2007-10-23

PRIVATE ETERPRICE COMPANY is a private juridical person with unlimited civil liability. This type of juridical person is characterized by a less complicated order of founding compared to founding other juridical persons and also by the fact that there is a minimal capital stock is not established for founding an individual enterprise.

However, on the other hand, if property of an individual enterprise is not sufficient to fulfill obligations, then the owner is liable for such enterprise’s obligations with his property.

One natural person founds an individual enterprise (as per requirement – a capable natural person), who is considered an owner of the individual enterprise from enterprise’s registration. Property of the individual enterprise is property, which has belonged to the owner of the individual company in accordance with the right of personal property and has been transferred to the ownership of the individual enterprise, also property acquired on behalf of the individual enterprise.

Individual enterprise rules is a constituent document, by which an individual enterprise is being guided.

A decision to found an individual enterprise is usually made, when one person wants to manage business, no specific knowledge is required for business management, no big capital stock is needed, and business risk is low. Undoubtedly, low tax burden conditions this choice, even having evaluated that an owner has to pay social insurance taxes for receiving a basic pension. A manager does not have to be hired for an individual enterprise; profit up to 25 000,00 Lt is taxable by income tax tariff of 0 percent.

Besides the Civil Code, the Law on Individual Enterprise regulates in greater detail a foundation of an individual enterprise.

First of all, a founder of an enterprise draws up regulations of an individual enterprise, which being founded; those regulations have to meet requirements provided for by the Civil Code, the Law on Individual Enterprise, and other law acts. A business consultant usually carries out this service. An individual enterprise owner signs three copies of the regulations. Authenticity of his signature is not notarized. In case in the regulations, it is not formulated that an owner is also a manager of the individual enterprise, then an individual enterprise manager is appointed. The founder of an individual enterprise (besides, as well as founders of other companies’ legal forms) also has to take care of owner’s consent to provide quarters for an office of the enterprise. A consent given by the owner – a juridical person – has to be confirmed by manager’s signature and a seal of the juridical person, whereas a consent given by the owner – a natural person – has to be notarized. In case consent is provided for by the lease agreement, loan agreement, or other agreement, then a notary is provided with the agreement. A note on rendering quarters is not required for an owner of the quarters, who is founding an individual enterprise himself; however it is necessary to provide a notary with documents, which verify his right of property to those quarters.

We in case the quarters are managed under the right of joint property (for example, which was acquired as common joint property during marriage), all co-owners have to give their consent. In case the quarters are mortgaged, usually creditor’s consent is required concerning not objecting registering an enterprise in such quarters. Prior to registering an individual enterprise, just like registering any other juridical person of other legal form, first, constituent documents (also, other documents, which a notary may require, for a example, a written confirmation of not being an owner of another individual enterprise) are provided to a notary. A notary must confirm authenticity of indicated data in an enterprise registration request of an established form, correspondence of regulations to requirements of the laws, and the fact that an individual enterprise can be registered. Also, we draw your attention to the fact that a notary confirms enterprise manager’s signature. Having obtained required notarizations, an enterprise is registered in the Register of Juridical Persons, by providing in person or via post notarized regulations and a request of the established form.

Enterprises are registered in the Register of Juridical Persons within 5 working days. However, having registered a new enterprise, all necessary formalities are not over yet. Law acts of the Republic of Lithuania obligate to register an enterprise in respective institutions or obligate managers of the enterprise to take care of appropriate permits, to take care of producing an enterprise’s seal. Since, frequently, those registrations have to be executed during the period established by the laws, it is imperative to perform those actions as quickly as possible so that the enterprise could carry out its activity without hindrances.