Reducing a UAB’s share capital in Lithuania: purposes, creditors, deadlines

A private limited company (uždaroji akcinė bendrovė, UAB) reduces its share capital by a decision of the general meeting of shareholders or, in cases set by law, of a court. This is allowed for only one of four purposes set by law: to eliminate losses, to cancel shares the company has acquired or redeemable shares, to pay company funds to the shareholders, or to correct errors. The capital is reduced by lowering the nominal value of the shares or by cancelling shares. Every creditor must be notified of the decision, and creditors can demand additional security for the company’s obligations. The capital counts as reduced only when the amended articles of association are registered in the Register of Legal Entities (from 1 November 2026: entered into its information system), and only after that can money be paid to the shareholders.

For what purposes can share capital be reduced

Article 52(2) of the Law on Companies of the Republic of Lithuania (ABĮ) allows share capital to be reduced only for these purposes:

• solely to eliminate losses recorded in the company’s balance sheet;
• to cancel shares acquired by the company or redeemable shares;
• to pay company funds to the shareholders;
• to correct errors made when the share capital was formed or increased.

The law provides for no other purposes. The general meeting’s decision must state the purpose of the reduction (Article 52(1) ABĮ). The purpose decides whether the company must give creditors additional security and whether it must wait before filing the articles with the register.

The reduced capital cannot be lower than the minimum share capital set in Article 2 ABĮ (Article 52(4) ABĮ). The minimum for a public company (AB) and for a UAB is set in Article 2(3) and (4) ABĮ.

Who decides and what majority is needed

The decision to reduce share capital is taken by the general meeting of shareholders, except where the law provides otherwise (Article 20(1)(19) ABĮ). In cases set by law, capital can also be reduced by a court decision (Article 52(1) ABĮ).

The decision needs a qualified majority of not less than 2/3 of the votes carried by the shares of all shareholders attending the meeting (Article 28(1)(12) ABĮ). The articles of association can set a higher majority (Article 28(3) ABĮ). If the company has issued shares of different classes, the holders of each class whose rights are affected by the reduction must approve the decision in a separate vote (Article 52(1) ABĮ).

How it is done: nominal value or cancelling shares

The law allows two methods: lowering the nominal value of the shares or cancelling shares (Article 52(3) ABĮ). Shares acquired by the company itself or by its subsidiaries are cancelled first. The nominal value or number of the remaining shares is reduced for all shareholders in proportion to the nominal value of their shares at the end of the day on which the amended articles are registered (Article 52(9) ABĮ). From 1 November 2026 that day is the day the amended articles are entered into the information system of the Register of Legal Entities.

When is it worth reducing the nominal value of a share

First, lowering the nominal value is one of the two methods of reducing capital (Article 52(3) ABĮ). Under both methods, once the company’s own shares are cancelled, the remaining shares are reduced for all shareholders proportionally (Article 52(9) ABĮ). When the nominal value is lowered, the number of shares stays the same and the value of each share goes down.

Second, the number of shares and their nominal value can be changed without changing the amount of share capital (Article 53¹(1) ABĮ). The capital then does not go down; only the number of shares and the nominal value of one share change: for example, one share is split into several smaller ones, or several are merged into one. Where there is more than one shareholder, each shareholder’s total nominal value must stay the same as at the end of the day of the general meeting that took the decision (Article 53¹(1) ABĮ). This is possible only when the share capital is fully paid up (Article 53¹(2) ABĮ). Such a change cannot affect the shareholders’ property and non-property rights (Article 53¹(3) ABĮ). The decision is taken by the general meeting by a majority of not less than 2/3 of the votes of the shareholders attending (Article 28(1)(4) ABĮ). Article 49(1), (5) and (10) ABĮ apply to this change (Article 53¹(6) ABĮ). Article 53¹ does not refer to the creditor-protection rules that apply to a capital reduction. The shares count as changed only once the amended articles are registered. From 1 November 2026 the law calls this moment the entry of the amended articles into the information system of the Register of Legal Entities (Article 53¹(5) ABĮ).

Notices to creditors and additional security

The document confirming the decision to reduce share capital must be filed with the keeper of the Register of Legal Entities (Juridinių asmenų registras) within 10 days of the decision (Article 52(10) ABĮ). From 1 November 2026 the law calls this addressee the manager of the Register of Legal Entities data (juridinių asmenų registro duomenų tvarkytojas); the deadline does not change.

Every creditor of the company must be notified of the decision against signature or by registered letter. In addition, the decision must be published in the source named in the articles of association, or every shareholder must be notified against signature or by registered letter (Article 53(1) ABĮ).

A creditor whose rights arose before, and had not ended by, the day the register keeper announces the decision can demand additional security for the performance of the company’s obligations. The creditor can submit this demand no later than 2 months from the day of that announcement (Article 53(3) ABĮ). The company must give security to every creditor who demands it (Article 53(2) ABĮ), except in these cases (Article 53(4) ABĮ):

• the total of the creditors’ claims does not exceed 1/2 of the company’s equity after the reduction; this exception does not apply where capital is reduced to pay funds to the shareholders;
• the creditors’ claims are sufficiently secured by a pledge, mortgage, surety or guarantee;
• the capital is reduced solely to eliminate losses.

