Are shareholders and the CEO liable for debts after deregistration?

A legal person ceases to exist from its deregistration from the Register of Legal Entities (Article 2.95(3) of the Civil Code of the Republic of Lithuania (CK)). When a legal person is liquidated, its obligation ends, except in cases set by law where other persons must perform it (CK Article 6.128(3)). As a general rule, a UAB shareholder or an MB member is not liable for the company’s obligations (CK Article 2.50(2)). Liability can still arise on several grounds set by law: bad-faith actions of a member, liquidation on the initiative of the Centre of Registers where it was caused by members’ bad-faith actions, and the duty of the CEO and the liquidator to compensate damage. A finding of intentional bankruptcy does not by itself shift the debts, but it identifies the persons responsible for it. Each ground has its own conditions, so each needs to be assessed separately.

What happens to the creditor’s claim

A deregistered company no longer exists (CK Article 2.95(3)). Its obligations end, unless the law names another person who must perform them (CK Article 6.128(3)). The Law on Tax Administration of the Republic of Lithuania (MAĮ) sets the same rule for taxes: a tax obligation ends when the legal person is liquidated, except in cases set by law where other persons must perform it (MAĮ Article 93(1)(6)).

So a creditor needs to act during the liquidation, while the company is still on the register:

  • the liquidation is announced publicly three times at intervals of not less than thirty days, or once, with written notice to all creditors (CK Article 2.112(1)). When you receive the notice, submit your claim to the liquidator;
  • a company in liquidation must first settle with its creditors (Article 73(13) of the Law on Companies of the Republic of Lithuania (ABĮ));
  • if court disputes arise over the company’s debts, assets may not be distributed to shareholders until the court resolves them and the creditors are paid (ABĮ Article 73(15));
  • assets may be distributed to shareholders no earlier than 2 months after the public announcements and the notices to creditors (ABĮ Article 73(14)).

If assets come to light after deregistration, ABĮ Article 73(13) provides that “assets of the company discovered later are distributed in the same way”. This situation is covered in The company has been deregistered but money is left in its account – what can be done.

Why shareholders are not liable as a general rule

A legal person is liable for its obligations with the assets it owns (CK Article 2.50(1)). A member is not liable for the obligations of the legal person, except in cases set by law or the founding documents (CK Article 2.50(2)). A company is a private legal person with limited civil liability (ABĮ Article 2(2)). A small partnership (MB) is also a legal person with limited civil liability (Article 2(1) of the Law on Small Partnerships of the Republic of Lithuania (MBĮ)).

A shareholder has no other property obligations to the company, except the obligation to pay in the set manner for all the shares they subscribed for (ABĮ Article 14(2)). This obligation does not disappear in liquidation: persons who subscribed for shares but did not pay for them must pay (ABĮ Article 73(12)).

Legal persons with unlimited civil liability are different. If their assets are not enough to meet their obligations, the member is liable for those obligations, unless the law provides otherwise (CK Article 2.50(4)). For example, an individual enterprise (individuali įmonė, IĮ) is a legal person with unlimited civil liability (Article 2(1) of the Law on Individual Enterprises of the Republic of Lithuania (IĮĮ)). For taxes, MAĮ Article 90(2) provides that where the assets of an unlimited-liability legal person in liquidation are not enough to cover its tax arrears, the rest may be recovered from the assets of its members who are liable for its obligations, in the cases and manner set by law.

When a shareholder or member is liable with their own assets

The main exception is CK Article 2.50(3): where a legal person cannot perform an obligation because of a member’s bad-faith actions, the member is liable for the legal person’s obligation with their own assets on a subsidiary basis.

The text of that part sets two conditions and a consequence:

  • the legal person cannot perform the obligation;
  • this was caused by the member’s bad-faith actions;
  • the member is liable on a subsidiary basis, that is, in addition to the legal person.

CK Article 2.50(3) does not list which actions count as bad faith. The part does not deal separately with the period after deregistration. The Supreme Court of Lithuania has held that once a UAB has been liquidated, its shareholders are not liable for the company’s remaining obligations, unless, in exceptional cases, a separate damages claim proves bad-faith actions of theirs that prevented the company from performing (ruling of 24 November 2021 in civil case No. e3K-3-293-313/2021, paragraph 28).

A further rule concerns payments to shareholders. A shareholder must return to the company a dividend or any other payment linked to their property rights if it was paid in breach of the mandatory rules of ABĮ and the company proves that the shareholder knew or should have known this (ABĮ Article 14(6)). The provision names the company as the party to which the payment is returned. So such a claim is worth bringing while the company has not yet been deregistered.

