REPUBLIC OF LITHUANIA
LAW
ON ENTERPRISES
CHAPTER 1
GENERAL PROVISIONS
Article 1. The Objectives of the Law on Enterprises
This Law shall establish the entities which have the right
to engage in permanent commercial-economic activities in the
Republic of Lithuania on behalf of their firm, and the legal
foundation of their establishment and activities.
The establishment of various types of enterprises, specified
in Article 6 of this Law, their legal status, activities,
liquidation and reorganisation shall be regulated by appropriate
laws.
This Law shall not apply to natural and legal persons
engaged in non-commercial (non-profit) activities. The
establishment, liquidation, reorganisation and activities of
nonprofit enterprises shall be regulated by the Civil Code of the
Republic of Lithuania and by the bylaws of these enterprises.
Article 2. The Enterprise
The enterprise shall be an economic unit having its own
name, and is established to carry out certain commercial-economic
activities in compliance with the procedures established by law.
The enterprise shall comprise material, financial, and
intangible assets, as well as its rights and obligations.
The enterprise, as a subject of law (the owner), may have
the rights of a legal person or may act as a natural person.
Article 3. The Owner
The owner shall be natural or legal person, or several
natural or legal persons united into a corporation (partnership)
who control, handle, and dispose of the property of the
enterprise, and organise economic and financial activities
thereof by the right of ownership.
The owner shall acquire the right of ownership to the
enterprise in pursuance of the establishment, or purchase and
sale of the enterprise, or on the basis of any other civil
transaction.
If the enterprise belongs to the Republic of Lithuania by the
right of ownership, the owner's functions shall be performed by
the managing body of the enterprise.
If the enterprise is leased, the rights of the owner shall
be vested in the lessee for the period of the lease.
Article 4. Enterprise Management
The system of the enterprise management body, the procedure
of its formation, and its powers shall be established by the law
which regulates the activities of the corresponding type of
enterprises, the bylaws of the enterprise, and other documents
related to the founding of the enterprise.
Article 5. 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 maintained on the basis of the employment
contract shall be regulated by the employment contract and the
Republic of Lithuania laws on labour, which determine the minimum
wage, and labour and rest regime, as well as minimum requirements
of hygiene and safety at work for employees of all types of
enterprises.
Relations based on membership in the partnership shall be
regulated by enterprise establishment documents.
Chapter 2
TYPES OF ENTERPRISES
Article 6. Types of Enterprises and Unions of Enterprises
(Amended 15 July 1993)
In the Republic of Lithuania, the following types of
enterprises shall be permitted to function:
1) private (personal) enterprises;
2) partnerships;
3) limited partnerships;
4) stock corporations (public and close);
5) state enterprises;
6) agricultural companies (whose activities shall be
regulated by a separate law); (Amended 16 April 1991) and
7) cooperative companies. Their activities shall be
regulated by a separate law. (Amended 1 June 1993)
Enterprises may form concerns, syndicates, associations and
other unions provided this is in conformity with the Law on
Competition of the Republic of Lithuania. (Amended 15 July 1993)
Article 7. Private (Personal) Enterprise
A private (personal) enterprise shall belong to one natural
person by the right of ownership or to several natural persons by
the right of common joint ownership. Non-production
organisations with the rights of a legal person may also own a
private (personal) enterprise by the right of ownership. A
private (personal) enterprise shall not have the rights of a
legal person, and its property shall not be separated from the
owner's property. The owner shall be liable for the obligations
of the enterprise by way of all his individual property.
A private (personal) enterprise must have the name of a
firm, in which the owner is indicated.
The establishment, liquidation and activities of private
(personal) enterprises shall be regulated by the Civil Code and
other laws of the Republic of Lithuania.
The Government of the Republic of Lithuania may grant the
rights of a legal person to the private (personal) enterprises of
non-production organisations at the request of their founder. The
laws which regulate the activities of state enterprises shall
apply to such enterprises.
Article 8. Partnership
A general partnership shall be an enterprise with unlimited
liability which is 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 a
firm. A general partnership shall not have the rights of a legal
person, and its property cannot be separated from the property of
the individual partners. All partners of a general partnership
shall be jointly liable for the obligations of the general
partnership by way of all their individual property. A 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.
A general partnership shall have the name of a firm which
must contain the name of at least one of its partners.
The establishment, liquidation and activities of a 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 9. Limited Partnership
A limited partnership shall consist of general and limited
partners acting under the common name of the firm who own the
property of the enterprise by the right of common joint
ownership. A limited partnership shall not be a legal person, and
its property cannot be separated from the property of the
general partners. The general members of the limited partnership
shall be jointly liable by way of all their property for the
obligations of the limited partnership, whereas limited partners
shall be liable only for contributions made to the limited
partnership for joint activity under the partnership agreement. A
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. A limited partnership must have at least one
general and at least one limited partner.
