Establishment and Registration of Charity and Sponsorship Funds in Lithuania
A fund is a public legal person of limited civil liability having its own name and the objective of providing charity and/or sponsorship and other support, in accordance with the procedure laid down in the Law on Charity and Sponsorship of the Republic of Lithuania (hereinafter referred to as the “Law on Charity and Sponsorship”) and this Law, to legal and natural persons in the fields of science, culture, education, arts, religion, sports, health care, social care and assistance, environmental protection as well as in other fields recognized as selfless and beneficial to society. The founders of a fund may be legal and natural persons who have concluded a memorandum of association and who have undertaken, prior to the fund’s registration in the Legal Entities’ Register, an obligation to make monetary or property contributions and provide services to the fund. Where the fund is established by a single person, he shall execute a founding act, instead of a memorandum of association, subject to the requirements applied to the memorandum of association. Persons who cannot be the providers of sponsorship under the Law on Charity and Sponsorship may not be the founders of a fund.
The following shall be indicated in the fund’s memorandum of association (founding act):
- the founders (full names, personal identification codes and addresses of natural persons, business names and identification codes of legal persons as well as their registered offices, full names or business names and personal identification codes (identification codes) of their representatives);
- the name of the fund;
- property and non-property obligations of the founders;
- the fund’s objectives;
- the date of the memorandum of association (founding act).
The memorandum of association (founding act) may also specify:
- the procedure of compensation of founding costs;
- the procedure of settlement of disputes between the founders;
- persons who have the right to represent the fund, their rights and powers;
- the procedure for convening a founding meeting and the procedure of adopting decisions by the founding meeting;
The fund shall hold general meetings of stakeholders and shall set up a managing body (single-person and/or collegiate). The managing body shall act on behalf of the fund in respect of relations with other persons and it shall also conclude transactions on behalf of the fund.
The fund shall have the right to pursue economic and commercial activities which are not prohibited by the law and which do not contravene its articles of association or the purposes of its activity and which are necessary to attain the fund’s objectives.
The fund shall be prohibited:
To transfer, free of charge, the fund’s assets into the ownership of stakeholders, members of managing and collegiate bodies, persons employed by the fund on the basis of an employment contract or persons related to the said persons, or third persons, or to transfer such assets to the above mentioned persons under trust or loan for use contracts, except for the purposes of charity and sponsorship specified in the articles of association pursuant to the Law on Charity and Sponsorship). To pay benefits to the founders or stakeholders of the fund in the form of profit participation or to transfer to them a share of the assets of the fund under liquidation where such a share exceeds the stakeholder’s contribution. To distribute in any manner, except as charity and sponsorship pursuant to the Law on Charity and Sponsorship, the fund’s assets and funds, including profits, among the founders of the fund and/or members of its managing bodies, persons employed by the fund on the basis of an employment contract, excluding the payment of wages and salaries, other payments relating to an employment relationship, payments made under copyright contracts and remuneration for services rendered or goods sold. To grant loans, mortgage the fund’s assets (except for cases where such assets are mortgaged by way of security for the obligations of the fund), guarantee, warrant or secure in any other manner the fulfilment of obligations of other persons. This provision shall not apply where loans are borrowed from credit institutions and where the international treaties of the Republic of Lithuania, the laws of the Republic of Lithuania or the legal acts based on the said treaties and laws provide otherwise. To borrow money on interest from the founders or stakeholders of the fund or persons related to them. This provision shall not apply where loans are borrowed from credit institutions. To take on unreasonably high-interest loans from other persons. To purchase goods and services for a manifestly high price, except for cases where charity is provided in this manner to a person who is a charity recipient pursuant to the Law on Charity and Sponsorship, etc. The fund shall be deemed to be established as of the date of its registration in the Legal Entities’ Register.