Welcome to the DAO Legal Guide focusing on the Lithuanian UAB, an integral segment of the Pontinova Global Top 100 DAO Legal Report.
Delve into this comprehensive guide to gain insights into the legal set up requirements and the regulatory compliance framework surrounding Lithuanian UABs. Explore the other jurisdictions to understand why they excel at fostering DAO initiatives and navigating the intricacies of decentralized governance structures.
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Lithuanian Private LLCs (UABs) are incorporated under the Law on Companies.
Constitution
Memorandum of Incorporation, Articles of Association, Deed of Incorporation, if the company is incorporated by one individual or company only, one or up to 249 Members who can be either natural or legal persons and do not need to be residents of Lithuania.
Regulatory Board
Bank of Lithuania
Administration, Management
Registered Office, Bank Account, Single-Person Management Body which consists of one individual. If the manager is a citizen of an EU/EFTA member state, he is entitled to be and work in Lithuania for a period up to 3 months. However, if he intends to reside and work for a longer period, he is obliged to receive a Certificate Confirming the Right of Temporary Residence in Lithuania. The procedure for receipt of the certificate is rather short and simple. Nationals of third countries willing to reside and work in Lithuania shall receive a work permit and a residence permit. The work permit is not required, e.g., for the founder and the manager. However, in such cases the receipt of the residence permit is obligatory, and the procedure takes from 2 to 4 months. A Collegial Supervisory Body is optional.
Reporting, Accounting, Auditing
Reporting and Accounting are mandatory. Auditing is mandatory, if two out of the following three conditions apply: (1) net turnover above EUR 3.5 mil-lion, (2) total value of assets above EUR 1.8 million, (3) number of payroll employees of 50 in a financial year.
Please note that a minimum capital of EUR 2’500 is required to set up a Lithuanian UAB. Moreover, the UAB is required to pay a registration fee of EUR 30.00. The calculation of the incorporation fees should include legal consulting fees and fees for the notary public. The incorporation duration is about 1 week.
Taxation
Corporate Tax – 0% to 15%; Dividend Tax – 15%; Value Added Tax – 21%, if the company is a VAT payer: (1) virtual currencies and exchange services are not subject to VAT, (2) services invoiced in virtual currencies are subject to VAT.
The regulation of crypto assets in the European Union follows a dualistic approach. Utility tokens and payment tokens are subject to the Markets in Crypo-Assets Regulation (MiCAR), which was published on June 9, 2023, and will apply to crypto-asset issuers on June 30, 2024, and to CASPs on December 30, 2024, while asset tokens are subject to capital markets regulation, in particular the Markets in Financial Instruments Directive (MiFID2). Until then, national regulations, particularly the Lithuanian Anti-Money Laundering and Counter-Terrorist Financing Law, apply.
Markets in Crypto-Assets Regulation [U, P / VA I]
Applicable to the issuance of utility and payment tokens. The issuer is re-quired to have an establishment in a Member State of the European Union and to draw up a crypto-asset white paper. However, if the public offering is made to fewer than 150 persons per Member State or addressed solely to qualified investors and does not exceed EUR 1’000’000 over a period of 12 months, the issuer shall be exempt from the obligation to draw up a crypto-asset white paper. The public offering of utility tokens issued for a good or service that already exists is also exempt from this obligation.
Markets in Financial Instruments Directive and Prospectus Regulation [A/VAI]
Applicable to the issuance of asset tokens. The issuer is required to draw up a prospectus. However, if the public offering is made to fewer than 150 persons per Member State or addressed solely to qualified investors and does not exceed EUR 1’000’000 over a period of 12 months, the issuer shall be exempt from the obligation to draw up a prospectus.
Markets in Crypto-Assets Regulation [U, P / VA S]
Applicable to service providers offering (a) crypto-asset trading platforms, (b) crypto-asset exchange services, (c) crypto-asset custody, or (d) crypto-asset financial services. Entities that intend to provide crypto-asset services need to have an establishment in a Member State of the European Union and to apply for authorization as a CASP with the competent authority of the Member State where they have their registered office, in case of Lithuania this is the Bank of Lithuania. This authority will assess whether an authorization application is complete within 25 days and is accepted within 90 days of receipt. As a result, a license is granted to the CASP. CASPs must also meet minimum capital requirements: (a) EUR 150’000 for crypto-asset trading platforms, (b) EUR 125’000 for crypto-asset exchange services, (c) EUR 125’000 for crypto-asset custodians, and (d) EUR 50’000 for other crypto-asset financial services. In addition, CASPs must fulfill governance, transparency, sustainability, anti-market abuse and eventually outsourcing requirements. CASPs licensed under MiCA will be able to provide services across the EU (“Passporting”).
Markets in Financial Instruments Directive [A / VA S]
Applicable to service providers acting as (a) investment firms, or (b) trading venues, such as regulated markets, multilateral trading facilities, and organized trading facilities. Entities that intend to provide these services need to apply for authorization with the competent authority of the Member State where they have their registered office. In addition, they must comply with minimum capital requirements, governance, and organizational requirements, conduct of business requirements and transparency and Reporting requirements.
Anti Money Laundering Directive 5 and Lithuanian Anti-Money Laundering and Counter-Terrorist Financing Law [P / VA S]
Applicable to virtual currency exchange operators and virtual currency depository wallet operators. Legal entities incorporated in Lithuania and providing these services must have a registered share capital of EUR 125’000. At least 25% must be paid in at the time of registration.
Check the other DAO Jurisdictions:
• Switzerland - Foundation
• Switzerland - Association
• Liechtenstein - Foundation
• Marshall Islands - DAO (Non-Profit) Limited Liability Company
• Cayman Islands - Foundation
• British Virgin Islands - Limited Liability Company
• Abu Dhabi ADGM - Distributed Ledger Technology Foundation
