Best Venture Capital Lawyers in Marijampolė

About Venture Capital Law in Marijampolė, Republic of Lithuania

Venture capital in Marijampolė operates within the national legal framework of the Republic of Lithuania and the broader European Union regulatory environment. Although Marijampolė is a regional city, founders and investors here use the same tools and structures seen in Vilnius, Kaunas, and other EU hubs. Most early stage companies are incorporated as private limited liability companies known as UAB, and funding rounds are documented with internationally familiar instruments such as equity subscriptions, convertible notes, and option plans. Funds themselves are typically structured as alternative investment funds managed by licensed or registered managers, and supervised by the Bank of Lithuania.

Local economic development initiatives, including the Marijampolė Free Economic Zone, business support programs, and proximity to the Kaunas innovation ecosystem, provide a practical base for startups. However, governance, investor protection, licensing, and tax questions are all governed by national law. This makes experienced legal counsel valuable for aligning global venture capital practices with Lithuanian rules.

Why You May Need a Lawyer

Term sheets and shareholder agreements need to reflect Lithuanian corporate law to ensure they are enforceable. Provisions like liquidation preferences, anti dilution adjustments, drag along and tag along rights, information rights, and reserved matters often require careful alignment between a shareholder agreement and a company’s articles of association.

Fund formation and fundraising may trigger licensing or registration requirements for managers of alternative investment funds. Determining whether you are a de minimis manager, a fully licensed AIFM, or relying on an exemption is a regulatory analysis best handled by counsel experienced with the Bank of Lithuania.

Employee incentives are common in venture backed companies, but option plans must fit Lithuanian employment and tax rules to qualify for available tax reliefs and to avoid pitfalls in grant documentation, vesting, and exercise mechanics.

Convertible instruments are widely used, yet their terms must be adapted to Lithuanian contract law, corporate approvals, and share issuance procedures. SAFEs can be implemented, but are typically drafted as convertible loan or convertible bond arrangements to suit local law.

Cross border investment raises questions about anti money laundering checks, sanctions screening, data protection, and sometimes merger control or foreign direct investment review. While Lithuania is open to foreign investors, compliance frameworks must be respected.

Exits through share sales or asset deals require planning for tax, consents, and competition law. Secondary transactions and investor transfers also involve formalities in the Register of Legal Entities and in share accounting.

Local Laws Overview

Corporate forms and governance are governed by the Civil Code and the Law on Companies. The UAB is the most common vehicle for startups. Its share transfer rules, pre emptive rights, and shareholder meeting procedures strongly influence how deal terms are drafted. Some investor protections must be mirrored in the articles of association to be fully effective against the company and third parties.

Fund structures and management fall under the Law on Managers of Alternative Investment Funds and the laws on collective investment undertakings intended for professional investors. These laws implement EU AIFMD in Lithuania. The Bank of Lithuania supervises AIFMs, sets fitness and propriety standards, reviews policies on risk and valuation, and oversees marketing to professional investors. Small managers under AIFMD thresholds can often register as de minimis AIFMs, subject to lighter requirements, while larger managers need full authorization.

Securities and marketing are regulated under the Law on Markets in Financial Instruments and related EU rules. Marketing of alternative funds to retail investors is restricted. Disclosures for professional investors are required. Cross border passporting is available for authorized EU AIFMs following the notification procedures.

Employment and option plans are governed by the Labour Code, the Law on Companies, and tax laws. Lithuania offers tax relief for qualifying employee stock options if statutory conditions are met, including a minimum holding period before exercise. Proper plan documentation and board or shareholder approvals are essential.

Competition and merger control are enforced by the Competition Council of the Republic of Lithuania. Significant acquisitions may require notification based on turnover thresholds. Venture deals can trigger filing requirements when portfolio companies grow or when larger strategic investors participate.

Data protection follows the EU General Data Protection Regulation and is enforced by the State Data Protection Inspectorate. Venture funds and tech companies handle personal data in investor onboarding, product development, and HR processes, so privacy by design and lawful basis assessments are routine.

Taxation includes corporate income tax, personal income tax, value added tax, and withholding tax regimes. Withholding tax commonly applies to dividends and interest paid to foreign investors, with relief available under double tax treaties and EU directives. Partnerships used for fund structures can be tax transparent, while companies are generally subject to corporate income tax. Carry, management fees, and incentive structures require bespoke tax analysis.

Anti money laundering and counter terrorist financing requirements apply to financial institutions and other obliged entities. Fund managers and some advisers must conduct customer due diligence, beneficial ownership checks, and ongoing monitoring consistent with Lithuanian AML law and EU standards.

Registration and formalities are handled by the Register of Legal Entities maintained by the State Enterprise Centre of Registers. Many filings can be completed electronically using a qualified electronic signature, but certain share or corporate changes still require notarial involvement or specific corporate approvals.

Frequently Asked Questions

What company type do startups in Marijampolė usually choose

Most startups incorporate as a private limited liability company known as UAB. It offers limited liability, flexible share capital, and familiar governance for investors. Some small teams begin as a small partnership known as MB, but venture investors generally prefer UAB for financing rounds and option plans.

Are SAFEs used in Lithuania

Yes, but they are typically adapted to Lithuanian law as convertible loan agreements or convertible bonds with clear conversion mechanics, interest provisions, and corporate approvals. A lawyer can align US style SAFE terms with Lithuanian corporate and contract law so they are enforceable and practical to implement.

