NGOs, public institutions, associations and charity and support funds

This page covers the legal questions of public institutions, associations and charity and support funds, from setting up to liquidation. We draft decisions, articles of association and agreements, file data with the Centre of Registers and JADIS, and help you assess whether an organisation is an NGO.

A public institution (viešoji įstaiga, VšĮ), an association (asociacija) and a charity and support fund (labdaros ir paramos fondas) are public legal entities with limited civil liability (Article 2 of the Law on Public Institutions of the Republic of Lithuania (VšĮĮ); Article 2(1) of the Law on Associations of the Republic of Lithuania (AĮ); Article 2(1) of the Law on Charity and Support Funds of the Republic of Lithuania (LPFĮ)). Each form has its own law, and whether an organisation is a non-governmental organisation (NGO) is decided by yet another law. We help these organisations from setting up to liquidation: we draft decisions, articles of association and agreements, and file data with the Centre of Registers (Registrų centras) and the Information System of Participants of Legal Entities (JADIS).

When you need this service

You are setting up an organisation. There is no limit on the number of founders of a VšĮ (VšĮĮ Article 6(1)). An association needs at least three founders (AĮ Article 4(1)). A fund can be set up by a single person who draws up a founding act (LPFĮ Article 4(1)). Setting up is covered in detail in our articles on setting up a public institution and setting up an association or a fund.

Members are changing. A member (dalininkas) of a VšĮ may transfer their rights, and the articles of association set the transfer procedure; the rights of a state or municipal member are transferred in the cases and ways set by law (VšĮĮ Article 4(4)). New members are admitted by the general meeting of members (VšĮĮ Article 12(1)(14)). A member of an association may leave at any time, but entry contributions and membership fees are not refunded (AĮ Article 13(4)(4)). A member of a fund may also leave at any time, and their contributions stay with the fund (LPFĮ Article 15(1)(3)). The fund’s articles set the procedure for removing members who have not met their obligations, and the general meeting of members decides (LPFĮ Article 15(2)).

You need to assess NGO status. An NGO is a public legal entity that is independent of state and municipal management, set up on a voluntary basis and acting for the benefit of the public or a group of it, whose aim is not to seek political power or to pursue purely religious aims (Article 2(3) of the Law on the Development of Non-Governmental Organisations of the Republic of Lithuania (NVOPĮ)). The head of the organisation assesses whether it meets this definition and marks it in the Register of Legal Entities (Juridinių asmenų registras) (NVOPĮ Article 12(2)). This NGO mark is needed, for example, to be recognised as a public-benefit NGO (NVOPĮ Article 8(2)(2)).

You are appointing or changing the head of a VšĮ. The general meeting of members appoints and dismisses the head and also sets the terms of the head’s employment contract (VšĮĮ Article 12(1)(4)). If a collegial management body has been formed, the meeting may delegate this function to it (VšĮĮ Article 12(2)). In a VšĮ where the state or a municipality holds more than 1/2 of the votes, the head is hired for a 5-year term by competition (without a competition in the cases set by law and for a second term), and the same person may not serve as its head for more than two terms in a row (VšĮĮ Article 20(4)). The register keeper must be notified of the appointment or dismissal of the head no later than within 30 days (VšĮĮ Article 9(4)). How an association is managed is explained in Does an association need a board, and can it have members without a vote?.

The annual reports are due, or the organisation is dormant. The general meeting approves the set of annual financial statements or the annual report within 4 months of the end of the financial year (VšĮĮ Article 12(1)(6); AĮ Article 8(1)(5); LPFĮ Article 8(2)(5)). The documents are filed with the register within thirty days of approval, unless the law sets another deadline (Article 2.66(4) of the Civil Code of the Republic of Lithuania (CK)). If they are not filed within twelve months of the end of the deadline, the Centre of Registers has the right to initiate liquidation (CK Article 2.70(1)(1)). What to do then is explained in Liquidation notice from the Centre of Registers: what to do and when.

You want to close the organisation. When a VšĮ is liquidated, once all creditors’ claims are met, its members get back assets whose value may not exceed the members’ capital, and the remaining assets go to public legal entities chosen by the general meeting of members or the court (VšĮĮ Article 27(8)). More in Liquidating a public institution (VšĮ): who decides, liquidator, assets and Liquidating an association or charity fund: who gets the assets.

What we do

  • Draft founding agreements, founding acts and articles of association where the model forms do not fit, and file the documents with the register.
  • Draft agreements transferring member rights, general meeting decisions admitting new members, and notices to the institution.
  • File members’ data with JADIS.
  • Assess whether the organisation meets the NGO definition, and prepare and file the application to register or remove the NGO mark.
  • Draft decisions appointing and removing the head and board members, the head’s employment or volunteering agreement, and file the changes with the register.
  • Amend articles of association: the allocation of votes, the procedure for admitting members and transferring rights, the management bodies.
  • Check whether annual reports have been filed, and help put the organisation in order when the Centre of Registers sends a liquidation notice.
  • Prepare liquidation documents, and we can act as liquidator.
  • Draft claims and represent you in disputes over decisions of the organisation’s bodies.

