Lithuania has become a prominent market for company sales and acquisitions thanks to its EU membership, stable economy, and investor-friendly M&A regulations. However, especially for foreign investors, selling or buying a company in Lithuania is a complex process consisting of many legal steps such as choosing the type of company, share/asset transfer structure, competition law notifications, notary and registry transactions.
Company Sales in Lithuania: Basic Framework
Company sales in Lithuania are primarily conducted through private limited companies (UAB). When it comes to public companies (AB), the process becomes even more regulated with securities and public share purchase offers.
The legal framework for sales and acquisitions is primarily based on the following regulations:
- Lithuania Civil Code
- Companies Act (Law on Companies)
- Securities Act (Law on Securities) – especially for public companies
- Competition Act (Law on Competition) – for merger/acquisition notifications
This legislation aims to protect both the buyer and seller, as well as market competition, through mechanisms such as notary approval for share transfers, preemptive rights of partners, mandatory share purchase offers, and notifications to the competition authority.
Share Sale or Asset Sale? Choosing the Right Structure
In Lithuania, it is possible to “sell” a company through different legal structures. The four most common structures are:
1. Share Sale (Share Purchase)
In a share sale, the buyer acquires the company “as is” along with all rights and obligations. This is the most commonly used structure, especially in UABs.
- The buyer takes over the entire company, including assets, contracts, employees, and all debts.
- Existing partners in UABs may have preemptive rights. According to the company’s articles of association and the Companies Act, other partners can exercise their right of first refusal.
- Since 2015, share transfers of 25% or more or share transfers with a value exceeding €14,500 in UABs are subject to notary approval.
If strategic investments, quick turnover, and operational integrity are desired, share sales are generally the most practical solution. However, tax, labor law, or environmental liabilities from the past also transfer to the buyer.
2. Asset Sale (Asset Purchase)
In an asset sale, the buyer acquires only specific assets:
- Selected assets such as specific machinery, trademarks, domains, software, and customer contracts are transferred.
- As a general rule; the company’s all debts and risks are not assumed, only obligations related to the acquired assets.
- For contracts with suppliers, customers, and banks, counterparty approval and notifications for transfer/assignment may be required.
- The transfer of employees is subject to specific rules under the EU’s 2001/23/EC Directive and Lithuanian labor law.
Asset sales are advantageous, especially for investors who want to acquire only the brand, technology, or a specific business unit; however, they require more formalities and third-party approvals compared to share sales.
3. Mergers and Acquisitions (Merger/Acquisition)
Mergers in Lithuania operate at the intersection of the Civil Code, Companies Act, and Competition Act. The main types are:
- Merger by absorption: One company merges into another, the absorbed company ceases to exist, and all assets and debts transfer to the acquiring company.
- Merger by new establishment: Two or more companies close, and a new company is established; assets are transferred to this new entity.
- Simplified merger: Less reporting, reports, and exemptions from expert reviews between 100% or at least 90% owned subsidiaries.
For merger decisions, a minimum 2/3 majority is generally required at the general assembly, merger conditions and reports are prepared, announcements must be made at least 30 days in advance, and the process is completed by registration in the trade registry.
4. Ready-Made Company Acquisition
Acquiring a ready-made company is a prominent method for investors seeking speed in Lithuania:
- Pre-established companies that have not operated and carry no debts or liabilities are listed.
- Information such as establishment date, capital, VAT registration is predetermined.
- With a share transfer agreement and notary approval, full transfer can generally be achieved within 1–3 days.
This model is highly effective for investors needing quick market entry in areas such as intra-EU trade or financial technology.
Share Sale Process in Lithuania: Step by Step
In a typical transaction proceeding through UAB share transfer, the process follows these steps:
1. Target Selection and Preliminary Discussions
- Contact is made with ready-made company lists or directly with company owners.
- The parties usually sign a Non-Disclosure Agreement (NDA) before sharing information.
