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Change of the local currency

12 Nov 2014

On 1 January 2015 Lithuania will be joining the euro zone. Although there are many examples in Europe of transferring from national currency to euro and certain lessons were (or at least should have been) learned on how to make the entire process go more smoothly, without causing much distress in the nation’s and business’s activities, the main burden still lies on companies and certain corporate, commercial and related changes will still need to be made or at least properly considered.

Share capital
Adopted amendments to the Law on Companies and a newly-published Law on Expressing the Share Capital of Public and Private Companies and the Nominal Value of Securities in Euro and Changes to Articles of Association state the following two main changes in Lithuania’s corporate law:
1) From 1 January 2015 a decrease in the minimum share capital required under Lithuanian law shall apply. For private companies (in Lithuanian – UAB) the minimum share capital shall be 2500 EUR (currently approx. 2896 EUR) and for public companies (in Lithuanian – AB) – EUR 40000 (currently approx. EUR 43443).
2) Existing private companies and public companies will be obliged to convert their share value by amending the articles of association by 1 January 2017. The approved conversion rate is 3,4528 LTL = 1 EUR. The value of shares shall be expressed in euro and tens of cents.
The general meeting of shareholders of the company will need to adopt a decision on changing the articles of association (simplified procedures shall apply), the new wording of the documents will need to be prepared and registered in the Register of Legal Entities. Relevant amendments to the list of shareholders and shareholders’ securities accounts will also need to be made in this regard, although this shall not affect the rights and obligations of the shareholders. 
The whole procedure may require certain additional funds to be spent, but such costs are not expected to be significant.
Commercial agreements
Euro introduction shall not affect in any way the validity and effectiveness of commercial contracts concluded. The sums expressed in litas shall simply be treated as sums expressed in euros, considering the conversion rate mentioned above. Nonetheless, in order to avoid any misunderstanding with business partners (especially with those from non-EU countries), it is advisable to review and restate the agreements (not necessarily in a separate written agreement form) on the payment terms under the commercial contracts.
Perhaps more significant changes shall apply mostly to the loan agreements. According to the Law on the Euro Adoption in the Republic of Lithuania, all references to VILIBOR (Vilnius Interbank Offered Rate) in legal instruments following the euro adoption date shall be treated as references to EURIBOR (Euro Interbank Offered Rate), except for overnight VILIBOR, which shall be treated as references to EONIA (Euro OverNight Index Average). Also, in case a reference to VILIBOR in legal instruments refers to a period that starts before the euro adoption and ends after the euro adoption date, this interest rate shall be used until the end of the period for which it has been established. Parties to a contract are free to agree otherwise, so it is advisable for businesses to review their current loan agreements and, if necessary, to agree on additional terms and conditions with their partners.

1)   On the day of euro introduction all funds in the Lithuanian bank accounts in litas will be converted to euro in accordance with the fixed conversion rate. Such conversion shall be made free of charge.

2)   No changes to the concluded employment agreements will need to be made, however it should be noted that a specific conversion rule shall apply. Following the euro adoption date the wage rates set in litas in employment agreements shall be converted to the euro to the employee’s benefit by rounding to the nearest euro cent. If the digit following the last digit, up to which rounding is performed, is above 0, one unit shall be added to the last digit or a new amount shall be set, which is not lower than the previous amount in litas converted to the euro. 

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