How to start liquidating a UAB: documents, employees and creditors

A liquidation starts with one document: the shareholders’ decision to liquidate the company and to appoint a liquidator. Until it exists, you cannot register the status “in liquidation”, and you cannot give employees notice on the ground of liquidation. A shareholder who lives abroad usually does not need to travel to Lithuania: documents can be filed with the Register electronically, and a notary does not check liquidation documents. Creditors are most often notified by one public notice plus a letter to each of them. And the liquidation opening balance sheet, which almost every accountant asks about, is no longer required under the rules now in force. Below: the first weeks of a liquidation. The whole procedure up to deregistration is described on the service page, and the time limits in the article How long a company liquidation really takes.

The decision comes first, and its date can be planned

Article 73(5) of the Law on Companies of the Republic of Lithuania (ABĮ) provides that a general meeting of shareholders which has decided to liquidate the company must elect its liquidator. The decision needs a qualified majority set by the founding documents. It cannot be less than 2/3 of the votes of all participants at the meeting. This is set by Article 2.107(1) of the Civil Code of the Republic of Lithuania (CK).

Only a solvent company can be liquidated this way. Article 73(3) ABĮ provides that the general meeting of shareholders cannot decide to liquidate an insolvent company. A company is liquidated for bankruptcy under the procedure of the Law on Insolvency of Legal Entities (Article 73(4) ABĮ).

Article 73(6) ABĮ provides that the company acquires the status of a company in liquidation from the day the decision is adopted, and the liquidator acquires the rights of the manager and the board from election. The manager loses his or her powers from the appointment of the liquidator.

Less well known is Article 73(8) ABĮ: the shareholders may set another date from which the decision takes effect, but not earlier than the day the decision is adopted. In practice this is useful when the company still has employees. The decision is adopted today and takes effect, for example, from the first day of next month. In our view, notices can be handed to employees as soon as the decision is adopted, while the company works as usual until the effective date.

When there is only one shareholder, Article 29(1) ABĮ allows minutes not to be drawn up. No minutes are needed, but there must still be a decision: a signed written decision of the sole shareholder is enough.

What the Register needs

Point 184 of the Regulations of the Register of Legal Entities (JARN) lists what must be filed: an application to register the legal status, the decision to liquidate the legal entity, and a document confirming the details of the liquidator and the limits of his or her rights. The deadline is no later than the first day of the public announcement of the liquidation (Article 73(11) ABĮ). Once it has the documents, the Register of Legal Entities (Juridinių asmenų registras) registers the status “in liquidation” and the liquidator’s details within three working days (JARN point 186).

No notary is needed at this stage. JARN point 58 provides that in all cases other than those listed there (incorporation, reorganisation and a few others), documents are filed directly with the Register. Liquidation documents are not among the exceptions.

Two more things that save time:

• Documents for the Register must be in the state language. If they are drawn up in another language, a translation signed by the translator is attached (JARN point 63). So for a foreign shareholder we usually prepare the decision in two languages in one document.
• When documents are filed electronically, copies certified with a qualified electronic signature may be filed (JARN points 65 and 68). In practice the shareholder signs the decision wherever he or she is and sends a scanned copy. The person filing the documents certifies that copy with their own qualified electronic signature, and the Register does not need the original.

When the shareholder lives abroad: whose signature and what power of attorney

The simplest route is for the shareholder to sign the decision personally. Then no power of attorney is needed for it at all.

A power of attorney is needed elsewhere. Most often by the company’s manager, who, until the liquidator is appointed, has to give the lawyer access to file documents with the Register. Article 2.137(1) CK allows a power of attorney to be made by means of information technology as well; such a power of attorney is given by registering it in the Register of Powers of Attorney (Įgaliojimų registras). If the person filing documents acts through a representative, documents confirming the representative’s authority are filed together with the documents (JARN point 39). In practice the manager grants this access online, without going to a notary.

If a shareholder who is a natural person nevertheless wants to authorise someone else to sign on his or her behalf, the power of attorney must be certified by a notary. Article 2.138(1)(2) CK requires this for a power of attorney to act on behalf of a natural person in matters concerning legal entities. A power of attorney certified by a notary abroad usually carries an apostille. Article 3 of the 1961 Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents provides that the apostille is the only formality that may be required, unless the law of the states or an agreement between them has abolished or simplified it.

So in the first conversation we ask who the shareholder is, a natural person or a company, and whether they can sign personally. The answer decides whether a notary abroad will be needed or not.

Employees: the decision first, the notice only after it

This is the question on which mistakes are made most often. The answer is yes: the shareholders’ decision must be adopted before notices are handed to employees.

The reason is the ground for dismissal. Article 57(1)(5) of the Labour Code of the Republic of Lithuania (DK) allows an employment contract to be terminated when a court or a body of the employer adopts a decision that brings the employer to an end. As long as there is no such decision, this ground does not exist either. The notice must be in writing, and it states the reason for termination, the legal provision and the day the employment ends (Article 64(1) and (2) DK). So the date of the decision must be no later than the date of the notice: the decision is signed first, the notice only after it. The decision itself is not handed to employees.

