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Mergers and acquisitions (M&A) in Lithuania

20 October 2014
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Mergers and acquisitions form a part of corporate reorganizations. Reorganization is the process that terminates the legal person without liquidation.  It shall be noted that reorganizations should not be confused with corporate restructuring (transformation).  Corporate restructuring (transformation) is a change in the legal form of the entity whereby the legal entity in its new form becomes the successor of all rights and responsibilities of the restructured entity.

There are 3 main legal acts that govern mergers and acquisitions in Lithuania:

  • Civil code sets out the basic principles and definitions on mergers;
  • Law on Companies sets out the procedures for merger implementation;
  • Law on Competition sets out requirements for merger control and filing requirements.

 The basis for the mergers and acquisitions is set out in the civil code of the Republic of Lithuania. Chapter VIII deals with reorganizations and liquidation. Civil code foresees two kinds of consolidations:

  • Acquisition, which is a type of consolidation when one or more legal entities are added to another legal entity which takes over all rights and responsibilities of the reorganized entities;
  • Merger, which is a type of consolidation when two or more legal entities are merged into a new legal entity that takes all right and responsibilities of reorganized entities.

Decision to reorganize the company (including merger) can be taken by the participants of legal entity (i.e. owners, shareholders) by majority set out in the articles of association but no less than 2/3 of all participants in shareholders meeting. In case of acquisition when on legal entity is added to another, the decision to reorganize the company can also be taken by the governing bodies of the entity to which the other entity is added.


Prior to the merger (acquisition), governing bodies of the companies participating in reorganization must prepare conditions for a merger (acquisition). Conditions of a merger (acquisition) shall contain details on the entities participating in reorganization, type of reorganization, timeframe for carrying out a merger and when the new entity takes rights and responsibilities of the reorganized companies. Conditions of the merger (acquisition) shall be evaluated by independent expert if it is set in the laws regulating particular types of legal persons. In addition to conditions of reorganization, merged companies must prepare reports explaining goals of the merger (acquisition), conditions of the merger (acquisition), timeframe and economic grounds. However, under simplified reorganization procedure, evaluation by independent expert and merger reports are not required. Simplified reorganization (i.e. merger) procedure can be applied when the entity is added to the entity that is the sole participant (i.e. shareholder) of the reorganized entity.


Implications for Companies

Law on Companies further details reorganization procedures for joint stock companies. It identifies that decision on a merger (acquisition) must be taken by general shareholders meeting, outlines the requirements for preparing merger (acquisition) conditions and other procedures. For companies report on verification of merger (acquisition) conditions must prepare the audit of company unless all shareholders agree that such report is not needed. Report of conditions of the merger (acquisition) must be prepared no later than 30 days prior to shareholders meeting which will decide on the merger (acquisition). In addition to conditions of a merger (acquisition) new set of bylaws must be prepared. Conditions of a merger (acquisition) and their evaluation report must be submitted to state registry upon announcement of a merger (acquisition). Conditions of the merger (acquisition) must be announced in the newspaper no less than 30 days prior to the shareholders meeting. A new set of articles of association for company continuing after the merger (acquisition) also has to be submitted to registry.


In addition to above documents, the boards of the companies participating in a merger (acquisition) must prepare a report outlining goals of a merger (acquisition), explaining its conditions, timeframe, legal and economic grounds (especially share swap ratios and share distribution after the merger (acquisition)). Again, such report is not needed if all shareholders agree to that. For closed joint stock companies it is needed only if shareholders with more than 1/10 of votes ask for it.


General shareholders meeting which is convened no earlier than 30 days after announcement of the merger (acquisition) decides on the merger (acquisition) and its conditions. Decision has to be taken by no less than 2/3 of votes participating in the meeting. Decision of the shareholders meeting must then be submitted to state registry.


Certain simplifying conditions exist when the company is merged with another company that controls 100% or 90% of its shares.

Merger (acquisition) is complete when state registry registers all the new companies after the merger (acquisition) and their articles of association. The company is registered after its shareholders meeting elects all required governing bodies.


Merger and acquisition Control

Mergers and acquisitions are subject to competition control in Lithuania, since Law on Competition defines mergers, when at least one of the merged companies ceases to exist, as concentration. This law further outlines procedures for concentration control for which mergers are subject to.

Competition Council is the body responsible for merger (acquisition) control in Lithuania. According to Law on Competition Council must be informed of a merger (acquisition) if aggregate turnover of the merged companies exceeds 50 million LTL (15 million EUR) and if turnover of each of the companies is more than 5 million LTL (1,45 million EUR). In certain cases Competition Council might request merger (acquisition) filing even for companies below those thresholds during 12 months after the merger (acquisition), if it deems that such merger (acquisition) might limit competition.

If notification is required, all the parties participating in merger (acquisition) should submit notification to the Competition Council and receive approval. Notification document should include registration information of the merged companies, reasons for and description of the method of concentration, financial accounts of the companies, their sales and evaluation of market shares in certain markets, information on competitors and other descriptive information.


Receipt of notification shall be announced by Competition Council in its webpage including type of concentration and parties involved.

Competition Council must evaluate merger (acquisition) notification and issue its opinion not later than 4 months after filling. However, no later than one month after receipt of merger (acquisition) filing council must either issue approval of the merger (acquisition) or decide that it will further evaluate it and inform the parties respectively.


After evaluating the merger (acquisition) filling, Competition Council must issue one of the following decisions:

  • Approve the merger (acquisition) as described in notification;
  • Approve the merger (acquisition) with certain conditions and obligations for the companies or their controlling bodies;
  • To refuse to grant permission for merger (acquisition).

Failure to get the Competition Council’s approval prior to completing the merger (acquisition) may result in a fine of up to 10 percent of the turnover of the participating companies.


Decisions of the Competition Council may be challenged in administrative court no later than 20 days after receipt of decision or its publication in its webpage.


Very limited precedents exist of merger (acquisition) court cases. Since 1996 only few cases where started in the court against council decisions in merger (acquisition)s. However, in 3 cases the plaintiffs withdrew their appeals before the hearings started. The Competition Council has only once disapproved the merger (acquisition) – in 2007 it objected the intention of several road construction companies to form a consortium.


If the companies are merged and the acquirer overtakes all obligations of the acquired company, the VAT for the transfer of the property is not calculated. However, the property itself must be shown in the accounting or in transfer of assets act where in both situations zero-VAT is applicable.




Jovita Valatkaite, lawyer of the Gencs Valters Law Firm in Vilnius

Practising in fields of  Company Law in Latvia, Lithuania and Estonia

T: +370 52 61 10 00

F: +370 52 61 11 00

For questions, please, contact Valters Gencs, attorney at law at

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The material contained here is not to be construed as legal advice or opinion.

© Gencs Valters Law Firm, 2016
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