How it works

  1. We read the articles of association and the register data. The articles of a VšĮ set the procedure for becoming a member, for transferring member rights and for convening the general meeting (VšĮĮ Article 8(2)), so we check them first.
  2. We draft the decision. The general meeting of a VšĮ can take decisions when members holding more than 1/2 of the votes attend, unless the articles set more (VšĮĮ Article 12(4)). Decisions on reorganisation, conversion and liquidation need the number of votes set in the articles, but no less than 2/3 of the votes of all members attending (VšĮĮ Article 12(5)). Where there is a single member, that member’s written decisions count as decisions of the meeting (VšĮĮ Article 12(12)).
  3. We draft the agreements and notices. A person who acquires member rights in a VšĮ notifies the institution in writing within 5 days and attaches the document proving the acquisition (VšĮĮ Article 4(5)).
  4. We file the changes with the register. An application to register changed register data or amendments to the founding documents must be filed within thirty days of the change (CK Article 2.66(3)). Amendments to the articles take effect only from their registration (CK Article 2.66(6)).
  5. We file the data with JADIS. When the members of a VšĮ change, the data are filed no later than within 5 days of the change (VšĮĮ Article 10(5)). The head of the VšĮ is responsible for this (VšĮĮ Article 10(6)).

Frequently asked questions

When is an organisation not a non-governmental organisation (NGO)?

An NGO is a public legal entity that is independent of the management of state or municipal institutions and bodies, set up on a voluntary basis, acting for the benefit of the public or a group of it, and whose aim is not to seek political power or to pursue purely religious aims. Legal entities are not NGOs if more than 1/3 of their participants are legal entities that are neither NGOs nor religious communities or societies, or if such participants hold more than 1/3 of the votes at the general meeting. Nor are political parties, trade unions, employers’ organisations and their federations, organisations in which membership is compulsory for members of a profession, gardeners’ associations, building owners’ associations and other legal entities set up to manage real estate jointly, family-type foster homes and permanent arbitration institutions NGOs (NVOPĮ Article 2(3)).

Is an organisation an NGO only once the NGO mark is registered at the Centre of Registers?

No. An organisation is an NGO if it meets the statutory definition. The head of the legal entity enters the mark in the register after assessing whether the organisation meets that definition (NVOPĮ Article 12(2)). The mark can be removed on the organisation’s own initiative, and it is also removed by the register keeper on its own initiative or at the request of an appropriations manager (NVOPĮ Article 12(4)–(6)). In some cases the mark is required: it is one of the conditions for recognition as a public-benefit NGO (NVOPĮ Article 8(2)(2)), and only a VšĮ that is registered as an NGO and is not classed as a public-sector entity may sign a volunteering agreement with its head instead of an employment contract (VšĮĮ Article 20(3)).

How does a community organisation differ from other non-governmental organisations?

A community organisation is an association whose founders and members are residents of a local community, or their representatives, and whose purpose is to pursue, through initiatives, public interests linked to living as neighbours (Article 2(1) of the Law on the Development of Community Organisations of the Republic of Lithuania (BOPĮ)). So a VšĮ or a fund is not a community organisation, even if it carries the NGO mark. An association whose members are not residents of the locality, or whose purpose is not linked to living as neighbours (for example, one uniting a profession nationwide), does not meet this concept.

Is a public institution a non-profit organisation by definition?

Yes. A public institution is a non-profit public legal entity with limited civil liability whose aim is to serve the public interest by providing public services or carrying out other activities useful to the public (VšĮĮ Article 2). A VšĮ may use its surplus (profit) only for the aims set in its articles (VšĮĮ Article 3(2)(2)). Being non-profit does not by itself make a VšĮ an NGO: that is assessed under the definition in the Law on the Development of Non-Governmental Organisations.

How can a member leave a public institution?

By transferring their member rights to another person, for example to another member. A member has the right to transfer member rights, and the articles set the procedure, except for the rights of a state or municipal member, which are transferred as the law provides (VšĮĮ Article 4(4)). The Law on Public Institutions does not give a member a right simply to leave, as an association member has (AĮ Article 13(4)(4)). Kaunas Regional Court (Kauno apygardos teismas) has held that the fact that the law does not expressly give a member a right to end their participation in the institution does not mean the member has no such right (ruling of 21 January 2020 in civil case No. e2A-46-413/2020, para. 21). The law does not set how that right is exercised without transferring the member rights. The person acquiring the rights notifies the institution in writing within 5 days (VšĮĮ Article 4(5)), and the changed member data are filed with JADIS within 5 days (VšĮĮ Article 10(5)).

Who sets the terms for transferring a member’s rights in a public institution, and do votes depend on the size of the contribution?

