SELLING BUSINESS IN LITHUANIA
CLOSING COMPANY IN LITHUANIA
Sooner or later you may want to sell your business. The first step towards finding the right purchaser is to ensure the company is in a saleable state. Are accounting records, agreements and administrative documents in good order? Are core business activities, the customer base and contact networks well documented? Are there any related-party liabilities and accounts which should be settled? Are there any ongoing disputes that should be resolved?
Your company is evaluated and ready for selling? Finding the right customer is your next step – and usually the hardest as anyone could be a prospect. A buyer can come from your employees, customers, suppliers or competitors. If your business is well known then word that it’s for sale may be enough to reach potential purchasers. But more than likely you will need to cast a wider net.
Once a company is ready for sale and a potential purchaser presents an offer of purchase, you may accept the offer, counter, or reject it entirely. You must decide whether sell the entire business entity or just assets; will you keep any assets; will the buyer likely retain or replace staff; will you maintain a minority stake of the ownership; will you be expected to put in a year of transition time after the business is sold. Usually, business in Lithuania are sold by signing share sale-purchase agreement at the notary, but there are various alternative options
Planning on gradually winding up your business in Lithuania? The procedure of liquidation is applicable to companies with no uncovered debts and obligations. Closing down can take several months as it all depends on what type of company you have been running. It is crucial to close the accounts in the correct way, whatever the legal form of the business.
Liquidation of a business entity with no debts means the process of converting the economic entity’s assets into cash, settlement of all accounts and distribution of the remaining cash or property between owners. Together with announcing publicly about the start of liquidation procedure, company’s owners appoint a liquidator – one of the employees or outsourced professional who takes control of all the company’s documents, takes care of all the procedures and who is responsible rightful closing of accounts.
Tax authorities may carry our the inspection on a company being liquidated. All the employment agreements must be terminated, and all the salaries must be paid to the employees. All the relevant tax declarations must be submitted, Remining assets of a company must be transferred to the owners, bank accounts must be closed. All the documents are passed to the State Archive. Company can now be de-registered from the Register of Legal Entities.
Economic entities with financial difficulties (not capable of settling accounts with all the creditors) have to options: restructuring or bankruptcy.
Restructuring gives businesses suffering temporary financial difficulties a possibility improve their financial state, avoid bankruptcy and get businesses to continue their activities, pay back to creditors, save jobs and simplify the termination of the business. Like in most jurisdictions, in Lithuania restructuring involves freezing of pending claims and can be arranged only if certain conditions are met.
The purpose of bankruptcy proceedings is: to ensure a uniform treatment of requirements of creditors and satisfy requirements of creditors after having realized a debtor’s assets in the order established by laws. Bankruptcy proceedings can be initiated by company’s creditors, owners or management. Bankruptcy proceedings usually take place in court, however, there might be alternatives.