Definition of Legal Capacity
Civil legal capacity is one of the fundamental characteristics of a legal entity.
The legal capacity of a legal entity is the ability to possess rights and obligations established or not prohibited by civil law. The active legal capacity of a legal entity is the ability to independently acquire rights and obligations and exercise them through its own actions. In the Republic of Lithuania, the legal capacity of a legal entity arises simultaneously with its active legal capacity; therefore, the term “active legal capacity” is rarely used for legal entities and is sometimes replaced with the term “subjectivity,” which encompasses both legal and active legal capacity. The legal capacity of a legal entity begins upon its registration, or, in cases where registration is not required under the Civil Code, from the moment of its establishment.
Limitations and Types of Legal Capacity of Legal Entities
The legal capacity of legal entities in Lithuania can only be limited on the grounds and in the manner prescribed by law. The legal capacity of a specific legal entity may be restricted only by a court decision.
Private legal entities may have and acquire any civil rights and obligations, except those that require specific personal attributes, such as gender, age, or kinship. Private legal entities are established to satisfy private interests. They may engage in any commercial or economic activity, even if it is not specified in their statutes, except for activities prohibited by law. For example, a private limited liability company in Lithuania may engage in any legally permitted commercial activity and may even guarantee a shareholder’s obligation to a bank through a suretyship agreement, even if this is not explicitly provided for in the company’s statutes, provided it does not harm the company’s profit-seeking purpose. Thus, private legal entities have general (universal) legal capacity, although Lithuanian law does not prohibit them from including restrictions in their founding documents that prohibit engaging in specific activities, such as highly risky business.
Public legal entities have special legal capacity. They may only acquire civil rights and obligations that are not contrary to their founding documents and their intended objectives. Public legal entities are those established by the state, municipalities, their institutions, or other non-profit-seeking persons, and their purpose is to satisfy public interests (e.g., state and municipal enterprises, public institutions, religious communities, etc.). The founding documents of public legal entities must clearly and comprehensively define their objectives, specifying the field and type of activity.