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Tips for beginners in business


1. Tips for the establishment of CJSC
  1. The distribution ofshares. EstablishingCJSCtogetherwith other persons, it is important toallocateshares wisely. It would be worthwhileto pay attention tosome of thepossible models ofthe distribution ofshares,for example:
    • 50% + 50%. Whenthere are twoshareholders of the company, this distribution ofshares maylead to difficultieswhen adisputebetween the shareholders arises,since noneof them cancriticallyinfluencethe importantdecision making of the firm. In this case,firm decisionmaking can be „įšaldytas“;
    • 33%+33%+34%. The allocation ofsharesin the companyin such a model,can lead to delayeddecisions, especially in the case, when a decision requiresa qualifiedmajority,for example,for the distribution ofprofitsthere must beat least 2/3 of the votes, so the twoshareholders, who have33% of the shares will not determinesuch a decision with their votes;
    • Forsome decisions,the law provides no less thanthree fourthsmajority of votes,soa smallnumber of shares (for example, 25%) can have a big impact.

    It is importantto knowthat the votesare countednotfrom all theshares,but only fromthe sharesavailable toshareholders attendingthe meeting. Therefore,if not all shareholders are participating in the meeting, then a small number of sharesbecomes more important.

  2. The Name. The name of the legal entity must be formed, following the rulesof the Lithuanian language. In practice, there are alsoregisterednames ina foreign language. The nameof the legal entityis registered ifit does not coincidewith the name ofanother legal entityor atrademark. After the registration of thenamethe following adverseeffects can appear:
    • If the name is misleading, and similar to the nameof another legalperson ora trademark (for example, Megarent andMegarenta),theirowners canmake a claim;
    • After the registration of the name, company`s owner can be punishedby the State Inspectionof Languagefor the failure to comply withthe rulesof the Lithuanian language.
  3. The Share Capital. The authorized capital ofCJSCmustbe at least 10thousandLT. When decidingwhat sizeof capital to choose, it is important to realize that thesefunds will becomethe propertyof CJSC. The size of the authorized capital is also important for the lenders of CJSC (for example, when takinga loanfrom the bank), because it shows the amountof fundsthatcan notbe takenby shareholderswhenthey please. Thiscan only be doneby reducingthe authorizedcapital, but duringthis processthe interests of thecreditors are also protected. When acompanyneeds money, shareholders can:
    • Load money to the company (after the expiry of the loan,money will be returnedto shareholders), or

    Increase the authorizedcapital of the company(the money becomes the propertyof CJSC).

  4. Enterprise Management.Crucialquestions about themanagementof CJSCdecidethe general meetingof shareholdersand with the current issuesdeals the Head of the Company.An organization canhave anassigned guideand /orcaretakerentity- in other words, the Board ofsupervisors, whichelectsand dismissesthe general meetingof the shareholders.
    The general meetingof shareholders,by a simple majorityelects or recallsthe manager of the company(director). The law providessolutions,forthe adoption of whichit requires 2/3 or 3/4majority of the votes(for example, the distribution of profitsorthe purchase of the newshares), thus,protecting the rights ofpersons withfewer shares.
    Directormakesimportantbusinessdecisions. Shareholdersoftenseek to controlhis actions, that is why Statute of the company providessolutions, which the Directorcan take, onlywhen he receiveda shareholders` agreement (for example, to get a long-termproperty worthmorethan, let`s say, 50 000Lt). One of the shareholders can also be a Director.
  5. Ifthere is leadership appointed in the company, thenit electsand dismissesthe head ofthe company.In this case, part of thesolutionstakes the lead, and the other part – Director. Leadershipis a collective bodyof the government. It consistsof at leastthreepersons. Leadersare appointed for the reason that importantmanagement issues could be solved by more than one person, but by several. Thismanagement modelis more securefor the shareholders.


    Ifthe companyhas appointedthe councilrangers, then itelectsand dismissesleadership and thehead of the company, and alsowatching overtheir activities.

    The production of stamp. Head of theCompanywishing toorder a stamp(withoutthe coat of armsof the Republicof Lithuaniaand without the municipality) must apply directlyto the manufacturerof stamps. Youwill have toprovide:

    • The certificate of the registration of the CJSC and its copy

    • Document, proving the election or appointment of the Head 
    • The proof of the identity, and if the orderis made by an authorized person- a document confirmingthe identityandthe authority
  6. The employment of the Head. The Director of the CJSCmay formallyact on a behalf ofthe company (for example, to sign the contracts)onlyin the casewhen he hadsigned a working contract. This contract is signed by the Director andthe person authorizedby the shareholders. It is importantto know thatthe sameperson canbe a leadernot only in one enterprise. TheSocial Insurance (the Office of theState Social Insurance Fund) must be notified about the employment of the Director. Opening of the current bank account. It is a change of the savings account of the CJSC (the one, which company had when was just established) to the current account, with which you can make payments. If you want to do this, youhave toprovide the bank:

    8. Registrationof taxpayers(on demand –VAT payers). The new,just registered company is automaticallyregistered as ataxpayerin the territorialdepartment ofthe State TaxInspectorate. However,the data, which is in thetax office, needs to be specifiedwhen completingandfilinga specialapplicationin the State TaxInspectorate.

    • The certificate of the registration of the CJSC
    • The stamp of the CJSC
    • Document, proving the election or appointment of the Head 
    • The proof of the identity, and if the orderis made by an authorized person- a document confirmingthe identityandthe authority
      • Registrationfor VATmaybeoptionalorvoluntary.


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