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Changes to the Law on Companies will improve the business environment and help start-ups to attract investment

Date

2022 11 18

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Seimas approved amendments to the Law on Companies drafted by the Ministry of the Economy and Innovation, which will substantially improve the conditions for growing companies to attract investment, encourage the use of digital tools in decision-making and enable shareholders,  small ones in particular, to exercise their rights.

 “With the adoption of these amendments to the Law on Companies, we have good news for both existing businesses and those thinking of starting a business. From now on, companies will have better conditions to set up, grow and expand. One of the most important amendments to the Law is the possibility for companies to issue shares of different classes – it will be up to investors to decide on the need for specific share classes. We expect that the amendments to the Law will meet the needs of companies, in particular those creating high added value, and will, of course, help attract new investment,” said Aušrinė Armonaitė, Minister of the Economy and Innovation.

The amendments to the Law have substantially liberalised the legal regulation of share classes. The strict regulation of the limit of preference shares in the share capital has also been removed, and non-voting preference shares will be allowed to represent not more than 1/2 of the share capital. Until now, the preference shares had to make up a maximum of 1/3 of the authorised capital.

The amendments to the Law also define in more detail the conditions for organising remote general meetings of shareholders (GMS) by electronic means. From now on, remote voting will be allowed on request of shareholders holding at least 1/10 of the total number of votes at the GMS.

The proposed amendments also include a novelty, i.e. by unanimous decision of shareholders the company’s articles of association may provide for organising GMS only by electronic means.

Statistics show that as many as 76.5 % of the private companies (PC) established in the last 3 years have opted for a minimum share capital; therefore, in order to facilitate the start-up of a business, a lower share capital requirement has been introduced for the setting up of a private company. From 1 May 2023, the minimum authorised capital for the establishment of private companies will be EUR 1,000 instead of the previous EUR 2,500.

In order to strengthen the protection of the rights of minority shareholders, the procedure for the redemption of their shares has been introduced, which will allow to protect their interests when continuing as a shareholder is no longer reasonable, as well as when redemption is requested by a shareholder holding an absolute majority. Until now, this possibility had been provided only to shareholders of listed companies.