of legal entities.