If the company wants to dismiss employees before the decision, it cannot use the liquidation ground. What remains is the ground of a redundant job function (Article 57(1)(1) DK), and the conditions of Article 57(2) DK apply to it: the changes must be real, and there must be no vacancy at the workplace to which the employee could be transferred.

If many employees are dismissed, the collective dismissal procedure applies. Article 63(1) DK applies it when, on the employer’s initiative, within a period of not more than thirty calendar days, employment contracts are terminated with ten or more employees at a workplace with an average of twenty to ninety-nine employees; at least ten per cent of employees where there are one hundred to two hundred and ninety-nine; thirty or more where there are three hundred or more. The employer must then inform the works council (where there is none, the trade union) and consult it before taking the decision (Article 63(3) DK). The Employment Service (Užimtumo tarnyba) is notified in writing no later than thirty days before the employment ends (Article 63(4) DK). If these duties are breached, the employment contract cannot be terminated (Article 63(5) DK).

One case from practice. A client wanted to close a company whose only employee was on childcare leave. The question was whether she could be dismissed at all. She could: Article 61(3) DK prohibits dismissing employees raising a child under three years of age only under Article 57(1)(1)–(3) DK, and those on childcare leave also at the employer’s will (Article 59 DK); the liquidation ground is not among them. But the time limits change, and this has to be assessed in advance:

• For employees raising a child under fourteen, the notice period is tripled (Article 57(7) DK).
• If at the end of the notice period the employee is on leave that has been granted, the end of the notice period is postponed until the leave ends (Article 64(4) DK).
• If the employee (the mother) was granted pregnancy and maternity leave or leave to care for the child before the baby turned four months old, the contract may be terminated only after that leave ends (Article 61(2) DK).

So we first check when the childcare leave started. We described notice periods and payments in more detail in the article Dismissal without the employee’s fault: how much notice and how much to pay. In such a case we use Article 73(8) ABĮ: the decision is adopted at once, but its effective date may have to be postponed until the employee’s notice period or leave ends.

Creditors: who, how and in what order

Article 73(10) ABĮ and Article 2.112(1) CK give two routes. Either announce publicly three times at intervals of not less than thirty days. Or announce publicly once and notify all creditors in writing. The notice states the details listed in Article 2.44(1) CK: name, legal form, registered office, electronic delivery box address, code and register.

In our practice the procedure is as follows:

1. A public notice is published in the source named in the company’s articles of association. Most often this is the Centre of Registers’ (Registrų centras) publication for public announcements.
2. The list of creditors is fixed on the same day. The list changes every day, so notices are sent to those who are creditors on the day of the public announcement.
3. A signed notice is sent to each of them by registered post. We keep the copies and the postal receipts: they may be needed later.

Two questions come up almost every time. The first is what happens to creditors who appear later. A company in liquidation may enter only into transactions connected with ending its activity or provided for in the decision to liquidate (Article 2.111 CK). Its documents must state the status “in liquidation” (Article 73(7) ABĮ). So a new creditor knows about the liquidation from the very start, and is paid in the ordinary way. The second is what to do if a creditor’s address is unknown. Then it is safer to choose three public notices. This route is longer, but it does not depend on the list of creditors being complete.

The liquidation opening balance sheet: the rules have changed

Previously, once a decision to liquidate was adopted, financial statements had to be prepared on the basis of data as at the day of the decision. That was the so-called liquidation opening balance sheet.

Since 1 July 2025 a new wording of Article 15 of the Law on Reporting by Undertakings and Groups of Undertakings (IIGAĮ) has applied (it is set out in Article 41(4) of the same law). Under Article 15(2) IIGAĮ, a company in liquidation must prepare a final liquidation financial statement on the basis of data as at its last day of activity before the end of the liquidation. Opening statements are no longer in this wording. Article 74(2)(1) ABĮ places the same duty on the liquidator. The rules on this statement do not apply to companies that keep their accounts under International Financial Reporting Standards (Article 15(5) IIGAĮ).

An important exception is the transitional period. If the decision to liquidate was adopted on or before 30 June 2025, the rules in force before the law took effect apply (Article 41(8) IIGAĮ). Under them the company had to prepare financial statements both on the basis of data as at the day of the decision to liquidate and on the basis of data as at the end of the liquidation (Article 16(3) of the former Law on Financial Reporting by Undertakings, wording in force until 30 June 2024). Such a company still needs opening statements.

Two more rules worth discussing with the accountant at the very start:

• If no more than 3 months have passed from the end of the financial year to the last day of activity, the set of financial statements for that last year need not be prepared, provided all material information is given in the final liquidation financial statement (Article 15(3) IIGAĮ).
• Once the decision to liquidate is adopted, the balances of assets and liabilities must be supported by stocktaking data without delay. This is set by Article 13(2)(2) of the Law on Financial Accounting (FAĮ). The opening balance sheet is gone, but the stocktaking remains.

How to start

Send us the latest extract from the Centre of Registers and the articles of association, and tell us where the shareholders and the manager live, how many employees the company has and whether there are known creditors. We will tell you who has to sign what, whether a notary abroad will be needed, and which date suits the decision best.

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

More about this service: liquidation of companies.