Introduction to Akcine Bendrove

When establishing a business in Lithuania, one of the most prominent legal entity types to consider is the “akcinė bendrovė” (AB). Translated as “joint-stock company,” this structure plays a significant role in the Lithuanian economy. Whether you’re an aspiring entrepreneur or a seasoned business professional, understanding the nuances of an “akcinė bendrovė” is essential for informed decision-making.

This guide will walk you through everything you need to know about establishing and operating an “akcinė-bendrovė,” from legal requirements to financial reporting and beyond. By the end, you’ll be equipped with the knowledge to determine whether this business structure is the right fit for your venture.

Legal Framework for Akcine Bendrove

Setting up an “akcinė bendrovė” in Lithuania is governed by the Civil Code of the Republic of Lithuania and the Law on Companies. These legal acts outline the foundational requirements and responsibilities associated with this entity type.

Key Requirements

• Founders: An “akcinė bendrovė” requires at least one shareholder but can have an unlimited number of shareholders. Both individuals and legal entities can serve as shareholders.
• Legal Registration: The company must be registered with the Lithuanian Register of Legal Entities by submitting the necessary documentation, which includes the founding act, articles of association, and proof of share capital.
• Purpose: Like many joint-stock companies worldwide, an “akcinė-bendrovė” is established to conduct commercial business and earn profits for its shareholders.

Strict adherence to these laws ensures that the company operates legally while protecting stakeholders’ rights.

Share Capital Requirements

One of the defining features of an “akcinė-bendrovė” is its share capital. The share capital serves as the financial backbone upon which the company is built.

Minimum Share Capital

• An “akcinė bendrovė” must have a minimum share capital of €25,000. This amount must be fully paid before the company’s registration is finalized.
• Share capital is divided into shares, which represent ownership in the company. These shares can then be publicly traded or privately held, depending on the company’s operational model.

Distribution and Shareholders’ Rights

• Shareholders can own varying amounts of equity based on the number of shares they hold.
• Each shareholder enjoys a set of rights, including voting rights, access to dividends, and participation in key decisions about the company’s direction.

This setup makes the “akcinė bendrovė” an attractive model for enterprises seeking scalability through broad investment opportunities.

Management Structure

The governance of an “akcinė-bendrovė” is robust, with different levels of management overseeing operations and ensuring compliance.

Board of Directors

• The board of directors, elected by the general shareholders’ meeting, is the main decision-making body. It is tasked with setting the company’s strategic direction, approving key decisions, and monitoring operations.
• Directors are legally obliged to act in the company’s best interests, with a focus on ethical business practices.

Supervisory Council (Optional)

• Large “akcinė bendrovė” entities typically establish a Supervisory Council. This additional body provides oversight, mediates potential conflicts of interest, and ensures compliance with Lithuanian laws.

General Shareholders’ Meeting

• The annual general meeting (AGM) is where shareholders gather to review company performance, approve financial statements, and elect members of the board.

A well-structured management framework is crucial for fostering transparency and accountability.

Financial Reporting and Auditing

An essential component of running an “akcinė bendrovė” is ensuring accurate financial management.

Accounting Standards

Lithuanian law requires that all “akcinė bendrovė” entities maintain proper bookkeeping practices. Financial statements must align with International Financial Reporting Standards (IFRS) or Lithuanian national accounting standards, depending on the company’s size and activities.

Auditing Requirements

• Companies meeting certain thresholds (e.g., revenue or employee count) are required to undergo regular audits by an independent auditing firm.
• Audits ensure the company’s financial health and provide stakeholders with confidence in its operations.

Proper financial reporting builds trust among shareholders, regulatory bodies, and the market.

Advantages and Disadvantages of Akcine Bendrove

Before choosing an “akcinė bendrovė” as your business structure, it’s essential to weigh its benefits and drawbacks.

Advantages

• Access to Capital: The ability to issue shares allows the company to raise funds efficiently.
• Limited Liability: Shareholders’ liability is limited to the amount of their investment, protecting personal assets.
• Scalability: This structure is ideal for businesses aiming for long-term growth.
• Reputation: Operating as an “akcinė bendrovė” often enhances credibility with investors, partners, and customers.

Disadvantages

• High Initial Capital Requirement: The €25,000 minimum share capital may be a barrier for smaller ventures.
• Complex Management: With multiple governing bodies, decision-making can be slower and more bureaucratic.
• Strict Compliance: The legal and financial compliance requirements can be time-consuming and costly.

Understanding these pros and cons is pivotal for entrepreneurs evaluating this business model.

Successful Examples of Akcine Bendrove

Several notable Lithuanian companies operate as “akcinė bendrovė,” exemplifying the structure’s potential for success.

• AB Lietuvos Geležinkeliai (Lithuanian Railways): A state-owned joint-stock company managing Lithuania’s railways.
• AB Electrum Lietuva: One of Lithuania’s leading energy companies, showcasing innovation in the utility sector.
• AB Švyturys-Utenos Alus (Švyturys Brewery): A staple of Lithuanian culture, renowned for its high-quality brews.

These examples highlight how versatility and transparency make the “akcinė bendrovė” an attractive choice for businesses across various industries.

Getting Started with Akcine Bendrove

If you’re considering establishing an “akcinė bendrovė,” here’s a quick summary of what you need to do:

• Understand and comply with the legal requirements outlined in Lithuania’s Civil Code and Law on Companies.
• Secure the required minimum share capital and finalize your registration with the Register of Legal Entities.
• Assemble a competent management team that can oversee operations transparently and efficiently.
• Prepare to meet financial reporting and auditing needs.

Starting an “akcinė bendrovė” can help lay a strong foundation for your business’s long-term success. Before making a decision, be sure to seek legal and financial counsel to ensure you’re fully prepared.

FAQs

What types of businesses are best suited for the “akcinė bendrovė” structure?

Companies requiring significant capital investment, scalability, or public trading potential are ideal candidates for this structure.

Can foreigners establish an “akcinė bendrovė” in Lithuania?

Yes, foreign individuals and companies can register an “akcinė bendrovė” in Lithuania, provided they meet the necessary requirements.

What is the tax rate for an “akcinė bendrovė” in Lithuania?

Corporate income tax is generally set at 15%, but smaller businesses meeting certain criteria can benefit from a reduced 5% tax rate.

Does an “akcinė bendrovė” have to be listed on the stock exchange?

No, not all “akcinė bendrovė” entities are publicly traded. Many operate as private companies unless they choose to go public.