The Law on Insolvency of Legal Entities, which entered into force 1 January 2020, established the concept of insolvency of a company according to two alternative insolvency criteria:
(a) a legal person is considered insolvent when it is unable to meet its property obligations on time; or
(b) the liabilities of a legal person exceed the value of its assets
After the entry into force of the new regulation, failure to comply with property obligations on time, even to a very minor extent, is considered a sufficient basis for initiating insolvency proceedings regardless of the financial situation of the company. Insolvency proceedings may also be initiated for a company whose liabilities exceed the value of its assets, regardless of whether these liabilities are overdue, i.e., long-term liabilities, such as loans that are not due, are also considered in assessing the company’s financial situation.
Our company will represent your interests in following cases:
- providing consultations and assessing the risk of bankruptcy
- implementing the manager’s obligation to file for bankruptcy under the Law on Companies
- preparing documents for out-of-court and judicial bankruptcy procedures
- defending the interests of the company in bankruptcy proceedings filed by creditors
We represent the interests of creditors and shareholders of bankrupt companies in judicial disputes in cases of intentional bankruptcy, where unlawful actions by managers of companies have caused property damage to creditors.
In the event of financial difficulties, the solution may be a restructuring procedure, which allows the company to maintain and develop its operation, pay debts, save jobs, restore solvency and avoid bankruptcy. During the restructuring process, the company is granted temporary protection from its creditors. Such a company cannot be seized of assets, filed for bankruptcy, and the calculation of penalties and interest shall be suspended.
To initiate restructuring proceedings, the company must meet the following requirements:
- company has financial difficulties or there is a real chance of having them in the next 3 months.
- company’ operation is not terminated.
- company does not undergo bankruptcy proceedings or has not bankrupted.
- company was established at least 3 years before the date of the application to the court for the initiation of company’s restructuring proceedings.
- at least 5 years have passed since the court decision to complete the company’s restructuring case or the order to terminate the case came into force.
If your company meets these conditions, our team of lawyers will:
- evaluate your company’s situation and discuss company restructuring options and forecasts.
- prepare project of restructuring plan.
- prepare notifications to creditors.
- prepare proposals to creditors for an agreement to postpone the repayment of debts, waive part of the obligations or repay the debts in a different way, considering the company’s real financial capabilities, cash flow forecasts.
- prepare a statement to the court on the restructuring case.
Branches and representative offices
Increase of business volumes makes companies to expand their operation or structurally distribute it by territory, functions performed, specialisation. In this case, businessmen shall decide to set up a branch, representative office or other (subsidiary) company of a legal entity.
Branch, representative office or subsidiary?
- The laws allow a branch of a company to have all the rights that the company has or will grant, but not more extensive than the company has according to the laws and regulations.
- Representative office. For the representative office, the laws provide an exhaustive list of rights: to represent and defend the interests of the company, to conclude transactions and other actions on behalf of the company and to carry out import and export operations under appropriate conditions.
- Subsidiary. A subsidiary is a separate business entity in which another larger company holds a controlling interest. Usually, such company that buys another is called the buying company, and the sold company in financial terms will be and is called precisely the subsidiary. A company is recognised as a subsidiary of another company if it fulfils the following conditions:
- 50 percent or more of its shares are held by another company
- if the management of the company is divided by another company
- if it is a subsidiary of another company which is itself a subsidiary of another company
The main difference is that the branch can carry out economic and commercial activities, and the representative office cannot. It is important that both the branch and the representative office do not have status of legal person, therefore they shall be responsible in accordance with the obligations of the company. Meanwhile, the subsidiary is to be considered as a separate legal person. The subsidiary shall only be liable for non-compliance or improper performance of its obligations by its own assets.
- preparation of the founding documents
- submission of the documents of the established branch / representative office electronically or to a notary
- registration of the established branch / representative office in the Register of Legal Entities
- consultation on the legal status of branches and representative offices, accounting, tax treatment.
We establish branches, representative offices and subsidiaries in the following countries:
Establishment of companies
We provide detailed consultations, take care of the entire process of establishing a company both inside and outside Lithuania. Our team has experience in establishing foreign capital companies in Lithuania. Our services include consultation on matters related to the establishment of a foreign capital company in Lithuania, provision of all necessary information, assistance in filling in documents, referral to the necessary institutions.
