{"id":2570,"date":"2026-10-06T08:59:43","date_gmt":"2026-10-06T05:59:43","guid":{"rendered":"https:\/\/linden.lt\/tinklarastis\/mb-to-uab-conversion-share-split-capital-from-profit\/"},"modified":"2026-10-06T08:59:43","modified_gmt":"2026-10-06T05:59:43","slug":"mb-to-uab-conversion-share-split-capital-from-profit","status":"publish","type":"irasas","link":"https:\/\/linden.lt\/en\/blog\/mb-to-uab-conversion-share-split-capital-from-profit\/","title":{"rendered":"Converting an MB into a UAB: splitting shares and capital from profit"},"template":"","kategorija":[],"class_list":["post-2570","irasas","type-irasas","status-publish","hentry"],"acf":{"visi_puslapiai_cta_statusas":false,"visi_puslapiai_cta_antraste":"","visi_puslapiai_cta_formos_id":"","visi_puslapiai_cta_papildomas_tekstas":"","visi_puslapiai_cta_nuotrauka":null,"tinklarastis_1_autorius":null,"tinklarastis_1_iraso_tipas":false,"dinamiski_blokai":[{"acf_fc_layout":"tekstas","tekstas":"

The law does not require that, when a small partnership (ma\u017eoji bendrija<\/em>, 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.<\/p>\r\n

Which rules apply<\/h2>\r\n

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 (MB\u012e)). 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 (MB\u012e Article 29(3)). That majority cannot be less than 2\/3 of all members' votes (MB\u012e Article 18(1)).<\/p>\r\n

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 (AB\u012e)). This requirement can be dispensed with in the cases listed in AB\u012e Article 72(13) (AB\u012e Article 72(13)). The UAB's share capital must be no less than the minimum capital set in AB\u012e Article 2 (AB\u012e Article 72(15); AB\u012e Article 2(4)). We describe the whole procedure in Converting an MB into a UAB: decision, capital, creditors, timing<\/a>.<\/p>\r\n

Can shares be split differently from the contributions<\/h2>\r\n

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 (MB\u012e Article 16(3)). Profit is distributed to members in proportion to their contributions unless the regulations provide otherwise (MB\u012e Article 26(4)). A UAB shareholder's rights are those conferred by the shares the shareholder owns (AB\u012e Article 3(2)). So on conversion it is important to decide clearly how many shares each member will receive.<\/p>\r\n

MB\u012e Article 29 and AB\u012e 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 (MB\u012e Article 29(3); MB\u012e Article 18(1)); the UAB's articles state the share capital and the number and nominal value of the shares (AB\u012e 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 (PM\u012e)).<\/p>\r\n

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 (AB\u012e Article 47(10)).<\/p>\r\n

Do members have to pay in new money<\/h2>\r\n

UAB shares are issued for the MB's assets (AB\u012e Article 72(12)). A member's contribution transferred to the MB became the MB's property (MB\u012e 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.<\/p>\r\n

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 (AB\u012e 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.<\/p>\r\n

Can capital be increased from accumulated profit<\/h2>\r\n

During the conversion.<\/strong> The UAB's share capital is set in the UAB's articles of association, which are adopted together with the decision (MB\u012e Article 29(3)). The shares are issued for the valued MB assets (AB\u012e Article 72(12)), and accumulated profit is part of the MB's equity. The AB\u012e 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)).<\/p>\r\n

After the conversion.<\/strong> 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 (AB\u012e Article 51(1)). The decision is taken by the general meeting of shareholders (AB\u012e Article 49(1)) on the basis of the company's set of financial statements (AB\u012e Article 51(2)). Shareholders receive the new shares without paying for them, in proportion to the nominal value of the shares they hold (AB\u012e Article 51(4)), so this route does not change the proportions.<\/p>\r\n

The conversion is complete when the UAB's articles of association are registered in the Register of Legal Entities (MB\u012e Article 29(14)). So the AB\u012e Article 51 route opens only after registration.<\/p>\r\n

If losses are recorded in the balance sheet, share capital can be increased only from the revaluation reserve (AB\u012e Article 51(3)).<\/p>\r\n

What to put in the decision and the UAB's articles<\/h2>\r\n

So that the split is clear to the registrar and the notary, state:<\/p>\r\n