Lithuania Wants to Become First Country to Enable Companies Registered & Managed Using Blockchain or “Virtual Limited Liability Companies”

Lithuania has announced the creation of “Virtual Limited Liability Companies” (VLLCs). These companies would be registered and managed all using blockchain technology. The Baltic country expects to be the first country to offer this type of service and it expects to allow VLLCs as soon as 2019, explains Invest Lithuania. Companies using the structure are said to benefit from an innovation-friendly regulatory sandbox. Additional advantages include the ability for the company to be remotely managed, and for all share transactions to be fully transparent, as they would be performed entirely on an immutable blockchain. The Lithuanian Centre of Registers has started to draft a proposal on legal amendments needed to make VLLCs a reality next year.

The plan has been endorsed by the Bank of Lithuania, the country’s regulator. The Bank is building a global reputation as a force for innovation, thanks to its positive stance on new ideas in fintech sector.

“Physical borders between countries are becoming a thing of the past. This ambitious project is the next logical step for Lithuania, given our track record in the field of financial technology (fintech),” said Ieva Tarailiene, Acting Director General of Centre of Registers.

Jonas Udris from the Centre adds that regulatory roadblocks persist for expanding businesses abroad;

“We are striving to become the first country to offer companies the possibility to register and manage companies remotely using blockchain technology, thus ensuring transparency and security.”

Marius Jurgilas, a Member of the Board of the Bank of Lithuania, says the potential is huge;

“Bank of Lithuania is already building LBChain – blockchain-based solutions accelerator for fintechs. Initiative to create virtual companies on blockchain is a move towards even more ambitious goal – creating LTChain, i.e. moving relevant public services on blockchain.”

The ability to remotely establish and manage a company in the EU is on the wish-list of many Fintech companies. Analysts from Invest Lithuania believe companies from Singapore, the US, Israel and other non-EU locations would all be interested in such a service.

“As the world is moving towards a paper- and bureaucracy-free future, jurisdictions that adapt to the increasing demand for instant solutions will win in the long run. As of now, the country already offers fintech companies the ability to receive a payments institution (PI) or e-money institution (EMI) license in just three months, which is 2-3 faster than in other EU countries. These draft proposals on the possibility of establishing a virtual company which can be managed remotely is another step in the right direction,” explains Mantas Katinas, Managing Director of Invest Lithuania.

Introducing blockchain-based VLLCs is viewed as “essential” for Lithuania to strengthen its leadership in the Fintech sector.

“Blockchain-based VLLCs represent an entirely new level of transparency, security, and convenience. With them, information about a company’s shareholders and the entire history of share ownership would be easily accessible to anybody at any time. Shareholders could manage their shares online, in real time, with far less paperwork. Shares could even be traded directly on the blockchain, without intermediaries,” says Udris.

VLLCs would be fully-recognised corporate entities under Lithuanian law and would file financial statements and pay taxes in Lithuania.

If the necessary amendments to the legal framework are made, entities from around the world would be able to register virtual companies in Lithuania as early as 2019.

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