A limited partnership must have a 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 10. Stock Corporation (Public and Close)
Stock corporations (public or close) shall be enterprises
with limited liability which have the rights of a legal person,
and the capital of which is divided into shares. The share
capital by the right of ownership shall belong to the stock
corporation (either public or close) as a legal person.
The shareholders shall be the members of the corporation who
have become members upon acquisition of shares of the stock
corporation (public or close) according to the procedure
established by law. Natural or legal persons, and the state,
which is represented by the corresponding state agency may be
shareholders.
Shareholders shall have the right of ownership to the
shares. The sphere of the share circulation of a close
corporation shall be closed.
The establishment, liquidation, activities and relations
between stock corporations (public or close) and shareholders,
creditors, and other relations, connected with the activities of
the corporation, shall also be regulated by the Civil Code of the
Republic of Lithuania, the Law on Stock Corporations of the
Republic of Lithuania, and the bylaws of an individual stock
corporation (public or close), approved and registered according
to the established procedure.
Article 11. State Enterprise
A state enterprises shall be owned by the State of Lithuania
or a local government body by the right of state ownership; it
shall have the rights of a legal person and shall be with limited
property liability. The State (local government) shall not be
liable for the obligations of the enterprise, whereas the
enterprise shall not be liable for the obligations of the State
(local government body).
The establishment, activities, liquidation and
reorganization of state enterprises shall also be regulated by
the Civil Code of the Republic of Lithuania, the Law on State
Enterprises of the Republic of Lithuania, and by the bylaws of an
individual state enterprise, approved and registered according to
the procedure established by law.
Chapter 3
BASIC PRINCIPLES OF THE ECONOMIC ACTIVITIES OF
ENTERPRISES
Article 12. The Sphere of Activities of the Enterprise
Enterprises shall have the right to engage in any
commercial-economic or other activities, which are not restricted
by this or other laws, the bylaws of an enterprise, the contract
on the establishment of an enterprise or other documents on its
establishment, and which are not prohibited in other ways.
Article 13. Issuing of Licences
The following activities shall be prohibited without a
licence issued by the Government of Lithuania or other authorized
body:
prospecting for or utilisation of mineral deposits;
utilisation of natural resources;
repair of sports and hunting firearms;
activities in the sphere of pharmacy; (Amended 31 January
1991)
cultivation and sale of crops containing narcotic, highly
effective or poisonous substances;
brewing of beer and production of non-alcoholic wine;
medical treatment and hygiene practices;
veterinary practice;
legal practice, unless the law provides otherwise;
establishment of educational institutions;
establishment and maintenance of gambling houses or
organisation of games of chance;
carrying out of geodetic and topographical works, publishing
and printing of topographical plans and maps as well as
cartographic charts; (Amended 29 October 1991)
economic activities in the sphere of transportation, unless
the law provides otherwise; (Amended 29 October 1991)
manufacturing of tobacco products ;
activities related to the purchasing in the Republic of
Lithuania of copper and other non-ferrous metals as well as their
alloys and scrap, and the melting thereof; (Amended 29 October
1992);
importing to and exporting from the Republic of Lithuania as
well as selling alcoholic beverages; (Amended 14 January 1993)
and
providing tourist services. (Amended 17 June 1993)
Only state enterprises shall be permitted:
to manufacture and sell narcotics and highly effective and
poisonous substances (which are not used for pharmaceutical
purposes); (Amended 31 July 1990)
to manufacture wine, liqueur and other spirits;
to manufacture tobacco products;
to manufacture weapons and explosives;
to treat patients ill with dangerous and especially dangerous
infectious diseases, including venereal and contagious skin
diseases, and aggressive forms of psychic (mental) diseases; and
to treat animals ill with especially dangerous diseases.
The licence to prospect for deposits of mineral resources
and to utilise natural resources shall be issued only on
coordination with the Department of Environmental Protection of
the Republic of Lithuania. (Amended 31 July 1990)
Natural or legal persons of other states must obtain
licences from the Government of Lithuania for any activities on
the territory of the Republic of Lithuania. Natural or legal
persons of other states who wish to buy shares of stock
corporations (public or close) or state stock enterprises shall
not need a special licence therefor.
Licences to engage in economic activities must be issued
within 30 days from the receipt of an application. If an
application for licence is rejected, the applicant must be sent a
justified response within said period of time. Refusal to issue
a licence may not be based on the inexpediency of the enterprise
activity.
Article 14. Relations between Enterprises and State Bodies
Enterprises shall function independently, and orders of the
bodies of state power and governance shall not be compulsory.
