Locals and foreigners may open a foundation in Lithuania, which is a type of establishment that is designed for non-profit purposes. The manner in which the structure is incorporated follows the standard steps for company formation in Lithuania, in the sense that it needs to have a registered name, a registration certificate, a business address, employees, etc.
Our specialists in Lithuania company formation can offer the necessary support to those who want to start a non-governmental organization (NGO), such as a foundation. Of course, we can assist in the registration of any other types of NGOs recognized by the Lithuanian law.
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What is a foundation?
A foundation is a type of entity that is incorporated for specific purposes which aim at helping/improving different domains or communities. Such domains can refer to art, science, education, health, religion, sports, social care, social welfare, etc. The foundation can reach its purpose by raising funds and redirect them to the area for which it was incorporated.
Another component of the Lithuanian definition of a foundation is that the entity must always pursue a public benefit purpose (private benefit foundations can’t be set up here).
Obtaining legal recognition
The foundation is considered a separate legal entity than its founders, which means that it needs to have its own constitutive documents, through which it gains legal recognition, granted by the Lithuanian Register of Legal Entities.
In the case in which only one founder will open a foundation in Lithuania, the entity is constituted based on the founding act; when the entity has more founders, it will be incorporated based on the memorandum of association.
The process of company registration in Lithuania in this case is regulated as per the rules of the Civil Code (Book Two) and the Law Amending the Law on Charity and Relief Foundations. Some of the highlights are:
- the registration of a trade name costs EUR 17;
- the procedures with the Register of Legal Entities can be completed in 3 business days;
- in the case in which there are issues (clarifications, other supporting documents, etc.), the procedure can be completed in around 20 days;
- the institution will charge a fee of EUR 25,65 for the registration of a charity/relief foundation.
The provisions of the foundation’s constitutive document
The provisions that must be included in the bylaws of a foundation are similar to the ones that investors must add in constitutive documents when they open a company in Lithuania. It must contain basic details regarding the foundation, such as its name, the legal form, the objectives it must accomplish, its founders, the rights and the obligations of the founders, etc.
Further on, it must provide clear information on the managing structure of the foundation, such as the general meeting of the founders, the manner in which members can be removed, the management body and its responsibilities, etc.
Lastly, it must also state what its sources of income are, the procedure through which the foundation can use its funds and the manner in which they are allocated, etc. Our consultants in company registration in Lithuania can provide further details on other mandatory provisions of the constitutive document of a foundation. We can also help you if you need to open a company in another country, such as Italy, where the time frame for incorporation is 5-7 days, compared to 3 weeks in Lithuania.
What are the reporting obligations?
Just like in the case of those who open a Lithuanian company, the foundation is legally required to comply with reporting obligations. In this sense, the responsible person must prepare an activity report and the annual financial statements.
These documents must be approved by the general meeting of the shareholders in maximum 4 months since the end of the financial year, after which they need to be submitted to the Register of Legal Entities in a period of 30 days from their approval.
The submission of financial document is done following a standard procedure, and we invite you to address our consultants in company registration in Lithuania for advice on this matter.