[ESTABLISHING A BUSINESS ENTITY IN LITHUANIA] 314
Association of the company may establish a lower amount of shares required); • shareholders owning not less than 1/20 of the company's shares have a right to propose a supplement to the agenda for the general meeting of shareholders; • shareholder or a group of shareholders owning not less than 1/10 of the company's shares has a right to initiate investigation of company's activity. Shareholders shall enjoy the right to request the court to appoint experts who must investigate whether a company or company’s managing bodies or their members acted in a proper way; • shareholder or a group of shareholders owning not less than 1/3 of the company's shares has a right to force sale of shares of a company’s member whose actions contradict the goals of company’s activities and where there are no grounds to expect any changes in the said actions. Shareholders of public limited liability company are not entitled to the right described herein; • shareholder or a group of shareholders, owning not less than 95% of the voting shares of a company ’s shares , has the right to request the mandatory buyout of their own shares of the company by all the other shareholders of that company. However, the shareholder or a group of shareholders, owning not less than 95% of the voting shares of a company ’s shares , has the right to request the mandatory sale of the minority shareholders’ shares as well. Please note that shareholders of a company may conclude a shareholders' agreement,
regulating relationships of shareholders of the company, including but not limited to, the agreement on voting in the general meeting of shareholders, various provisions beneficial for minority shareholders, etc. There is also a possibility to establish a protection for minority shareholders in the establishment documents of the company. 4. Foreign Investment, Thin Capitalization, Residency and Material Visa Restrictions 4.1 Taxation 4.1.1. Thin Capitalization Rule Thin capitalization ratio is 1:4. Interest and currency exchange loss on the capital borrowed from the controlling creditor, which exceeds the equity of the company more than 4 times, are non-deductible for corporate income tax purposes. The controlling creditor is the one who: • directly or indirectly holds more than 50% of shares or rights (options) to dividends; or • together with related parties, holds more than 50% of shares or rights (options) to dividends, and the holding of that creditor is not less than 10%; or • any company which is a part of the debtor‘s company group (a company group exists when a parent company directly or indirectly holds more than 25% of shares, interests, member shares, voting rights or rights to a share in distributable profits or exclusive rights to acquire them). Additional interest deduction limitation rules apply to interest expenses incurred due to loans from all parties. Entities can fully deduct interest expenses that do not exceed interest income and deduct any
ILN Corporate Group – Establishing a Business Entity Series
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