INTEREST GROUP IN LITHUANIAEdvardas Juchnevicius, Gdansk University

Vaidas Kazlauskas, Budvytis, Civilis & Partner Law Firm

The status quo

The two primary sources are the Republic of Lithuania Law on Companies and the Republic of Lithuania Law on Consolidated Accounts of Groups of Undertakings, which implements the mandatory provisions of the 7th Directive. The criterion of control is used for the identification of the group of companies under Lithuanian law.

The status quo

Under the Law on Companies a company shall be considered a parent company if it directly and/or indirectly holds a majority of the voting rights in another company which is its subsidiary or if it may directly or indirectly exercise a dominant influence on another company.

The status quo

Lithuanian law is very specific on the duties of the management bodies of a company in that they must act in the interest of the company and its shareholders, comply with laws and other legal acts and be governed by the articles of association of the company.

The Civil Code of the Republic of Lithuania also stipulates that member of a legal person’s body must act in good faith and reasonable manner in respect of the legal person and members of other legal person’s bodies and be loyal to the legal person and maintain confidentiality.

The status quo

Another instrument for the protection of the company’s interest is the regulation of payment of dividends. The general meeting of shareholders may not adopt a decision to allocate and pay dividends if at least one of the following conditions is met, i.e. a company has undischarged obligations which ought to have been discharged prior to the adoption of the decision, the aggregate of profit/loss of the reporting financial year available for distribution is negative (losses have been incurred) or the equity capital of the company is lower or upon payment of dividends would become lower than the aggregate amount of the capital of the company, the legal reserve, the revaluation reserve and the reserve for acquisition of its own shares.

The status quo

To summarize, the group interest concept is at present moment is not regulated by Lithuanian law. Each company must be run and operated independently, the interests of the company being at the core of its operations, and the management bodies must see to that and avoid any actions and steps that might be detrimental to the company.