Liquidation on the initiative of the Centre of Registers

If the company was liquidated by the register’s data controller, the Centre of Registers (Registrų centras), a separate rule applies. The members of a legal person that has ceased to exist are jointly and severally liable for three years and must compensate the damage creditors suffered because the legal person was liquidated on the register’s initiative due to the members’ bad-faith actions (CK Article 2.70(9)). Creditors may also bring a claim for performance of obligations or for opening insolvency proceedings within one year from the date the legal person acquired the status of a legal person whose liquidation is being initiated (CK Article 2.70(6)). The whole procedure is covered in Liquidation notice from the Centre of Registers: what to do and when.

Bankruptcy and intentional bankruptcy

Shareholders cannot decide to liquidate an insolvent company (ABĮ Article 73(3)). Such a company is liquidated due to bankruptcy under the Law on Insolvency of Legal Entities of the Republic of Lithuania (JANĮ) (ABĮ Article 73(4)). A court declares a bankruptcy intentional if the insolvency arose from deliberately bad management and/or transactions concluded when it was known or should have been known that they breach creditors’ rights and/or legitimate interests (JANĮ Article 70(1)). In the same ruling, the court identifies the person or persons whose acts or omissions caused the intentional bankruptcy (JANĮ Article 70(3)).

The insolvency administrator may, within 6 months from the date the ruling declaring the bankruptcy intentional becomes final, apply to the court to have transactions declared invalid (JANĮ Article 72(1)). The court may also restrict the CEO’s right to act as a CEO for 1 to 5 years, among other grounds, if they caused the intentional bankruptcy or did not start insolvency proceedings when they had to (JANĮ Article 13(2)). From 1 January 2027 this ground will also cover a CEO who did not file an application with the court to open insolvency proceedings although they had to.

JANĮ Articles 70–72 do not give a creditor a right to claim damages from the person who caused the intentional bankruptcy. Creditors whose claims have been confirmed by the court have a right to claim damages caused by the fault of the legal person’s management bodies or of the insolvency administrator (JANĮ Article 43(5)). When such damages can be claimed directly from the persons who caused the intentional bankruptcy was settled by the Supreme Court of Lithuania: only after the company has been liquidated, because until the bankruptcy proceedings end only the insolvency administrator, or creditors through an indirect (derivative) claim, can bring such claims (Supreme Court of Lithuania, ruling of 15 January 2026 in civil case No. e3K-3-19-823/2026, paragraph 37). The topic is covered in our article on intentional bankruptcy (in Lithuanian).

Liability of the CEO and the liquidator

When the company becomes insolvent, the CEO must inform the members without delay and start insolvency proceedings without delay (JANĮ Article 6(2)). The CEO must compensate damage caused by failing to perform, or improperly performing, the duties set by JANĮ (JANĮ Article 13(1)). From 1 January 2027 the CEO’s duty is extended: if, within the period set in JANĮ Article 8(3), no assistance agreement is concluded or no decision to conduct the bankruptcy out of court is adopted, the CEO must file an application with the court to open insolvency proceedings without delay.

For a liquidator, once insolvency comes to light, JANĮ Article 7 sets the duty to suspend all payments and start bankruptcy proceedings without delay. A liquidator who does not perform the duties set out in CK Article 2.110 and in the laws governing the relevant legal form, or performs them improperly, must compensate the resulting damage in full (CK Article 2.110(4)).

A management body member who does not perform the duties set out in that article or in the founding documents, or performs them improperly, must compensate the damage to the legal person in full, unless the law, the founding documents or a contract provide otherwise (CK Article 2.87(7)). That part links the damage to the legal person, and a legal person ceases to exist from deregistration (CK Article 2.95(3)). So a claim under that part is worth bringing while the company is still on the register, for example in bankruptcy proceedings. It is different where the manager’s unlawful actions were aimed at one particular creditor, for example by misleading it: that creditor may then sue the manager personally, not for improper management under CK Article 2.87(7), but on the general grounds of tort liability (CK Article 6.263(1); Supreme Court of Lithuania, ruling of 26 June 2024 in civil case No. e3K-3-137-381/2024, paragraph 46).

What to do now

If you are a creditor and the company is still being liquidated:

  1. Check the company’s status in the register.
  2. Submit your claim to the liquidator in writing.
  3. If the claim is disputed, go to court. While the dispute is pending, assets may not be distributed to shareholders (ABĮ Article 73(15)).
  4. If you see that the company is insolvent, consider starting insolvency proceedings yourself. A creditor whose claim has fallen due has that right (JANĮ Article 4(1)(2)).

If the company has already been deregistered, collect documents showing which transactions and payments were made before and during the liquidation. They decide whether there are grounds to rely on CK Article 2.50(3), CK Article 2.70(9) or another ground described here.

If you are a shareholder or a liquidator, do not distribute assets before the creditors have been paid and the period in ABĮ Article 73(14) has passed.

More on liquidation

How to start

Send us the Centre of Registers extract on the company, the documents your claim arises from, and any correspondence with the liquidator or the CEO. Tell us when the company was deregistered, or what stage of liquidation it is at.

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

More about this service: Liquidation of companies.

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