Amendments to the Law on Companies will allow to select the most optimal structure of company management and establish the binding nature of a collegial body
According to amendments to the Law on Companies, at least one collegial body – either Supervisory Board or Board – will have to be established in all the registered public stock companies from 1 July 2015 (this requirement will not apply to private stock companies).
Amendments to the Law on Companies, which came in force on 17 June 2014, provide the possibility to expand functions of the Board. From now on the Board will be allowed to perform not only the management functions, but supervisory functions as well. In such a case a legal person shall have one collegial body, which performs both of the above-mentioned functions.
According to amendments to the Law on Companies (Law on Amendments to the Law on Companies No. XII-912 of 16 June 2014), it is foreseen that from now on more than half of the members of newly established Supervisory Boards shall have no employment relationships with the company. If the functions of the Supervisory Board are transferred to the Board, more than half of the members of the Board shall have no employment relationships with the company, furthermore, the head of the company shall not be a member of the Board, same as he is not entitled to be a member of the Supervisory Board. These requirements will apply only to newly-established Supervisory Boards or Boards with supervisory functions. Supervisory Boards or Boards, which have been elected before the law entered into force, are allowed to perform their functions until the end of their legislative term or until the election of a new Board or Supervisory Board.
Amendments to the Law on the Legal Status of Aliens reduce the bureaucratic burden, as well as create opportunities of faster and easier employment for foreigners
The adopted amendments to the Law on the Legal Status of Aliens will reduce the bureaucratic burden for the employer who intends to employ a foreigner and will speed up the work of authorities issuing permits. Employers will be able to employ a highly qualified specialist from a non-EU country in just 2 weeks. It should be noted that this procedure took about 4 months before the adoption of amendments. The amendments will come into force on 1 November 2014.
Once the amendments to the Law on the Legal Status of Aliens (Law on Amendments to the Law on the Legal Status of Aliens No. XII-965 of 10 July 2014) come into force, the employer will no longer be required to apply to labour exchange for approval that there is a lack of particular suitably qualified specialists in Lithuania. The amendments establish that in order to employ a specialist from a third country, the employer will have to pay the employed specialist a salary not less than three times the national average gross salary – currently it amounts slightly more than 7‘000,00 Lt per month.
The amendments would also facilitate the possibilities to obtain residence permits for family members of certain categories of foreigners who intend to work in Lithuania. The amendments include exceptions for the family members of foreign employees, which were seconded to Lithuania to companies that have established their branches or representative offices in the territory of the Republic of Lithuania or belong to the same company group. This exception also applies for the family members of investors from third countries who invested more than 900‘000,00 Lt in business in Lithuania and have more than 5 employees employed in their companies. When these amendments come into force, the above-mentioned family members of foreigners will be able to receive residence permits to live in Lithuania at the time that the permit is given to the foreigner. It will no longer be required that the foreigner lives in the Republic of Lithuania for 2 years, has a temporary residence permit which is valid for at least a year and has reasonable prospects to obtain permanent residence permit to live in the Republic of Lithuania.
Additionally, the amendments provide more stringent requirements for foreigners, who are involved in activities of legal persons established in the Republic of Lithuania (as a shareholder, director and etc.) and on such basis obtain permits to live in Lithuania. A temporary residence permit shall be issued to a foreigner who is a shareholder of a company, which operates according to its founding documents in the Republic of Lithuania no less than past 6 months prior to applying for temporary residence permit. In addition, the foreigner shall also be the head of this company, a member of a collegial management body, a shareholder holding the right to make transactions on behalf of the company, a member of the supervisory body or a shareholder in a public limited liability or private limited liability company, who owns the company's shares with a nominal value of no less than 1/3 of the company's authorized capital. Some requirements are determined for the company as well: it has to establish not less than 3 workplaces, which are occupied by citizens of the Republic of Lithuania or permanent residents of the Republic of Lithuania, the company's authorized capital (asset) value has to amount not less than 100 000 Litas, not less than 50 000 Litas of which shall be foreigner’s invested money or other property. Foreigner head of the company, a member of the collegial management or supervisory body, who is not a shareholder of the company, but has arrived with a purpose to work in that company, is able to obtain a temporary residence permit or have it replaced also only in cases, when the company meets the above-mentioned requirements.
