A foreign company’s branch in Lithuania: the one document on which almost every registration stalls
Branch registration almost always stalls at the same point — the foreign company’s financial statements. Clients arrive with statements they prepared themselves and that their CEO has approved, and these are not enough. According to the notaries’ offices, an official document with an apostille is required, and it cannot be replaced by any other document. Obtaining an apostille abroad adds weeks. This is worth knowing on day one, not in week three.
What must be filed with the register
Article 76(1)(1) of the Law on Companies (ABĮ) — an extract from the register in which the foreign company’s file is kept, confirming that the foreign company is registered in that register.
Article 76(1)(2) ABĮ — the foreign company’s instruments of incorporation, the memorandum of association and the articles of association if these are separate documents, and also all amendments to these documents. The word “all” does real work here: if over twenty years the company has amended its articles several times, the whole chain is needed, not just the latest version.
The third set of documents is the foreign company’s annual financial statements, together with the management report and, where an audit is mandatory under the law of that state, the auditor’s report. The time limit — within 12 months of the last day of the financial year. This is exactly where registrations stall.
Fourth — documents confirming the procedures applied to an insolvent company, if there are any.
Why self-prepared statements are not enough
We put this question to two independent notaries’ offices. Both gave the same answer: financial statements prepared by the foreign company itself and approved by its CEO are not sufficient. An official document with an apostille is required, and the legislation does not provide for any other document in its place.
We are reporting this as what two notaries’ offices told us. The text of the law does not say it in those words — it requires the filing of a set of statements prepared under the law of that state. An exception is provided in Article 76(2) ABĮ: if the foreign company’s statements are not prepared in accordance with the requirements applicable in the European Union, the branch’s set of annual financial statements prepared under Lithuanian legislation is filed instead. The practical result is that without an official, properly certified document the file does not move.
Article 76(3) ABĮ applies alongside this: the register extract and the founding documents must be legalised in the manner prescribed by law, except in cases established by international treaties. This is where the apostille enters the process.
So the order of work is the reverse of what most clients imagine. The first task is not the branch regulations or the appointment of the branch manager. The first task is to order the register extract and the financial statements in official form in your own country and have them apostilled. Everything else is done in days; this step takes weeks.
The apostille: where to get it
Article 3 of the Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (the Apostille Convention) provides that the only formality that may be required in order to certify the authenticity of the signature, the capacity in which the person signing the document has acted and the identity of the seal is the addition of a certificate issued by the competent authority of the State from which the document emanates. This means that for a document issued abroad, the apostille is added by that foreign state, not by Lithuania.
There is an exception too. Article 3(2) of the Hague Convention says that this formality cannot be required where the laws, regulations or practice of the state in which the document is presented, or an agreement between two or more states, have abolished or simplified it, or exempt the document itself from legalisation. Some states have bilateral treaties with Lithuania, and then no apostille is needed. This is checked for the specific state before ordering the service, because an apostille costs money and takes time.
For documents issued in Lithuania, the apostille is added by notaries: point 18 of Article 26 of the Law on the Notarial Profession (Notariato įstatymas) assigns to notaries the act of certifying documents with a certificate (Apostille) in the manner established by the Government. From our letters: for this you can go to any notary’s office, the nearest one will do, with the original documents. There is no need to choose a notary by location or by an existing relationship.
Closing a branch: about 6 months
Closing takes considerably longer than setting up, and the rules on public announcements are usually to blame.
Article 75(7) ABĮ — the branch manager must publicly announce the termination of the branch’s activities in the electronic publication issued by the registrar three times, at intervals of not less than 30 days, or announce it once and notify all creditors in writing. The time limit for creditors to submit their claims may not be shorter than 2 months from the date of the public announcement.
Three announcements 30 days apart mean two months for the announcements alone, plus two months for the creditors’ time limit. One announcement plus written notices to all creditors is faster — provided the list of creditors is accurate and all of them can be reached.
Article 75(9) ABĮ — the documents for deregistering the branch may not be filed with the register at all until the obligations to the creditors who demanded it have been performed or their performance has been additionally secured, nor before a court judgment becomes final where a dispute is pending in court. One unsatisfied creditor stops the whole process.
Article 75(10) ABĮ — before deregistration, the documents of a branch that has ceased its activities are handed over for safekeeping in the manner laid down by the Law on Documents and Archives (DAĮ). This is the last step, and it has its own cost and its own time limit.
This list also includes the decision and the registration of the liquidator, settling with creditors, dismissing employees, the consent of the State Tax Inspectorate (VMI) to deregistration and closing the bank accounts. Taken together, our practice as recorded in our client letters comes to about 6 months. The law sets no overall time limit; this duration is how long it actually takes.
How to start
Write to us with the state in which the company is registered and when its last financial year ended. We will tell you whether an apostille will be needed in that state, in what form to order the financial statements and how long it will realistically take until registration.
Tel. +370 5 212 1506, email info@linden.lt
More about this service: establishment of legal entities.