State bodies shall not have the right to manage the affairs of
enterprises or to regulate by administrative methods their
economic activities, except in cases when according to the
procedure established by law, a special supervision procedure is
applied to the enterprise for legal infringement, or a liquidator
of the enterprise is appointed in the case of bankruptcy or in
other cases specified by law.
All enterprises shall have equal legal-economic conditions.
When a state of emergency is declared or a certain territory
is declared to be a disaster area upon the resolution of the
Supreme Council of the Republic of Lithuania, enterprises must
carry out the instructions of the Government of the Republic of
Lithuania or local government bodies.
Enterprises may acquire financial, material and other
benefits allotted (sold) by the state in the centralised procedure
at a price determined by the state or by agreement, and for the
certain agreed obligations taken upon by an enterprise before the
state (local-government) body.
Article 15. Control of Enterprise Activities
Enterprises shall keep accounts in the obligatory procedure,
and, in pursuance of the laws of the Republic of Lithuania, shall
submit information concerning their accounts to state bodies for
the purposes of taxation and financial accounting of the
enterprise. Enterprises shall have the right to keep documents
concerning their commercial activities confidential.
The inspection and auditing of an enterprise's activities
shall only be permitted in cases specified by the laws of the
Republic of Lithuania.
Article 16. Liability for the Violation of the Laws on
Enterprises
Legal actions may be instituted in the manner established by
law against the enterprises (owners) 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 17. The Enterprise Founder
The founder of an enterprise may be a natural or legal
person, or the state (local government body), represented by its
bodies or by the managing body of the enterprise which is being
established.
The enterprise may be established by one or several
founders.
Article 18. The Procedure for the Establishment of
Enterprises
The procedure for the establishment of enterprises shall be
determined by this and other legal documents which regulate the
establishment of different types of enterprises.
Article 19. Documents Concerning the Establishment of an
Enterprise
Documents concerning the establishment of an enterprise
shall comprise the bylaws of the enterprise, a licence to engage
in certain economic activities, a qualification certificate, the
act on the allotment of a land plot if in accordance with this
or other laws these documents are required, and a licence to
engage in economic activities issued by a local government when
an enterprise is to be established on its territory with the
State budget funds. In the case of certain types of enterprises,
the contract on the establishment of the enterprise, the
agreement on common joint activity or the lease agreement may be
documents on the establishment of the enterprise. Enterprises
which are engaged in production activity must also have an
ecological certificate-licence issued by the Department of
Environmental Protection of the Republic of Lithuania. Other
documents on the establishment of enterprises may also be
specified by separate laws. (Amended 31 July 1990).
The contents and form of the documents on the establishment
of an enterprise shall be specified by the standard acts which
regulate the establishment of enterprises of the corresponding
types.
Article 20. The Licence of Local Government to Engage in
Economic Activities
The licence of the local government to engage in economic
activities shall be required only in cases when the enterprise is
established with the State budget funds and is registered with
the Ministry of Economics of the Republic of Lithuania. In other
cases, the registration of the enterprise (the registration of
the contract on its establishment or of the bylaws of the
enterprise) with a local government body shall be equivalent to a
licence to engage in economic activities.
The licence to engage in economic activities shall be issued
by a local government body upon receipt of all the documents on
the establishment of the enterprise.
The licence to engage in economic activities may specify the
term of functioning of the enterprise.
A local government body may deny a licence to engage in
economic activities if:
1) the establishment of the enterprise would inflict harm
upon the health of the population or the environment;
2) the bylaws of the enterprise or other documents
concerning its establishment are not in compliance with the law;
and
3) in other cases specified by law.
The local government body must, within 15 days from the
receipt of the documents on the establishment of the enterprise,
consider the application for a licence to engage in economic
activities, and must within 3 days inform the founder of the
enterprise of its decision in writing.
If there are circumstances specified in Part 4 hereof, the
local government body may issue a conditional licence for
economic activities and fix the term within which the founder or
the enterprise must eliminate the circumstances which hinder the
issuing of the licence. If these requirements are not complied
with, the local government body shall have the right to revoke
the conditional licence to engage in economic activities.
The local government body may revoke the licence to engage
in economic activities in the event that the existence of the
circumstances specified in Part 4 hereof is subsequently
discovered. The local government body shall inform in writing the
owner, the administration of the enterprise, and the state agency
which controls the economic and commercial activities of the
enterprise of the revocation of the licence.
If the owner, upon the receipt of the licence to engage in
economic activities, fails to register the enterprise within 1
year, the licence shall become invalid.
The founder of the enterprise may appeal to court against
the refusal of the local government body to issue a licence, or
the decision to revoke the licence to engage in economic
activities, or the decision to issue a conditional licence within
30 days after the decision of the local government body is
delivered.