In Lithuania, we establish legal entities of various legal forms electronically or through a notary:
- private limited liability companies (UAB)
- public companies (AB)
- individual enterprises (IĮ)
- small partnerships (MB)
- public institutions (VŠĮ)
- general partnerships (TŪB)
- limited partnerships (KŪB)
- charity and support funds
- branches and representative offices of legal entities
After companies decide on business development abroad, we establish companies of various legal forms in following countries:
In these countries, our partners will take care of the entire establishment process, provide consultations on operating licenses, taxes, registration of the office and accounting.
Capital increase / decrease
The authorized capital of the company may be increased by the issuance of new shares by additional contributions from shareholders and other persons or by the company’s funds, i.e., of retained earnings, share premium and reserves (excluding own share acquisition reserve and compulsory reserves).
The authorized capital may be decreased by reducing the nominal values of the shares or by cancelling the shares. The authorized capital may be reduced in accordance with the Law on Companies of the Republic of Lithuania for the purposes specified therein.
Our services in this area:
- we will choose the best way to increase or decrease the authorized capital according to the company’s documents submitted by you.
- we prepare the documents required for the increase of the authorized capital or decrease of the authorized capital (minutes of the general meeting of shareholders) announce the increase or decrease of the authorized capital in accordance with the procedure laid down in the company’s articles of association, amend the articles of association, etc.
- we will represent your interests in the Centre of Registers and the notary’s office.
- we will provide legal consultation in case of objections of other shareholders during the whole procedure.
To prevent serious legal problems in the future, it is important to periodically conduct a due diligence of the company (business), which will help to identify the legal deficiencies and legal risks of the company’s operation, possible inconsistencies in the requirements of the existing legislation.
During due diligence:
- employment and other agreements concluded by the company with employees are reviewed.
- company’s agreements with customers and suppliers are reviewed.
- compliance of the company’s agreements with the requirements of applicable legislation and the company’s business interests is evaluated.
- company’s operating documents (founding documents, articles of association, internal rules, agreements of management bodies, orders and other normative documents) are reviewed.
- due diligence of the operation carried out (licenses, permits) is reviewed.
- analysis of potential disputes is performed, identifying the riskiest areas of operation, legal measures are proposed to avoid the possibility of legal disputes in the future.
- due diligence of personal data protection in the company is performed.
- analysis of the legal protection of the intellectual property owned by the company is performed.
By performing the above actions, we will manage your business risks, saving your investments in disputes.
Debt recovery in Lithuania and abroad
We provide regular debt administration and recovery services to our clients under both pre-trial and judicial procedures.
By using a network of partners across Europe and CIS Countries (Russia, Ukraine, Belarus, Tajikistan) we provide debt recovery services both under judicial and pre-trial procedures from natural and legal persons in these countries.
We carry out an analysis of the company’s debts, identify the reasons for their formation, and draw up a preventive action plan to eliminate existing debts and prevent the formation of hopeless debts in the future.
The nature of the legal status of the manager of the company is dualistic, since the manager of the company is both the sole governing body of the company and the employee of the company, so the manager can be subject to both material and civil law. A fiduciary relationship exists between the manager of the company and the managed company, so from the moment of becoming the head of the company, the head must act diligently, carefully and prudently, act exclusively in the interests of the legal person, and failure to perform these duties or improper performance thereof imposes responsibility on the manager as described in the Civil Code.
Our services related to responsibility of the company’s manager include:
- consultations on company’s management
- risk management during Covid-19
- risk management in case the company is unable to meet creditors’ claims
- personal responsibility of the manager for the conclusion of loss-making shareholders’ transactions
- evaluation of the manager’s decisions on the company’s operation
- preparation of employment contracts with managers
- preparation of confidentiality and non-competition agreements with managers
- representation in negotiations
Protection of personal data
Regulation (EU) 2016/6791 of the European Parliament and of the Council, the new General Data Protection Regulation of the European Union (EU) (hereinafter – the GDPR) apply to the processing of personal data relating to ES citizens by a natural person, company or organization. Every company should have an approved policy (set of rules) aimed at maximising the protection of personal data of employees, customers, service users and minimising threats of data protection breaches.
We will help implement solutions that protect personal data processed in your company:
- personal data protection compliance assessment, analysis of data processing purposes, audit of procedures for documentation, document management
- preparation of data processing documentation
- data protection officer services. Regular supervision and control of data processing in your company
- representation in the state data protection Inspectorate
- implementation of the procedures and rules established by the organisational and technical means to ensure the appropriate level of security determined by the GDPR.
- data processing activity records
- continuous management of the processes necessary for the proper implementation of the GDPR