It is suggested to adopt the amendments to the Law on Tax Administration, which allow to recover 10% of the disputed amount under extrajudicial procedure
The draft Law on Tax Administration is aimed at establishing a provision, which, in case of a dispute between the taxpayer and tax administrator, will allow to recover part of the debt (10% of the disputed amount) under extrajudicial procedure (even in case of a dispute, the taxpayer shall pay 10% of the disputed amount until court decision). The Amendments to this Law are proposed with regard to the fact that taxpayers often initiate tax disputes in order to defer tax payments. It is believed that these amendments will help to prevent such abuses. The draft law also proposes to expand the scope of information provided to the State Tax Inspectorate. In addition to the information concerning opened and closed accounts in credit institutions, which is being provided since 2004, the credit institutions should once per year provide information on account turnover, balances, paid interests and debt obligations, in line with the procedure established by the Government.
According to current provisions of the Law on Tax Administration, in case of a dispute between the State Tax Inspectorate and the taxpayer, the taxpayer's claim filed to court suspends the recovery of the disputed amount of debt. According to the draft on amendments to the Law on Tax Administration (Draft Law on Amendments to the Law on Tax Administration No. XIIP-1742 of 12 June 2014), in case of a dispute between the above-mentioned persons, the claim filed to court suspends the recovery of 90% of the disputed amount, and the remaining 10% would be recovered upon extrajudicial procedure. If, however, the recovery of 10% was proved to be unfounded, the state would have to return that amount and pay an interest rate determined by the Minister of Finance, which is currently 0,03% per day.
Functions of the Centre of Registers are expanded by amendments of the Civil Code enabling the liquidation of a legal entity without a court order
Civil Code amendments adopted by the Seimas of the Republic of Lithuania (Law on Amendments to the Civil Code of the Republic of Lithuania No. XII-1064 of 23 July 2014), which will come into force on 1 January 2015, shall enable the Centre of Registers to take strict measures, consequently the Centre of Registers will be able to liquidate a company without a court order. The Centre of Registers shall have the right to make a decision to liquidate a company, if the company delays submitting its financial statements to the Centre of Registers for a year, if the company does not update its information for five years, provided that there are indications that the company is not operating, also, in cases when the company does not form managing bodies for six months, or the members of the managing body cannot be reached at the given addresses for six months. Companies will be given the opportunity to deny these factors.
Promotion of creation of new workplaces is sought by making amendments to the Labour Code
The draft amendments to the Labour Code suggest to reduce time limit for giving notice on termination of employment contract, allow conclusion of fixed-term employment contracts for works of a permanent nature, as well as increase the limit of overtime work. It is believed that these amendments will promote creation of new workplaces.
The draft amendments (Draft Law on the Amendment to the Labour Code No XIIP-2028 of 17 July 2014) provide that term for notification on termination of the employment contract shall be unified to all employees. It is suggested to establish terms of one or two months for notification, which shall differ according to the employee‘s lenght of service. Employees which work at the enterprise for not more than three years – before one month, and for employees which work at the enterprise for more than three years – before two months.
It is also suggested to limit the severance pay to the maximum of three monthly average wages. In case of redundancy, employees working in the enterprise for not more than three years shall receive payment of one monthly average wage, employees working for more than three but less than ten years – payment of two monthly average wages, and employees working in the enterprise for more than ten years – payment of three monthly average wages.
Additional amendments propose establishment of overtime work limit of 180 hours per year and it is suggested to abandon limitation of overtime work of 4 hours per two days in a row.
It should be noted that employer which seeks to exercise the rights established in the above mentioned provisions, shall submit notification to the State Labour Inspectorate of the Republic of Lithuania evidencing that he is in compliance with the following criteria: less than 10 percent of all employees of the enterprise receive minimum wage, there were no cases of illegal work for the last five years and the enterprise has signed collective agreement or a trade union or works council is in place. Additionally, the provisions will be applicable only in respect of those employees working at the enterprise whose monthly wage indicated in their employment contract is not less than 1,5 of the latest state average monthly bruto wage announced by the Lithuanian Department of Statistics.