Akcinė Bendrovė: Definition, Structure, and Purpose

In Lithuania, the term Akcinė Bendrovė is commonly used in business registration and corporate structures. It plays an important role in the country’s business environment. If you are looking to start a company or understand how businesses operate in Lithuania, it is important to know what an Akcinė Bendrovė is, how it is structured, and why it is used.

This article explains the definition, structure, and purpose of an Akcinė Bendrovė in simple terms. It is meant for both locals and international readers who want to understand how this business form works.

What is an Akcinė Bendrovė?

Akcinė Bendrovė is a Lithuanian term that translates to “joint-stock company” in English. It is a type of legal business entity in Lithuania where the company’s capital is divided into shares. These shares can be owned by private individuals or other companies. The shareholders are not personally responsible for the company’s debts or obligations. Their risk is limited to the amount of money they have invested in shares.

This business form is often chosen by medium to large businesses that want to raise capital by selling shares. Akcinė Bendrovė is usually used by companies that plan to grow, attract investors, or operate internationally.

In Lithuania, the abbreviation for Akcinė Bendrovė is AB. You will often see it at the beginning or end of a company name, such as AB “Vilniaus Energija” or “Lietuvos Geležinkeliai” AB.

Legal Requirements for Forming an Akcinė Bendrovė

Starting an Akcinė Bendrovė in Lithuania requires meeting several legal conditions. The process is regulated by the Lithuanian Law on Companies. Here are the basic requirements:

• Minimum Share Capital: To form an AB, the minimum share capital must be at least 40,000 euros. This capital is divided into shares of equal value.
• Founders: An Akcinė Bendrovė can be established by one or more persons. These can be individuals or legal entities.
• Articles of Association: The company must prepare its articles of association, which outline the company’s purpose, share structure, management system, and rules of operation.
• Registration: The company must be registered with the Register of Legal Entities in Lithuania. After registration, the company becomes a legal entity.

Once all requirements are met, the Akcinė Bendrovė is officially established and can start its business activities.

Structure of an Akcinė Bendrovė

An Akcinė Bendrovė has a specific management and ownership structure. This includes shareholders, a supervisory board (in some cases), a board of directors, and a general manager. Each group has specific responsibilities.

Shareholders

The shareholders are the owners of the company. They invest in the business by buying shares. Shareholders have the right to vote at general meetings, receive dividends (a share of company profits), and sell or transfer their shares. The number of shares a person owns usually determines their level of influence in the company.

General Meeting of Shareholders

The general meeting is the highest authority in the company. It is where major decisions are made. This includes approving the annual financial statements, distributing profits, electing the board, and making changes to the articles of association. All shareholders have the right to participate in the general meeting.

Supervisory Board (Optional)

Some Akcinė Bendrovė companies choose to have a supervisory board. This board monitors the work of the board of directors and represents the interests of shareholders. The supervisory board does not manage daily operations. Its role is more about overseeing and reviewing major decisions.

Board of Directors

The board of directors is responsible for managing the company’s operations and strategy. They make decisions about business plans, investments, and budgets. The board is usually elected by the general meeting of shareholders.

General Manager (CEO)

The general manager is responsible for the daily operations of the company. They carry out the decisions made by the board of directors and ensure that the company meets legal and financial obligations. The general manager may or may not be part of the board.

Purpose of an Akcinė Bendrovė

There are several reasons why entrepreneurs and investors choose the Akcinė Bendrovė form when creating a business in Lithuania. Here are the main purposes:

Raising Capital

One of the biggest benefits of forming an Akcinė Bendrovė is the ability to raise money from investors. The company can sell shares to the public or private investors to fund its growth. This makes it easier to finance large projects or expand into new markets.

Limited Liability

In an AB, shareholders are only responsible for the amount they invested in shares. They do not risk their personal money or property if the company has debts. This makes the Akcinė Bendrovė form a safer option for investors.

Business Growth

The Akcinė Bendrovė structure is suitable for businesses that want to grow quickly. It allows for large ownership groups, multiple managers, and complex strategies. The company can also go public and list its shares on the stock exchange, making it easier to attract new investors.

Transparency and Credibility

Akcinė Bendrovė companies are required to follow strict rules for reporting, auditing, and management. This gives the company more transparency and makes it more attractive to investors, banks, and business partners.

Differences Between AB and UAB

In Lithuania, there are two main types of companies with share capital: Akcinė Bendrovė (AB) and Uždaroji Akcinė Bendrovė (UAB). While both have similar features, there are key differences:

• AB has a higher minimum share capital (40,000 euros) compared to UAB (2,500 euros)
• AB can trade its shares publicly, while UAB shares are private
• AB is more suitable for large businesses, while UAB is used for small or medium businesses

Final Thoughts

An Akcinė Bendrovė is a key legal form for doing business in Lithuania. It offers benefits like limited liability, access to investors, and a clear company structure. It is often used by medium and large businesses that want to grow and raise funds. Understanding how it works can help you make better decisions as an investor, business owner, or employee.

If you plan to start a company or invest in Lithuania, knowing the meaning and purpose of Akcinė Bendrovė is essential. It is one of the most trusted and well-known business structures in the country.

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