The procedure for transferring member rights to other persons must be set in the articles of association (VšĮĮ Article 8(2)(2)), while the terms of a specific transfer, such as the consideration, are agreed by the parties in the transfer agreement. Votes at the general meeting of members are allocated in proportion to the contributions unless the articles provide otherwise, but the smallest contribution must always give at least one vote (VšĮĮ Article 12(6)). A decision to change the proportion in which votes are allocated needs no less than 2/3 of the votes of all members attending, and the articles may set a higher number (VšĮĮ Article 12(5)).

When does a person become a member of a public institution, and must the decision be filed with the Centre of Registers?

A person becomes a member by transferring a contribution to the institution under the law and the articles, or by acquiring member rights on other grounds (VšĮĮ Article 4(1) and (2)). New members are admitted by the general meeting of members (VšĮĮ Article 12(1)(14)). The Register of Legal Entities does not list the members of a VšĮ: participants’ data are additionally entered there only when registering legal entities whose participants are liable for the entity’s obligations (CK Article 2.66(2)). So the decision is not filed with the register, and the members’ data are filed with JADIS within 5 days of the contribution being transferred or of the change (VšĮĮ Article 10(5)).

Does a member who has not paid their contribution have to transfer their share to the other members?

No. A person becomes a member only by transferring a contribution to the institution or by acquiring member rights on other grounds (VšĮĮ Article 4(1) and (2)). If the contribution was never transferred and no rights were acquired on another ground, the person has no member rights, so there is nothing to transfer. JADIS must hold correct data, and the head is responsible for filing them (VšĮĮ Article 10(5) and (6)). A founder’s obligation to transfer a contribution comes from the founding agreement (VšĮĮ Article 7(1)(6)), so if a founder refuses to perform it, it is worth recording that in writing together with the other founders.

Who appoints the head of a public institution and sets their pay?

The general meeting of members appoints and dismisses the head and also sets the terms of the head’s employment contract, including pay (VšĮĮ Article 12(1)(4)). If the VšĮ has a collegial management body, the meeting may delegate this function to it (VšĮĮ Article 12(2)). The employment contract is signed on behalf of the VšĮ by a person authorised by the appointing body; a VšĮ that is registered as an NGO and is not classed as a public-sector entity may instead sign a volunteering agreement with its head (VšĮĮ Article 20(3)). In a VšĮ where the state or a municipality holds more than 1/2 of the votes, the head is hired for a 5-year term by competition (without a competition in the cases set by law and for a second term) (VšĮĮ Article 20(4)).

Is an annual audit mandatory for a public institution, and what must be filed with the Centre of Registers?

An audit is mandatory where the Law on the Audit of Financial Statements and Other Assurance Services requires it; in other cases the general meeting of members may decide to have an audit, or the articles may provide for one (VšĮĮ Article 12(1)(12)). If an audit is mandatory, only an audited set of annual financial statements is approved (VšĮĮ Article 12(1)(6)). The activity report is filed with the register together with the set, and where an audit is mandatory, also the auditor’s report (VšĮĮ Article 23(2)); where an audit is mandatory, the set is not accepted without the auditor’s report (VšĮĮ Article 23(4)).

Do annual financial statements have to be filed if a public institution or an association has not been active?

Yes. Neither the Law on Public Institutions nor the Law on Associations makes this duty depend on whether the organisation was active: the set of annual financial statements or the annual report is approved within 4 months of the end of the financial year (VšĮĮ Article 12(1)(6); AĮ Article 8(1)(5)) and filed with the register within thirty days of approval (CK Article 2.66(4)). An organisation that has chosen simplified accounting may prepare an annual report instead of the set and the activity report (VšĮĮ Article 22(7); AĮ Article 10(6)). If the documents are not filed within twelve months of the end of the deadline, the Centre of Registers has the right to initiate liquidation (CK Article 2.70(1)(1)).

Do the members of a public institution have to be registered in JADIS?

Yes. The JADIS keeper receives each member’s data, the dates on which member rights were acquired and transferred, and the value of the contribution (VšĮĮ Article 10(1)). The data are filed no later than within 5 days of the contribution being transferred and the person becoming a member, and when members or their data change, within 5 days of the change; the head of the VšĮ is responsible for this (VšĮĮ Article 10(5) and (6)). The data are filed only in electronic form, and the list of participants is signed with a qualified electronic signature (point 11 of the JADIS Regulations (JADIS nuostatai)). The members’ data of a charity and support fund that is an NGO are filed within 5 working days (LPFĮ Article 6¹(4)), and associations are not among the legal entities whose participants’ data JADIS collects (JADIS nuostatai point 5.1). Beneficial owner data, however, are collected in JADIS for legal entities of every legal form, associations included, except those whose sole participant is the state or a municipality (JADIS nuostatai point 5.2).

More on NGOs and public legal entities

How to start

Send us the organisation’s articles of association and an extract from the Centre of Registers, and tell us briefly what is changing: the members, the head, the articles, or whether you want to close the organisation.

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

More about this service: Company law.

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