Leaving a VšĮ: transfer of member rights, JADIS and contributions

The Law on Public Institutions does not provide for a member (dalininkas) of a public institution (viešoji įstaiga, VšĮ) to withdraw, and does not allow the contribution to be returned while the institution operates. The route the law provides is to transfer the member’s rights to another person in the way the articles of association set. The person who acquires the rights notifies the institution in writing within 5 days, and the head of the VšĮ files the updated members’ data with the Information System of Legal Entities’ Participants (JADIS) within 5 days of the change. Both periods run from the same day, so it is worth notifying the institution on the day the rights are acquired. A founder who never transferred a contribution never became a member, so there is nothing to transfer.

Can a member simply withdraw?

Article 4(4) of the Law on Public Institutions of the Republic of Lithuania (VšĮĮ) says that a member has the right to transfer the member’s rights, and that they are transferred in the way the articles set. The law provides for no withdrawal and no waiver of member rights. However, the Kaunas Regional Court (Kauno apygardos teismas), deciding a case under an earlier version of the law, held that the law’s not expressly giving a member the right to leave the institution “does not mean that the member has no such right at all” (our translation), although the law sets no procedure for exercising it (ruling of the Kaunas Regional Court of 21 January 2020 in civil case No. e2A-46-413/2020, para. 21). Nor does the law provide for returning a contribution while the institution operates. Assets are returned to members only when the VšĮ is liquidated, after creditors are paid, and their value cannot exceed the members’ capital (VšĮĮ Article 27(8)). How that works is covered in Liquidating a public institution (VšĮ): who decides, liquidator, assets.

The law also does not provide for a VšĮ buying its own member’s rights. In addition, a VšĮ may not transfer its assets into the ownership of a member or a related person below market value, nor on trust or by loan for use, except on liquidation and in the other cases the law names (VšĮĮ Article 3(2)(3)). So the way the law provides for leaving is to find someone who will take over the member’s rights. That can be another member or a new person.

An association is different. A member of an association may withdraw at any time, but entry fees, membership fees and other property transferred to the association are not returned (Article 13(4)(4) of the Law on Associations of the Republic of Lithuania (AĮ)).

How to transfer member rights

1. Read the articles. The articles must set how a person becomes a member and how member rights are transferred to others (VšĮĮ Article 8(2)(1) and (2)). Those rules must be followed. If the articles lack them, the articles need to be supplemented first.

2. Decision on a new member. The decision to admit new members is taken by the general meeting of members (VšĮĮ Article 12(1)(14)). How that decision links to a transfer of rights to a new person is for the articles to set. The decision is taken by a simple majority of the votes of the members taking part in the meeting (VšĮĮ Article 12(5)). The meeting can decide only if members holding more than 1/2 of the votes take part, unless the articles set a larger majority (VšĮĮ Article 12(4)). If there is a single member, that member’s written decision counts as a decision of the meeting (VšĮĮ Article 12(12)).

3. Transfer document. The person who acquires the rights submits, together with the notice to the institution, a document proving the acquisition (VšĮĮ Article 4(5)). So put the transfer in writing, for example in a member rights transfer agreement. State the parties, the rights transferred, the date of transfer and the payment terms, if the rights are paid for. The Law on Public Institutions does not require a notarial form.

4. Notice to the institution. The person who acquires member rights notifies the VšĮ in writing within 5 days. The notice names the member who transferred the rights, the person who acquired them and the date of acquisition (VšĮĮ Article 4(5)).

5. Value of the contribution and the certificate. A new member’s contributions are valued at the value of the transferring member’s contributions. If an existing member takes over the rights, that member’s contributions increase by the transferring member’s contributions (VšĮĮ Article 24(4)). The member receives a document confirming the value of the contributions, which is replaced each time the member acquires rights from another member (VšĮĮ Article 24(5)).

6. Data in JADIS. When the members change, their data are filed with the JADIS manager no later than 5 days from the change (VšĮĮ Article 10(5)). This period runs from the change, not from the day the institution is notified. The filing shows the date the member rights were acquired, the date they were transferred and the value of the contribution (VšĮĮ Article 10(1)). The head of the VšĮ is responsible for filing the data (VšĮĮ Article 10(6)).

How the data are filed in JADIS

JADIS is run by the Centre of Registers (Registrų centras) (JADIS Regulations, point 9). Data are filed in electronic form only, and the list of members is signed with a qualified electronic signature (JADIS Regulations, point 11). JADIS records the date the member rights were acquired, the date of transfer, the value of the contribution and the date that value changed (JADIS Regulations, point 26.7).