Article 21. Registration and Re-registration of an
Enterprise
Before starting its economic activities, every enterprise
shall be registered in the obligatory manner. The activities of an
unregistered enterprise shall be prohibited. The bodies of the
Ministry of Finance of the Republic of Lithuania shall bring a
legal action to recover to the budget the owner's income from the
activities of the unregistered enterprise.
An enterprise shall be considered as having been established
from the date of its registration. Enterprises shall be
registered with the higher level local government body, and the
enterprises established with State funds shall be registered with
the Ministry of Economics of the Republic of Lithuania or other
State body commissioned by it.
The registration of enterprises shall be regulated by the
Republic of Lithuania Law on the Register of Enterprises.
The following documents shall be filed for the registration
of an enterprise:
1) the founder's (founders') application to register the
enterprise, containing the requisite data to be recorded in the
register;
2) officially registered documents concerning the
establishment of the enterprise; and
3) certificate concerning the payment of state taxes.
The decision to register or to refuse to register an
enterprise must be adopted no later than 15 days after the
receipt of all the documents specified in Part 4 hereof. The
registrar shall announce about the registration of the enterprise
in the local and national press.
In the cases, where the registration of an enterprise ( the
contract on the establishment of an enterprise or its bylaws) is
equivalent to the licence of its establishment, Article 20 of
this Law shall apply.
If the documents on the establishment of an enterprise are
amended or supplemented, the enterprise shall be re-registered in
pursuance of the requirements of this Article. An enterprise must
also be re-registered if it is sold, leased or in any other way
transferred to other natural or legal persons or the state
according to the procedure established by law.
Article 22. Refusal to Register or Re-register an Enterprise
Refusal to register an enterprise shall be permitted when
the documents specified in Article 21 of this Law are not filed
or when said documents do not comply with the requirements
established by law. Refusal to register an enterprise on other
grounds shall be unlawful. The corresponding body must within 3
days inform the founder of the enterprise in writing about the
unfavourable decision to register the enterprise.
Refusal to register an enterprise may be appealed against in
court. The founder of the enterprise may bring a legal action to
recover the loss inflicted by the unlawful refusal to register
the enterprise. In the event that the founder of the enterprise
cannot assess and specify the actual amount of the loss, the
registrar must make reimbursement to the founder in the amount of
1000 Roubles for each month that the enterprise remained
unregistered. (Amended 16 October 1990)
In the cases, where the registration of an enterprise (the
contract on the establishment of an enterprise or its bylaws) is
equivalent to the licence to engage in economic activities, the
disputes concerning registration shall be considered according to
Article 20 of this Law.
The regulations set forth in this Article shall also apply
to the re-registration of enterprises.
Article 23. Liquidation and Reorganisation of an Enterprise
The basis for the liquidation of an enterprise may be:
1) the owner's decision to terminate the activities of the
enterprise;
2) the court order or the decision of the meeting of
creditors declaring the enterprise insolvent; (Amended 28
September 1993) and
3) the decision adopted by the government bodies to revoke
the registration of the enterprise for the violations of law
specified in the laws of the Republic of Lithuania.
The body, upon adopting the decision to terminate the
activities of the enterprise, shall appoint or authorise the
owner to appoint the liquidator of the enterprise. After the
appointment of the liquidator, the enterprise shall acquire the
status of the enterprise under liquidation: the bodies of the
enterprise shall lose their powers, the functions of the body of
the enterprise shall be performed by the liquidator of the
enterprise, and the enterprise may conclude only such contracts
which do not contradict the laws regulating the activities of
the enterprise under liquidation. The enterprise under
liquidation must be re-registered.
The procedure for liquidating an enterprise and the legal
consequences shall also be regulated by the Civil Code of the
Republic of Lithuania, the Republic of Lithuania Law on
Enterprise Bankruptcy, and other legal acts, and the documents on
the establishment of an enterprise.(Amended 28 September 1993)
Enterprises may be reorganized when they: unite into
production amalgamations and associations, or merge with other
enterprises or associations, or split up into several
enterprises. The procedure and consequences of the re-
organisation of an enterprise 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 documents, bylaws of the enterprise, and
other documents on the establishment of the enterprise. (Amended
28 September 1993)
After the liquidation or re-organisation of an enterprise,
appropriate records shall be made in the Register of
Enterprises. This shall be announced in the local and national
press.
Article 24. Subsidiaries and Representative Offices of an
Enterprise
Enterprises may establish their subsidiaries and
representative offices. The subsidiaries and representative
offices of an enterprise shall function under the authorisation
of the enterprise. The regulations of the establishment and
registration of enterprises shall apply to the establishment of
subsidiaries.
The establishment of representative offices of enterprises
shall be regulated by a special law of the Republic of Lithuania.
Vytautas Landsbergis
President
Supreme Council
Republic of Lithuania
Vilnius
8 May 1990
No. I-196