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[null,"Prepared By:","Contributors:"]
[null,"Ellex Valiunas"]
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[]
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["Social Enterprise Law Surveys"]
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["Report Generated: 5/2/2025"]
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["View your report results on next tab"]

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["Question","Lithuania"]
["I. Enterprise Form"]
["What jurisdiction(s) do you practice in?","Republic of Lithuania\n"]
["What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade or business (rather than for investment or holding company purposes)? Please briefly describe these forms. a. Of these, which are the most common for-profit organizational forms used by Enterprises seeking financing from investors and that will have multiple owners? b. Other than organizational forms specifically designed for Social Enterprises (and discussed below under Question 4), which, if any, are the most common for-profit organizational forms used by Social Enterprises?","The most common for-profit organizational form used in Lithuania is a private limited company (Lith. UÅ¾daroji akcinÄ— bendrovÄ—, “\nUAB”), which is well understood and traditional in nature. This result is brought on not only by the flexibility, clear and understandable regulations and the limited liability, which this organizational form possesses, but also by the relatively small mandatory share capital, clear share reassignment process and corporate structure. Public limited companies (Lith. AkcinÄ— bendrovÄ—) are far rarer, but still more common than partnership enterprises.\nFurthermore, Lithuania has available the small partnership (Lith. MaÅ¾oji Bendrija, “\nMB”). Although it was only introduced in 2012, it is among the most popular organizational forms. It is limited to 10 members, who must be natural persons and does not have a mandatory share capital. It is generally thought of as a perfect organizational form for small family business – MB is based on collective decision making and trust-based member relations, as there are no clear regulations on making business decisions in a MB. Generally speaking, the MB operates as modification of the traditional UAB form.\nThe individual enterprise (Lith. Individuali Ä¯monÄ—, “\nIÄ®”) is organizational form most commonly used by small scale business operations, which only requires the work of a couple individuals and little capital, as the IÄ® may be only created by one natural person, who may function as both the owner and the managing body. It benefits from simplified financial regulations and does not have to file financial reports, only a tax declaration. The drawback of using this form is that of unlimited liability – the founder has to fully take into account the business risk he’s committing to.\nFinally, general partnership enterprises (Lith. Tikroji Å«kinÄ— bendrija, “\nTÅªB”) and limited partnership enterprises (Lith. KomanditinÄ— Å«kinÄ— bendrija, “\nKÅªB”) are usually founded when the business operation requires the efforts of multiple business partners to be started. Partnerships in general also benefit from simpler financial regulation and does not have to file financial reports, except if all of the members of the partnership are (private) limited companies. On the other hand, they also suffer from the same problem – unlimited liability.  \n \na. When planning to attract new business partners and investors, individuals usually choose between UAB and TÅªB/KÅªB.\nb. Under current Lithuanian law, only a very narrow set of companies commonly understood as Social Enterprises qualify as “Social Companies”. Out of those that do qualify, they heavily tend to form as private LLCs.\n"]
["Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required to or allowed to consider (e.g., interests of employees, customers, the environment, etc.)?","The Public Enterprise (Lith. Viešoji Ä¯staiga, “\nVšÄ®”) cannot assign profits to other goals other than those set out in the Articles of Association (the profit cannot be paid out as dividends to the participants). The goal of VŠÄ® (as specified in regulation) is to satisfy public interest by engaging in education, teaching and scientific, cultural and other activities.\n"]
["Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so: a. What type(s) of organizational forms are they? b. How do they materially differ from the most closely analogous traditional organizational form? c. What are the main benefits for founders and funders of such organizational forms? d. Are there any restrictions on the use of these organizational forms (such as profit-caps, stakeholder involvement and impact reporting)? If there are, what are they? e. Are there any material differences in timing or costs for forming a Social Enterprise versus a traditional Enterprise? f. How prevalent and well known are Social Enterprise forms?","No, it does not.\n"]
["Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporate, tax or other perspective? b. Are there any material benefits of, and/or restrictions on, using a Nonprofit form for Social Enterprises that does not apply to Nonprofits that are not Social Enterprises? c. Is there any type of “hybrid” Nonprofit form that requires less reporting and/or allows for faster formation? If so, please describe the drawbacks of utilizing this form (i.e. fewer tax benefits). d. How prevalent is the use of Nonprofits for Social Enterprises?"," Under current Lithuanian law, only a very narrow set of companies commonly understood as Social Enterprises qualify as “Social Companies”. These Social Companies are not restricted in organizational form, so they may be organized as nonprofits. The qualifying companies may receive state assistance in these ways: \n\n \n\t Subsidies for employee renumeration and insurance costs; \n\t Subsidies for generating new employment opportunities for the disabled; \n\t Subsidies for training employees that belong to a certain focus group; \n\t Subsidies for adapting workspace environment to disabled employees; \n\t Subsidies for extra administrative or transport expenses; \n\t Subsidies for hiring an assistant (sign language translator); \n\t Real estate tax breaks; \n\t Profit tax breaks; \n\t VAT breaks. \n \n\n (c) No, there is not. \n\n (d) It is very prevalent indeed, although the majority of the companies that qualify as “Social Companies” are UABs. \n"]
["Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms."," Yes, a cooperative is a legal organizational form in our jurisdiction. \n\n \n\t Benefits: limited liability. \n\t Restrictions:\n\t \n\t\t must have not less than 5 members, \n\t\t limited amount of dividend payouts (restricted to a maximum of 10% of the profits), \n\t\t additional requirements for agricultural/forestry cooperatives, etc. \n\t \n\t \n \n"]
["Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to."," If a company qualifies as a “Social Enterprise” under Lithuanian law, it must: \n\n \n\t create and submit an annual plan of training for employees who belong to focus groups; \n\t process personal data which confirms that employees belong to focus groups and submit reports on the number of employees that belong to focus groups; \n\t provide reports on received and used state assistance; \n\t provide reports on profit use for the goals of the Social Enterprise; \n\t with 2 months left until the end of the term of planned state assistance, provide a new plan for foreseen need of state assistance. \n \n\n These enterprises must report to the Employment Services Under the Ministry of Social Security and Labour of the Republic of Lithuania. \n"]
["In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.","No, there is not.\n"]
["Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.","Enterprises which pose a large public interest, who have over 500 employees on the last day of the financial year, must provide annual social responsibility reports.\n"]
["Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe."," The requirements are as follows;  \n\n \n\t The main economic activity defined by the founding document must be geared towards a main goal of measurable and positive social impact; \n\t Profits must be reinvested towards the main goals using pre-determined reinvesting schemes; \n\t The Social Enterprise must be controlled accountably and transparently; \n\t Social Enterprises must be independent from state institutions and related organizations. \n \n"]
["Does your jurisdiction have any ESG requirements for investors? If it does, please describe.","No.\n"]
["II. Funding"]
["Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements. b. If they are not, are they permitted to consider such factors? c. What other relevant factors do investors tend to consider (aside from profit motive).","No major investor classes are required to look at ESG issues. However, pension funds that provide Lithuanian pillar II additional funds do consider ESG issues when making their investment decisions and have joined Principles of Responsible Investment of the United Nations.\n"]
["What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?","Social Enterprises in Lithuania receive philanthropic funding and usually, it is in a form of donations (aid and charity).\n"]
["How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?","For-profit impact investments are not prevalent in Lithuania. However, several pension funds are trying to combine different investment strategies, including for-profit impact investments strategies with others.\n"]
["What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government funding? b. Is any government funding limited to Enterprises incorporated using Social Enterprise forms?","Social Enterprises can receive state assistance (as mentioned in Section I Question 5 above), however, there is no special government funding specifically available to Social Enterprises as such. Depending on the Social Enterprise’s form and industry, government and EU Structural Funds grants, loans, bonds, and guarantees may be available. For example, guarantees for small and medium-sized enterprises are provided by the “Investment and Business Guarantees” (INVEGA) institution, which provides guarantees equivalent to state guarantees to credit institutions, helping Social Enterprises to secure financing from credit institutions.\n"]
["Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?","No.\n"]
["To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.","Under Lithuanian laws, publicly traded Enterprises are not required to disclose ESG factors.\n"]
["How prevalent, if at all, are impact bonds in your jurisdiction?","Impact bonds are not prevalent in Lithuania, however, the Lithuanian government with EU Commission are making way for future legislation on impact bond issuance.\n"]
["In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?","No.\n"]
["Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under applicable statutes?","Crowdfunding is regulated activity in Lithuania and Crowdfunding Platform Operators are supervised by the Bank of Lithuania. However, only one successful crowdfunding project involving Social Enterprises has been carried out since the adoption of the crowdfunding legislature. Therefore, it can be concluded that this kind of funding is not very popular in regards to Social Enterprises. Additionally, there are no rules that make it easier for smaller businesses or Social Enterprises to take money from investors that are not professional.\n"]
["III. Tax"]
["Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full. b. Are they dependent on the Social Enterprise utilized using a specific organizational form (e.g., for profit vs. Nonprofit form)? c. Please describe any other key requirements of the available tax exemptions (e.g., restrictions on sources or uses of funds, restrictions on commercial activities, etc.)."," There are tax exemptions available both for-profits and Nonprofits generally. However, there are no tax exceptions that are uniquely available for Social Enterprises (whether for-profits or Nonprofits). \n\n Nonprofits (whether or not Social Enterprise) that (i) are established for purposes other than profit-making and (ii) are not entitled to distribute the generated profits among its founders and (or) members, have a right to reduce taxable profit with the funds directly allocated to finance public interest activities (allocation shall be made within three tax periods). \n\n For-profits (whether or not Social Enterprise) may reduce corporate income tax (CIT) if they meet the following criteria: (i) income received for own produced products accounts for more than 50% of all income received, and (ii) part of the workforce employed, consists of persons with limited working capacity. Reduction of calculated CIT depends on the percent of employees with limited work capacity and may vary from 25% to 100%. Please find the detailed points in the table below: \n\n \n\t \n\t\t \n\t\t\t \n\t\t\t Share of persons with limited work capacity in the total number of persons in employment \n\t\t\t \n\t\t\t Reduction of calculated CIT \n\t\t \n\t\t \n\t\t\t More than 50% \n\t\t\t 100% \n\t\t \n\t\t \n\t\t\t 40–50 % \n\t\t\t 75% \n\t\t \n\t\t \n\t\t\t 30–40 % \n\t\t\t 50% \n\t\t \n\t\t \n\t\t\t 20-30 % \n\t\t\t 25% \n\t\t \n\t \n \n\n   \n"]
["Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?","No.\n"]
["Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)","No.\n"]
["Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?","No.\n"]
["IV. Governmental Infrastructure"]
["Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.","No, it does not.\n"]
["What government operational support, resources, training or services, are available for small businesses or Social Enterprises?"," There are few types of state aid measures dedicated to Social Enterprises: \n\n \n\t Government subsidies for wages, social security contributions, training, creating and adapting workplaces and work tools of target groups and in specific cases subsidies for transportation of target groups, reimbursement of costs of administration, and assistance. These subsidies are provided by Employment Service Under the Ministry of Social Security and Labour of the Republic of Lithuania. \n\t Corporate income tax (CIT) relief. CIT can be relieved up to 100 percent. Exact reduction of CIT depends on proportion of persons with reduced working capacity among all persons in employment (see part III). \n\t State and municipal property (premises) may be provided to Social Enterprises for temporary use free of charge. The contracting authority or contracting entity may impose special conditions limiting the participation in public procurement only to Social Enterprises. \n \n\n For small businesses, there are loans, grants, subsidies, other staid aid measures and incentives in various forms provided by different governmental institutions. \n"]
["Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.","Yes, but all requirements are the same regardless of the type of Social Enterprise. Social Enterprises are required to produce state aid reports every quarter of the year. Social Enterprises must also produce a report on the use of their profits for their purposes. They must also produce monthly reports showing the number of employees in the target group and their share of all employees in the Social enterprise.\n"]
["Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.","Yes, in accordance with the procedure established by the Law on Public Administration State Labour Inspectorate of the Republic of Lithuania is supervising the compliance of Social Enterprises with the requirements established by laws and other legal acts.\n"]
["Is there a different bankruptcy system available for Social Enterprises?","No, it does not.\n"]
["VI. Miscellaneous"]
["What are the average time and filing fees to form an Enterprise in your jurisdiction?","Upon verification of establishment documents of UAB by the Notary Public, usually, the registration takes up to 3 business days with limited exceptions when the term is extended. The registry fee for the registration of UAB is approx. EUR 50, however, the documents additionally have to be verified by the Notary Public before their provision.\n"]
["What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well as the standards there are to maintain them.","There is no government or third-party certifications or accreditations that allow Social Enterprises to gain a special taxation status. However, Nonprofit Social Enterprises may gain a special status - the recipient of sponsorship. If such status is granted, sponsorship received by Social Enterprise is not included in the corporate income tax base.\n"]
["Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.","Yes, startups can easily form and flourish in Lithuania. They have a number of Enterprise forms available to choose from, there are relatively few reporting requirements for private for-profit businesses and incorporation processes are fast, cheap and simple.\n"]
["Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.","Yes, Social Enterprises can easily form and flourish in Lithuania. Social Enterprises may choose any legal form (with some exceptions). When the status of the Social Enterprise is granted, the Social Enterprise may receive state aid, e. g.  wages and state social insurance contributions subsidy; subsidy for job creation for the disabled and acquisition of their work tools and other types of subsidies. However, it should be mentioned that the Social Enterprise status may be granted only to those Enterprises that have a purpose to promote the reintegration of persons whose work capacity is reduced due to disability.\n"]
["Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Social Enterprises subject to legislation prohibiting inclusion of Social Enterprises in government contract procurement)?","In the general corporate form, directors must use their powers in the best interests of the company and shareholders. While they are not prevented from considering other interests, such as the environment or the larger community, it would be better were they more easily able to consider those interests.\n"]
["In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.","No.\n"]
["What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?"," \n\t Revising rules governing fiduciary duties of Enterprises and managers to enable or require them to consider factors other than financial return. \n\t Introduction of separate legal form oriented strictly for Social Enterprises. \n\t Introduction of a tax relief that would exclude Social Enterprises from the corporate income taxpayers’ list, i. e. profit received by Social Enterprises would be tax free.   \n \n"]
["What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?","N/A\n"]
["Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?","N/A\n"]