Foreign-owned UAB: bank account, identification and documents

The manager does not have to be a Lithuanian citizen or live in Lithuania. Article 37(2) of the Law on Companies of the Republic of Lithuania (ABĮ) only requires the manager to be a natural person who has the right to hold such a position. On formation, the initial contributions are paid into an accumulation account (kaupiamoji sąskaita) with a credit or electronic money institution (Article 7(5) ABĮ). A bank can also identify you remotely, but only in the ways listed in the law. About a foreign parent company, the bank will ask for the ownership and control structure up to the natural persons, and the Centre of Registers (Registrų centras) for its register extract, legalised under the apostille procedure, unless that country’s register data are public and available at no charge.

How long formation takes and whether you need to travel, we covered in Setting up a UAB in Lithuania: how long it takes and whether the founder needs to travel. Which documents the founder signs and what the notary asks for, in Setting up a UAB step by step: documents, signatures and the notary. This article covers what is different when the owner is a foreigner or a foreign company.

Does the manager have to be Lithuanian?

No. Article 37(2) ABĮ sets two conditions: the manager must be a natural person, and it cannot be a person who, under legal acts, has no right to hold such a position. This provision sets no condition of citizenship or residence. We also answered this briefly in the company law FAQ (in Lithuanian).

If a foreign manager intends to come to live and work in Lithuania, that is a separate matter. Migration rules apply, which we cover on our business migration services page.

Does the account have to be in Lithuania?

The founding agreement (steigimo sutartis; with a single founder, the founding act, steigimo aktas) gives the right to open an accumulation account for the company being formed “with a credit or electronic money institution” (Article 7(5) and (7) ABĮ). The initial contributions for the shares are paid into it within the set time limit (Article 8(4) ABĮ). This provision does not name the country of the institution.

In our practice, we open the accumulation account with an institution operating in Lithuania. A lawyer does this under a power of attorney, and the shareholder or manager does not need to come. We obtain the account statement for the formation documents from the same institution.

After registration, most companies need an ordinary account. Why the bank cannot yet see a new company in the first days, we explained in our article on how long formation takes.

Do you have to go to the bank in person?

The bank must identify and verify the identity of the client and the beneficial owner before starting a business relationship (Article 9(1)(1) of the Law on the Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania, PPTFPĮ).

Where the client is not physically present, identity may be established only in the cases listed in the law and subject to the conditions it sets (Article 11(1) and (2) PPTFPĮ). They include:

• an electronic identification means issued in the EU with a high or substantial assurance level;
• a qualified electronic signature;
• live video transmission in which the original identity document is captured and identity is confirmed with at least an advanced electronic signature, or in which the client’s face and the original document they show are captured.

The law permits these methods but does not require them, so whether a particular bank uses them is its own decision (Article 11(1) PPTFPĮ). In our practice, electronic money institutions let you open an account online, while some banks ask the manager to come in to sign the internet banking agreement.

The company can also be represented by an authorised person. The representative’s identity is then established in the same way as a natural person’s, and the client provides data on its manager (Article 10(3) PPTFPĮ). The bank must require the power of attorney and check whether the person who issued it had the right to issue it, how long it is valid and which actions it allows. The power of attorney must meet the requirements of the Civil Code. A power of attorney issued abroad must be legalised or certified with an apostille, except powers of attorney issued in EU Member States (Article 10(5) PPTFPĮ). How an apostille is obtained, we explained in Translation, notary and apostille: what your documents actually need.

In our practice, a representative under a power of attorney can submit the documents to open the account. But banks usually give internet banking access only to the manager personally.

What the bank will ask about a foreign shareholder

When identifying the client, the beneficial owner must be identified in every case. It is always a natural person or a group of natural persons (Article 12(1) PPTFPĮ). Where identity is established with the client physically present, the client is asked for the beneficial owner’s name, surname, personal identification number (for a foreigner, the date of birth) and citizenship (Article 12(2) PPTFPĮ). Where identity is established remotely, the client’s representative provides the same data and confirms them, for example with a qualified electronic signature (Article 12(5) PPTFPĮ).