- Then, a Term Sheet/Letter of Intent summarizing the basic commercial terms is prepared, often defining a 2–3 month exclusivity period.
2. Legal, Financial, and Tax Due Diligence
The most critical stage in company acquisitions is the due diligence process. It generally lasts 4–8 weeks and covers the following areas:
- Corporate documents, articles of association, partnership structure, general assembly decisions
- All significant contracts (loans, leases, distribution, supply, licenses, etc.)
- Employee contracts, collective bargaining agreements, ongoing business lawsuits
- Inventory of intellectual property such as trademarks, patents, software rights
- Past tax returns, potential tax penalties, and risky practices
- Compliance with regulations, especially regarding AML/CFT, sanctions, data protection
A virtual data room is typically used. Identified risks directly affect the sale price, payment schedule, guarantees, and indemnity mechanisms.
3. Preparation of Contracts and Documents
Based on due diligence findings, the parties prepare the following key documents:
- Share Purchase Agreement (SPA)
- Disclosure Letter – details the risks known to the seller
- Drafts of general assembly and board of directors decisions
- Payment and security mechanisms (e.g., escrow account)
Contracts for target companies in Lithuania are mostly structured under Lithuanian law; however, bilingual texts in English/Lithuanian are preferred when there are international parties involved.
4. Notary Approval (Mandatory Thresholds in UABs)
According to the Companies Act, notary approval is mandatory for certain share transfers in UABs:
- Share transfers representing 25% or more of the total capital, or
- Cases where the share sale price exceeds €14,500
The share transfer agreement signed in the presence of a notary includes the nominal value of the shares, sale price, quantity, and payment terms. Thanks to digital signatures and e-notary infrastructure, remote notary transactions are possible in most cases.
5. Corporate Approvals and Partner Rights
Before the transaction, the following corporate requirements must be checked:
- Whether there is pre-approval or restriction for share transfer in the articles of association
- How existing partners will exercise their preemptive rights and the timeframes
- Approval conditions from banks, investors, or significant contract parties (change of control)
- If a merger/acquisition is involved, a decision must be made with at least a 2/3 majority at the general assembly
The board of directors and managers must also obtain decisions approving the transaction on both the buyer and seller sides.
6. Closing and Registration
The parties sign the contract, payment is made, and the share/asset transfer occurs. Then:
- The new partners and share ratios are registered with the State Enterprise Centre of Registers.
- In merger transactions; merger conditions, reports, and the new articles of association are submitted for registration; announcements must be made at least 30 days in advance through newspapers or official channels.
With the completion of registration, the transfer of ownership is legally finalized.
7. Post-Closing Processes
- Labor integration, merging IT systems, brand and process alignment
- Transitional services agreements where the seller provides services for a certain period
- Non-compete and non-solicitation commitments
- Monitoring of warranty and indemnity provisions, tracking potential claims
Special Procedures in Mergers and Restructuring
If a merger or reorganization is involved, the process includes more formalized steps:
- The management bodies prepare the merger conditions: merging companies, type, timeline.
- If necessary, an independent expert report and merger report are prepared (but there are exemptions in simplified mergers).
- Merger conditions and reports are submitted to the registry and announced at least 30 days before the general assembly.
- A merger decision is made with at least 2/3 votes at the general assembly.
- The registration is completed with the new articles of association and the selection of management bodies.
In 100% or 90% owned subsidiaries, under the simplified procedure, an expert report and merger report may not be required, significantly speeding up the process.
Competition Law and Other Regulatory Approvals
In Lithuania, the Competition Council monitors certain mergers and acquisitions of significant size. If the following thresholds are exceeded, a “concentration notification” is required:
- The total turnover of the parties in Lithuania exceeds approximately €14.5 million and
- The turnover of each party exceeds approximately €1.45 million
When a notification is made:
- Preliminary review usually concludes within 1 month.