Data on beneficial owners are filed together with the change of members (JADIS Regulations, point 12). Beneficial owner data are filed no later than 10 days from the change (JADIS Regulations, point 13). Who counts as a beneficial owner and how to get an extract is covered in Beneficial owners in JADIS: who files the data and how to get an extract.

The management body of the legal entity answers for the accuracy and timely filing of the data (JADIS Regulations, point 25). For filing incorrect data with the JADIS manager, or failing to file on time, Article 223(1) of the Code of Administrative Offences of the Republic of Lithuania (ANK) sets a fine on the head or another person named in law or in the founding documents.

Does the decision go to the Centre of Registers?

A change of members is not registered in the Register of Legal Entities (JAR). Participants’ data are additionally entered in JAR for legal entities whose participants are liable for the entity’s obligations (Article 2.66(2) of the Civil Code of the Republic of Lithuania (CK)). JAR also records participants who have the right to enter into transactions on the entity’s behalf (CK Article 2.66(1)(8)), but a VšĮ cannot acquire civil rights or assume civil duties through its members (VšĮĮ Article 3(1)). A VšĮ is a legal entity with limited civil liability (VšĮĮ Article 2). Data on its members are filed with JADIS (VšĮĮ Article 10).

So the meeting’s decision and the rights transfer agreement stay with the institution’s records. A JAR filing is needed when the data listed in CK Article 2.66(1) or the articles change (CK Article 2.66(3)). For example, if the departing member was also the head or a board member, the person authorised by the general meeting of members notifies the register manager of the removal and the new appointment no later than 30 days (VšĮĮ Article 9(4)).

If the contribution was never transferred

Founders become members only once they transfer a contribution to the VšĮ in the way the law and the articles set (VšĮĮ Article 4(1)). A member is a person who has transferred a contribution, or a person who acquired member rights on other grounds (VšĮĮ Article 4(2)). So a founder who never transferred a contribution has no member rights and cannot transfer them.

The founder’s duty to transfer a contribution comes from the founding agreement, which states the founders’ property obligations and the deadlines for meeting them (VšĮĮ Article 7(1)(6)). If that founder will not join the institution, record this in a written agreement among the founders. If the founder is listed in the JADIS members’ list by mistake, the list needs to be corrected, because the data must be accurate (JADIS Regulations, point 25).

Can a member be expelled?

In 2023 the Supreme Court of Lithuania held that the Law on Public Institutions “does not establish rules providing for a duty or a right to set in the articles of a public institution the right of a body of the institution to expel” a member (our translation; LAT e3K-3-158-403/2023, para. 46). The court also said that another member may ask the court to have the rights of a member whose actions run against the institution’s aims, where those actions cannot reasonably be expected to change, sold to the applicant, applying Chapter IX of Book Two of the CK mutatis mutandis (ibid., para. 49). The CK itself says that this chapter does not apply to public legal entities (CK Article 2.34(5)). The case was decided under the version of the law in force before 1 May 2024, so whether the conclusion applies under the current version is unsettled. More on becoming a member and on the articles: Setting up a public institution (VšĮ): members, articles, registration.

The state or a municipality as a member and the NGO mark

The member rights of the state or a municipality are not transferred under the articles. They can be transferred only in the cases and ways set by the Law on Public Institutions and the Law on the Management, Use and Disposal of State and Municipal Property (VšĮĮ Article 4(4)).

If the VšĮ is marked in JAR as a non-governmental organisation (NGO), a change of members may mean it no longer fits that definition. A legal entity is not an NGO if more than 1/3 of its participants are legal entities that are not NGOs or religious communities or associations, or if such participants hold more than 1/3 of the votes (Article 2(3)(1) and (2) of the Law on the Development of Non-Governmental Organisations of the Republic of Lithuania (NVOPĮ)). The head of the legal entity assesses whether it fits the NGO definition (NVOPĮ Article 12(2)). So check these limits before admitting a legal entity as a new member. If the limits are crossed, the mark can also be removed on the VšĮ’s own initiative (NVOPĮ Article 12(6)).

More on NGOs and public legal entities

• NGOs, public institutions, associations and charity and support funds
• Head of a VšĮ: who appoints, employment contract and pay
• Dormant VšĮ, association or foundation: reports and suspension
• NGO status in Lithuania: when it applies and what the NGO mark gives

How to start

Send us the VšĮ’s articles, the founding agreement, the current JADIS members’ list, and tell us who is leaving and who takes over the rights. If any founder never transferred a contribution, say so.

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

More about this service: NGOs, public institutions, associations and foundations.