The bank checks these data against reliable and independent sources. It may ask you to point to public sources where the information can be confirmed (Article 12(3) PPTFPĮ). The bank must also keep data on the client’s ownership and control structure (Article 12(6)(3) PPTFPĮ).

So where the shareholder is a foreign company, the bank needs to see the whole chain up to the natural persons. In our practice, banks ask for an official register extract of every company in the chain, not just a chart prepared by the group itself.

It is worth preparing this in advance. If the client avoids or refuses to provide additional information within the time limit set by the bank, the bank may refuse to carry out transactions or terminate the business relationship (Article 18 PPTFPĮ). In our practice, there have been cases where a bank blocked an account because it had not received documents proving the beneficial owner.

How beneficial owners are registered in the state system and why the bank checks them itself, we explained briefly in the company law FAQ (in Lithuanian).

What the Centre of Registers asks about a foreign shareholder

Shareholder and beneficial-owner data are filed with the Information System of Legal Entities’ Participants (JADIS, Juridinių asmenų dalyvių informacinė sistema). For a foreign legal entity, its register extract is filed. No extract is needed if that country’s register data are public and accessible to everyone without payment (point 16 of the Regulations of the Information System of Legal Entities’ Participants, JADIS Regulations). Documents on a foreign legal entity are filed legalised in accordance with the Description of the Procedure for Legalisation and Certification by Apostille of Documents (point 16 of the JADIS Regulations).

Documents not in Lithuanian need a translation signed by the translator, except documents in English (point 17 of the JADIS Regulations). For a foreign natural person, a copy of their passport or identity card is filed, and a notary does not certify it (point 15 of the JADIS Regulations).

Where a shareholder is a foreign person, the Centre of Registers checks the data no later than within 3 working days. If documents are missing, approval is postponed and a time limit is set to put the defects right (point 20 of the JADIS Regulations).

In our practice, the most suitable extract is one that shows the registration date, the directors and the shareholders. The notary often also needs the foreign company’s articles of association, certified by a notary and with an apostille. What the notary needs, we described in more detail in our article on UAB formation documents.

Can the shares later be sold to a foreign company?

Yes. The company can be set up with Lithuanian shareholders, and the shares can later be sold to a foreign company.

Whether the agreement has to be certified by a notary depends on what portion of the shares is sold and on the amount of the deal, with the exceptions set in the law (Article 1.74(1)(3) of the Civil Code of the Republic of Lithuania, CK). The buyer’s country is not a criterion in this provision. We described this in detail in When a UAB share sale agreement must be notarised, and when the notary asks for it anyway.

In our practice, where a notary is needed, the foreign buyer provides its register extract with an apostille. It either attends in person or is represented by a person holding a power of attorney certified by a notary and with an apostille, unless an international treaty provides otherwise. If there are several shareholders, before the shares are sold to an outside buyer, the other shareholders’ pre-emption right has to be dealt with. We wrote about it in Shares must first be offered to the other shareholders — how to keep it from taking a month.

After the deal, data on the new shareholder are filed in JADIS no later than 5 days after receipt of the documents on which the entries are based (Article 41¹(2) ABĮ). The company’s manager is responsible for this (Article 41¹(3) ABĮ). Beneficial-owner data are filed together with the change in shareholders (point 12 of the JADIS Regulations). Where the beneficial owners change, their data are filed no later than 10 days after the change (Article 25(1) PPTFPĮ). So in practice, where the beneficial owners change because of the share sale, both lists are filed together.

How to start

Send us who the shareholders and the manager will be and, if the shareholder is a foreign company, its register extract and the ownership chart up to the natural persons. We will tell you which documents need an apostille and prepare the text of a power of attorney to sign remotely.

Phone +370 5 212 1506, email info@linden.lt

More about this service: establishment of legal entities.