When starting or expanding a business, selecting the right legal structure is crucial. In Lithuania and many other countries, one powerful option is the Akcinė Bendrovė, known in English as a Joint Stock Company (JSC).This article breaks down what it is, how it works, and whether it’s the right structure for your bsiness goals.
2. What Is an Akcinė Bendrovė (Joint Stock Company)?
An Akcinė Bendrovė (AB) is a corporation with share capital divided into shares. These shares can be owned by individuals or other companies. ABs are often used for larger businesses due to their ability to attract investments and their strong legal standing.
Key Features:
- Minimum share capital: €40,000
- Ownership via shares: Each shareholder owns a portion of the company
- Liability: Shareholders are not personally liable for company debts
- Shares can be publicly traded, especially if listed on a stock exchange
3. Key Differences: Joint Stock Company vs Private Limited Company
| Feature | Private Limited (UAB) | Joint Stock Company (AB) |
|---|---|---|
| Minimum capital | €2,500 | €40,000 |
| Share transferability | Restricted | Public or private |
| Number of shareholders | 1–250 | No legal limit |
| Public listing | Not allowed | Allowed |
| Governance complexity | Lower | Higher (Board, Superviso |
4. How to Form a Joint Stock Company in Lithuania
Forming an AB in Lithuania requires several legal and financial steps. Here’s how it’s done:
Steps to Register:
- Draft the Articles of Association and founding documents
- Open a temporary bank account to deposit the initial capital (€40,000 or more)
- Sign a shareholder agreement
- Register the company with the Centre of Registers
- Appoint management bodies such as a Board of Directors and General Manager
- Register for VAT and taxes, if applicable
- Optional: Apply for a listing on a stock exchange
Once established, an AB can begin operating legally and issuing shares if needed.
5. Pros and Cons of an Akcinė Bendrovė
✅ Advantages:
- Limited liability: Shareholders are only responsible up to their investment
- Attracting capital: Easier to raise large funds through share issuance
- Credibility: Viewed as more stable and trustworthy by investors and clients
- Possibility to go public: Listing on a stock exchange boosts visibility and capital access
❌ Disadvantages:
- Complex governance: Requires formal corporate structures and reporting
- Higher costs: Legal, accounting, and administrative expenses are greater than for a UAB
- Public disclosures: Must comply with transparency and financial reporting standards
6. Listing on the Stock Exchange
One of the biggest advantages of an AB is the ability to list on the Nasdaq Vilnius or other stock exchanges. This gives the company access to capital markets and increases its prestige.
Benefits of Going Public:
- Raise large-scale investment
- Increase company valuation
- Boost brand recognition
- Attract institutional investors
However, this requires full regulatory compliance and is best suited for mature companies.
7. Legal Liability and Responsibilities
Though shareholders enjoy limited liability, company directors and board members can be held personally responsible if:
- They act in bad faith or against the company’s interests
- Fail to submit financial reports
- Violate laws or misuse funds
Good governance and ethical practices are essential to mitigate legal risks.
8. Conclusion
A Joint Stock Company (Akcinė Bendrovė) is an ideal structure for medium to large businesses aiming to grow, raise capital, or expand internationally. While the setup and maintenance are more complex than other forms, the benefits—especially long-term—can outweigh the costs.
If you’re planning a scalable venture with outside investors, an AB might be the perfect fit.
9. FAQ – Frequently Asked Questions
Q: How much capital do I need to start an Akcinė Bendrovė?
A: You need a minimum of €40,000 in share capital.
Q: Can I own all the shares as one person?
A: Yes, a single shareholder can own 100% of the company.
Q: Can an Akcinė Bendrovė be listed on a stock exchange?
A: Yes, ABs can be listed and trade shares publicly.
Q: What’s the main difference between UAB and AB?
A: UABs are limited in raising public capital; ABs can issue shares publicly and require more formal governance.
Q: Is it suitable for small businesses?
A: Not usually. For startups or small businesses, a UAB is more practical due to lower costs and simpler administration.