Converting an MB into a UAB: splitting shares and capital from profit

The law does not require that, when a small partnership (mažoji bendrija, MB) is converted into a private limited company (UAB), the shares be split exactly in line with the members’ contributions. How many shares each member receives is set in the conversion decision, which the MB’s members’ meeting adopts by a qualified majority. We found no case law on whether the majority can give a smaller share to a member who voted against, so where the allotment differs from the contributions the safest course is for all members to sign the decision. The UAB’s share capital is formed from the MB’s assets, valued by an independent valuer, and must be no less than the statutory minimum. No new money has to be paid in if the MB’s assets are enough. Share capital can be increased from retained profit under Article 51 of the Law on Companies only by the UAB once it is registered.

Which rules apply

An MB is converted into a UAB under the provisions of the Law on Companies on converting a legal entity of another form into a company (Article 29(8) of the Law on Small Partnerships of the Republic of Lithuania (MBĮ)). The decision is taken by the MB’s members’ meeting by the qualified majority set in the regulations, and the UAB’s founding documents must be adopted at the same time (MBĮ Article 29(3)). That majority cannot be less than 2/3 of all members’ votes (MBĮ Article 18(1)).

The assets for which UAB shares are issued must be valued by an independent valuer (Article 72(12) of the Law on Companies of the Republic of Lithuania (ABĮ)). This requirement can be dispensed with in the cases listed in ABĮ Article 72(13) (ABĮ Article 72(13)). The UAB’s share capital must be no less than the minimum capital set in ABĮ Article 2 (ABĮ Article 72(15); ABĮ Article 2(4)). We describe the whole procedure in Converting an MB into a UAB: decision, capital, creditors, timing.

Can shares be split differently from the contributions

An MB member’s rights do not always depend on the size of the contribution. Each member has one vote, unless the MB has a manager and its regulations set a different allocation of votes (MBĮ Article 16(3)). Profit is distributed to members in proportion to their contributions unless the regulations provide otherwise (MBĮ Article 26(4)). A UAB shareholder’s rights are those conferred by the shares the shareholder owns (ABĮ Article 3(2)). So on conversion it is important to decide clearly how many shares each member will receive.

MBĮ Article 29 and ABĮ Article 72(12) to (15) do not require the shares to be split in line with the contributions. The split is recorded in the decision, which the members’ meeting adopts by a qualified majority (MBĮ Article 29(3); MBĮ Article 18(1)); the UAB’s articles state the share capital and the number and nominal value of the shares (ABĮ Article 4(2)). As noted in the introduction, if the split differs from the contributions, the safest course is for all members to sign the decision. If the proportions change, check the carry-forward of tax losses as well: on conversion they are carried forward only if the owners do not change as a result of the conversion and the converted entity continues the same activity for 3 years (Article 43(5) of the Law on Corporate Income Tax of the Republic of Lithuania (PMĮ)).

If you want to change the proportions later, this can be done once the company is a UAB, by transferring shares. A sale and purchase agreement for UAB shares is in simple written form, except where the Civil Code requires notarial form (ABĮ Article 47(10)).

Do members have to pay in new money

UAB shares are issued for the MB’s assets (ABĮ Article 72(12)). A member’s contribution transferred to the MB became the MB’s property (MBĮ Article 8(3)), so the money in the MB’s bank account is an MB asset. After conversion, the UAB takes over all the MB’s rights and obligations (Article 2.104(1) of the Civil Code of the Republic of Lithuania (CK)). No new money has to be paid in if the MB’s assets are enough for the UAB’s share capital.

If the MB’s assets are not enough to form the minimum share capital, or its liabilities exceed the value of its assets, the members have the right to make additional contributions (ABĮ Article 72(15)). The law frames this as a right, not a duty, but without sufficient assets the UAB’s share capital would not be formed.

Can capital be increased from accumulated profit

During the conversion. The UAB’s share capital is set in the UAB’s articles of association, which are adopted together with the decision (MBĮ Article 29(3)). The shares are issued for the valued MB assets (ABĮ Article 72(12)), and accumulated profit is part of the MB’s equity. The ABĮ ties the shares to the valued MB assets, not to the members’ contributions. But the law does not directly say whether the UAB’s share capital on conversion can exceed the sum of the members’ contributions, and we found no case law, so it is worth agreeing such a decision in advance with the notary who will confirm that the documents comply with the law (point 54 of the Regulations of the Register of Legal Entities (JAR nuostatai)).

After the conversion. Share capital can be increased from the company’s own funds, that is, from retained profit, share premium and reserves, except the financial assistance reserve, the own-shares reserve and the mandatory reserve (ABĮ Article 51(1)). The decision is taken by the general meeting of shareholders (ABĮ Article 49(1)) on the basis of the company’s set of financial statements (ABĮ Article 51(2)). Shareholders receive the new shares without paying for them, in proportion to the nominal value of the shares they hold (ABĮ Article 51(4)), so this route does not change the proportions.

The conversion is complete when the UAB’s articles of association are registered in the Register of Legal Entities (MBĮ Article 29(14)). So the ABĮ Article 51 route opens only after registration.

If losses are recorded in the balance sheet, share capital can be increased only from the revaluation reserve (ABĮ Article 51(3)).

What to put in the decision and the UAB’s articles

So that the split is clear to the registrar and the notary, state:

• the amount of the UAB’s share capital and the number and nominal value of the shares (in the UAB’s articles);
• how many shares each member receives (in the decision);
• the valuation report or certificate for the assets for which the shares are issued.

The valuation report or the certificate referred to in ABĮ Article 45¹(5) is filed with the registrar no later than 10 days before the day of the decision (ABĮ Article 72(14)). From 1 November 2026 the addressee is called the data controller of the Register of Legal Entities; the deadline does not change (ABĮ Article 72(14), version from 2026-11-01). So order the valuation before you call the members’ meeting, and align the share split with the valuation result.

More on conversion

• Converting an MB into a UAB: decision, capital, creditors, timing
• Non-cash contribution to a UAB’s share capital: valuation
• Reducing the share capital of a UAB

How to start

Send us the MB’s regulations, the list of members with their contributions and the latest balance sheet, and tell us what share capital and share split you plan for the UAB. We will tell you whether the plan complies with the law and prepare the decision and the UAB’s articles of association.

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

More about this service: Changing the legal form of a legal entity.