Disputes about security are decided by a court (Article 53(5) ABĮ), and while a dispute is pending the amended articles cannot be filed (Article 53(7) ABĮ). If the amended articles were registered in breach of the requirements on additional security for creditors, the reduction is declared invalid by a court decision (Article 53(8) ABĮ).

When the amended articles go to the register

The amended articles are filed once all the steps in Article 53(1) and (2) ABĮ have been completed, but not earlier than 2 months from the register keeper’s announcement of the decision and not later than 6 months from the date of the decision (Article 53(6) ABĮ). The 2-month wait does not apply if at least one condition is met (Article 53(6) ABĮ):

• the company has no outstanding debts to creditors and the reduction was publicly announced as required by Article 53(1) ABĮ;
• the capital is reduced solely to eliminate losses;
• the capital is reduced to correct errors made when it was formed or increased.

If the amended articles are not filed with the register within 6 months of the date of the general meeting, the decision is deemed invalid (Article 52(11) ABĮ). The exception is a pending court dispute about creditor security (Article 53(6) and (7) ABĮ).

The register receives an application, the document confirming the decision and the full text of the amended articles (point 139 of the Regulations of the Register of Legal Entities, the JAR Regulations). When documents are filed electronically directly with the register, a document confirming that all procedures required by law have been completed is added (point 143 of the JAR Regulations).

When the capital counts as reduced

Share capital counts as reduced only once the amended articles are registered in the Register of Legal Entities (Article 52(11) ABĮ). From 1 November 2026 the law calls this moment the entry of the amended articles into the information system of the Register of Legal Entities. The date of the decision is not yet the date of the reduction.

If shares were cancelled or their nominal value changed, the UAB files this data with the Information System of Legal Entities’ Participants (JADIS) (Article 41¹(1) ABĮ). This is done within 5 days of receiving the documents on which the entries are based (Article 41¹(2) ABĮ), and the company’s manager is responsible (Article 41¹(3) ABĮ). More on JADIS in UAB shareholders changed: what to file in JADIS, and who does it.

When funds can be paid to the shareholders

A decision to reduce capital in order to pay funds to the shareholders is taken on the basis of a set of financial statements. If the decision is taken no later than 6 months after the end of the financial year, the annual set can be used. After that, the meeting must be given a set of interim financial statements prepared no earlier than 3 months before the meeting (Article 52(6) ABĮ).

The decision can be taken only if the financial statements show no retained losses and no long-term liabilities. The requirement about long-term liabilities does not apply where all such creditors have consented in writing (Article 52(6) ABĮ). The decision cannot be taken if on that day the company is insolvent or would become insolvent after paying out the funds (Article 52(7) ABĮ). A decision in breach of this ban may be declared invalid (Supreme Court of Lithuania, case No. 3K-3-267/2014).

Shareholders are paid in money only. The money is paid no earlier than the registration of the amended articles and no later than one month from the date of registration (Article 52(8) ABĮ). From 1 November 2026 both moments run from the entry of the amended articles into the information system of the Register of Legal Entities. Payments go to those who were shareholders at the end of the day of the general meeting that took the decision, in proportion to the total nominal value of their shares. Persons who are not paid in time can claim the money from the company as its creditors (Article 52(8) ABĮ).

Paying funds to shareholders has tax consequences; assess them in advance.

Reducing capital to cover losses

Capital can be reduced on this ground only where the losses are recorded in the company’s balance sheet (Article 52(2) ABĮ). In that case the company does not have to give creditors additional security (Article 53(4) ABĮ), and the amended articles can be filed without waiting 2 months (Article 53(6) ABĮ). Creditors must still be notified and the decision published (Article 53(1) ABĮ).

The same general meeting can also decide to increase capital by additional contributions through an issue of new shares. If the capital is increased to its previous amount or more, Article 53 ABĮ does not apply (Article 52(5) ABĮ). Such new shares can be paid for in money only (Article 45(1) ABĮ). Why losses must be dealt with before increasing capital from profit is covered in You cannot increase share capital from retained earnings while the balance sheet shows losses.

The steps in order

1. General meeting decision stating the purpose and method (Article 52(1) and (3) ABĮ).
2. Decision filed with the register within 10 days (Article 52(10) ABĮ).
3. Notices to creditors and publication (Article 53(1) ABĮ).
4. Creditors’ demands and security where required (Article 53(2)–(4) ABĮ).
5. Amended articles filed within the periods in Article 53(6) ABĮ.
6. After registration: capital reduced, JADIS data updated, payments to shareholders if that is the purpose.

More on setting up a company

• Establishment of legal entities: service page
• Non-cash contributions to a UAB’s capital: assets, valuation and loans
• Amending UAB articles in Lithuania: votes, notary and registration
• Changing the CEO of a UAB: who decides, how to register, when it applies
• UAB management board: is it required, how many members, who elects them
• Setting up a UAB step by step: documents, signatures and the notary
• Converting a loan into UAB shares: set-off, valuation, pre-emption
• Foreign company raising a UAB’s capital: documents, signatures, deadlines

How to start

Send us the current articles of association, the latest set of financial statements and a list of creditors. Tell us why you want to reduce the capital and whether you plan to pay funds to the shareholders.

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

More about this service: Share capital increases and decreases.