Lithuania’s newly elected Parliament (Seimas) has approved legislation allowing the startup capital of limited liability corporations (LLC) (public or private) to be held in any credit or electronic money institution (EMI). Prior to this amendment of Lithuania’s LLC legislation, only banks could be used for this purpose. This put many foreign investors in a situation where a freshly set up company couldn’t start operating because its capital was “frozen” in a bank and the business was struggling with opening a simple payment account for daily operations.
All of this changes with the latest amendment, effective January 1, 2021. Both credit unions and EMIs will be able to offer accounts to local startups and foreign investors. Lithuania’s fast-growing EMI ecosystem will now be able to offer companies set-up services as part of their business packages. Lawyers and company formation service providers will have a wider range of choices of financial partners offering more efficient services.
Of course, this also means more work for AML professionals as well as regulatory bodies, as the expected increase in company formation might include attempts by less than reputable businesses to insinuate themselves into Lithuania’s burgeoning startup environment. However, the current growth of the fintech ecosystem as well as the capacity of supervisory authorities has demonstrated Lithuania’s ability to manage these risks.
With other proposed and prospective business-friendly legislation on the horizon, including cutting profit tax on re-invested profit to zero, Lithuania is setting a course for a cutting-edge business environment. The next steps towards making Lithuania the best place to do business are virtual corporate offices and company shares on the blockchain.