Do I need a license to set up a venture capital fund

Managers of funds that qualify as alternative investment funds fall within the AIFM regime. Smaller managers under AIFMD thresholds can often register as de minimis AIFMs with the Bank of Lithuania. Larger managers need full authorization. The analysis depends on assets under management, leverage, investor type, and fund strategy.

Can foreign investors participate easily in Lithuanian startups

Yes. Lithuania is open to foreign investment and applies EU rules on capital movement. Foreign investors typically subscribe for shares in a UAB or invest through a convertible instrument. KYC and AML checks are standard, and some sectors may have specific licensing or screening rules.

How do employee stock options work

Option plans are approved by the company and grant employees a right to acquire shares after vesting. Lithuanian law provides a tax relief for qualifying options if a statutory holding period is observed and other conditions are met. Proper plan rules, individual grant agreements, and updates to the articles of association help ensure enforceability and tax compliance.

What is market standard for liquidation preference

Seed and Series A deals commonly use a non participating 1x liquidation preference, with participation and higher multiples appearing in later or riskier rounds. The exact provision is negotiated and must be harmonized with Lithuanian corporate documents to be effective at exit.

When is merger control filing required

Mergers, acquisitions, or joint ventures may require notification to the Competition Council if turnover thresholds are met. Whether a particular venture deal triggers filing depends on the parties revenues in Lithuania and other factors. Counsel will test current thresholds and timing to avoid closing delays.

How long does it take to incorporate a company and issue shares

Incorporation of a UAB can often be completed within a few business days if documents and share capital are ready, especially when using qualified electronic signatures. Issuing new shares for a funding round requires board and shareholder approvals and filings with the Register of Legal Entities, which can be prepared in parallel with transaction negotiations.

Are convertible notes subject to withholding tax

Interest paid to foreign investors can be subject to Lithuanian withholding tax, with possible reductions under double tax treaties or EU directives. Equity like conversion mechanics also raise corporate law considerations. Tax and legal advice is recommended before choosing a convertible instrument.

How are exits typically structured and taxed

Exits are usually share sales to strategic buyers or financial sponsors, sometimes with management rollover. Tax outcomes depend on the seller profile, holding period, double tax treaties, and whether any participation exemptions apply. Early tax planning can materially improve net proceeds and repatriation.

Additional Resources

Bank of Lithuania Supervision Service. The financial markets regulator responsible for authorizing and overseeing managers of alternative investment funds and supervising marketing to investors.

State Enterprise Centre of Registers. Administrator of the Register of Legal Entities where companies are incorporated, share capital changes are registered, and beneficial ownership information is maintained.

Competition Council of the Republic of Lithuania. Authority responsible for merger control, antitrust, and competition compliance that may affect larger venture backed transactions.

State Tax Inspectorate under the Ministry of Finance. Tax authority providing guidance on corporate income tax, personal income tax, VAT, and withholding taxes relevant to investments and exits.

State Data Protection Inspectorate. Data protection authority for GDPR compliance, useful for funds and startups handling personal data across borders.

INVEGA and CoInvest Capital. State backed institutions supporting access to finance, including co investment initiatives that may participate alongside private venture capital in Lithuania.

Innovation Agency Lithuania and the Agency for Science, Innovation and Technology. Public bodies offering innovation programs, grants, and advisory services for startups and scale ups.

Lithuanian Private Equity and Venture Capital Association. Industry association offering market insights, best practices, and networking for investors and founders.

Marijampolė Municipality Administration and Marijampolė Free Economic Zone. Local bodies supporting business development, infrastructure, and investment projects in the region.

Notaries and sworn translators in Marijampolė. Service providers often needed for corporate actions, apostilles, and cross border document formalities.

Next Steps

Clarify your objective and timeline, whether you are forming a fund, raising a round, or making an investment. Identify key constraints such as regulatory approvals, investor eligibility, or tax considerations. Early scoping helps counsel design the right structure.

Engage a Lithuanian venture capital lawyer who regularly works with the Bank of Lithuania and with startup equity rounds. Ask for a roadmap covering structure, documents, regulatory touchpoints, and closing mechanics. If needed, include a tax adviser at the outset.

Prepare a clean data room. For startups, include articles of association, cap table, prior financing documents, IP assignments, employment agreements, option plan materials, and key contracts. For funds, prepare policy drafts, offering documents, track record summaries, and KYC templates.

Choose the appropriate vehicle. For startups this is usually a UAB with articles tailored to investor protections. For funds consider a limited partnership style vehicle or other alternative investment fund form in line with AIFM requirements and target investors.

Address regulatory filings and compliance. Map out any AIFM authorization or registration, marketing notifications, merger control thresholds, and AML procedures. Build GDPR compliance into onboarding and operations from the start.

Negotiate and document the deal. Align the term sheet with Lithuanian law, then prepare definitive documents such as the investment agreement, shareholders agreement, articles amendments, convertible note or bond terms, and option plan documents.

Close and implement. Complete corporate approvals, update the Register of Legal Entities, arrange notarial actions if required, and issue or register the new securities. After closing, calendar ongoing obligations such as information rights, board meetings, and regulatory reporting.

If you are uncertain where to begin, schedule an initial consultation with a venture capital lawyer in Lithuania describing your goals, the parties involved, and your preferred timeline. A short scoping call can surface the key legal and regulatory items and set a clear path forward.