Corporate secretarial repercussions of Lithuania's entrance to the Eurozone

• United Kingdom
• Lithuania

• Corporate secretarial services

08-01-2015

On the 1 January 2015, Lithuania became the nineteenth member of the Eurozone, adopting the euro (€) over its previous currency – the Lithuanian lita (LTL). The conversion rate has been fixed at LTL 3,4528 to EUR 1, which was used to convert all monetary amounts in Lithuanian accounts from LTL to EUR on the day the euro was introduced.

Although the change is expected to cause minimal disruption, companies operating in Lithuania will have to consider their share capital, which will need to be converted to euros, and also mentioned in the updated articles of association of the company by 1 January 2017. Furthermore, a change in Lithuanian law has lowered the minimum necessary share capital for public companies to EUR 40,000 and EUR 2,500 for private companies (previously EUR 43,443 and EUR 2,896 respectively).

Regarding employee salaries under the new currency, where this was previously expressed in LTL, a specific conversion mechanism will apply, whereby the figure produced using the conversion rate of LTL 3,4528 to EUR 1 will be rounded up to the nearest euro cent, to the benefit of the employee. In simple terms, the new figure cannot be less than the previous amount under the lita – even if standard practice would suggest rounding down.

Finally, existing loan agreements within legal instruments made before the introduction of the euro and due to conclude after 1 January 2015 will still be subject to the Vilnius Interbank Offered Rate (VILIBOR), yet any agreements made after this date will reference the Euro Interbank Offered Rate (EURIBOR). However, those involved in such contracts are permitted to define their terms differently, if a certain rate is preferred.

Further details on the affects of the introduction of the euro and your Lituanian entity are available from Kate Barker: katebarker@eversheds.com, or alternatively visit our LinkedIn site for regular international updates.