- If a detailed review is needed, the total process can extend up to 4 months.
- The council can issue an approval, conditional approval (e.g., divestment of certain assets), or a rejection decision.
- Unnotified transactions or closures contrary to the decision may incur an administrative fine of up to 10% of turnover.
In regulated sectors such as banking, finance, and fintech, approval from the relevant regulatory authority (e.g., the Bank of Lithuania) may also be required.
Tax and Cost Dimension
The tax structure in company sales varies depending on whether shares or assets are sold:
- From the seller’s perspective: Capital gains arising from share sales may be subject to income or corporate tax. In some cases, there are exemptions/postponement opportunities in intra-EU reinvestment scenarios.
- From the buyer’s perspective: In share transfers, past debts and tax risks are inherited; in asset transfers, the cost can be written off as an amortizable expense.
- In asset sales, VAT (21%) may come into play; however, different applications may occur in scenarios such as the transfer of the entire business (going concern) or intra-EU deliveries.
Depending on the size of the transaction; legal and tax consultancy, notary, valuation, and registration fees can range from a few thousand Euros to tens of thousands of Euros.
Risks, Contractual Guarantees, and Structuring
In M&A transactions in Lithuania, buyers and sellers establish various protection mechanisms in the contract to distribute risks:
- Representations & Warranties: Detailed commitments made by the seller regarding the company’s legal status, taxes, lawsuits, environment, IP, etc.
- Indemnity provisions: Define how and for how long damages will be compensated in case of breach of representations.
- Escrow: 20-30% of the sale price is held in an account for a certain period, and risks are resolved as they become clear.
- Earn-out: A portion of the sale price is paid based on the company’s performance post-closing.
Proper structuring of these mechanisms is critical for foreign investors to confidently enter the Lithuanian market.
Corpenza Perspective: Company Sales in Lithuania, Mobility, and Tax Optimization
Corpenza, as a consultancy platform specializing in corporate structuring, residency, investment-based citizenship, international accounting, and payroll/EOR, offers integrated solutions to clients planning to sell or acquire a company in Lithuania.
Corpenza’s contributions specific to Lithuania include:
- Choosing the most advantageous structure between share/asset sales, mergers, or ready-made company acquisitions
- International tax and social security planning considering companies and employees in different countries within the EU
- Structuring the team legally and tax-wise with EOR (Employer of Record), posted worker model, and payroll management in Lithuania and other EU countries during the post-sale period
- Establishing a “mobility strategy” that integrates your company sale in Lithuania with residency permits, investment-based residency programs, and potential citizenship pathways
Thus, you can transition from a singular company sale transaction to a broader strategy that includes tax optimization and workforce mobility across Europe.
Conclusion: Company Sales in Lithuania Should Be Treated as a Strategic Project
Lithuania offers an attractive environment for company sales with its strong EU integration, digital infrastructure, and predictable corporate law. However;
- Whether shares or assets will be transferred,
- Partners’ preemptive rights and notary processes,
- Competition law notification obligations,
- Tax, labor law, and regulatory risks
require professional planning and a multidisciplinary approach. Especially in cross-border company structures, the transaction in Lithuania should be considered alongside subsidiaries, employees, and tax obligations in other EU countries.
Therefore, when planning a company sale or acquisition in Lithuania; collaborating with local lawyers, tax experts, and international mobility consultants minimizes legal risks and maximizes the post-tax real return of the transaction. Corpenza can coordinate this multi-layered process under one roof, making investors’ company sale and acquisition plans in the Lithuanian market safer and more predictable.
Disclaimer
The information contained in this text is for general informational purposes only; it does not constitute legal, financial, or tax advice. Before carrying out a company sale, merger, or acquisition in Lithuania; be sure to check current legislation, official information sources, and competent authorities, and obtain professional support from a qualified lawyer and financial advisor. Since legislation, threshold values, and application criteria may change over time, do not make decisions solely based on the information provided here.
