In Lithuania, all activities conducted by financial institutions are regulated by the Bank of Lithuania. In addition, all registered companies and financial institutions must have a license or authorization to offer their services to the public. These licenses are under the law of the Lithuanian Republic.

Additionally, they are issued in accordance with the procedures set by the law of the land regulating their provisions and in pursuit of financial activities. They are obligatory to all electronic money institutions, credit institutions, and any payment institutions.

The specific services offered, directions of the intended activities, territory, and size of the investment planned will determine the type of license issued. 

For example, a bank receiving a payment institution license is not enough because it will require withholding their customer’s funds among other services, which means that a bank license should be issued.

Legal fee is around EUR 25000, it further requires to have local employees with board members, etc. The actual cost will exceed EUR 50k, not considering the share capital.

The fee for restricted activities will be an additional EUR 1,235.

The cost of the payment institution license for the unrestricted activities is EUR 898. And the license for restricted activities is EUR 682.

The license for payment institutions that provide only account information is EUR 693.

Lithuania is a hub at the moment, mostly due to its swift procedure. In many states – governments and central banks delay, extend and mostly are unpredictable in their decision-making, while in Lithuania, there is transparency and no delays. 

Predictability is high and thus, there is great certainty in demand and investment. 

You can even see many UK financial institutions and Maltese as well, more often than not, are directly receiving EUR IBAN from the Bank of Lithuania than their local central banks - the predictability and fair play ground is what attracts them.

Companies that Require Financial Licenses

One of the biggest advantages of being in the financial sector in Lithuania is the fact that there are options in terms of the number of services you can offer. The following types of fin institutions can be set up in Lithuania;

-Banks – you can set up private banks, which are created for both foreign and local investors in Lithuania. For this one, the market is quite promising.

-Consumer Credit Providers and Credit institutions – These are among the most preferred choices for financial investments.

-Financial management advisers and companies – they are much easier to set up and are hugely popular.

-Electronic payment companies and traditional payment institutions – are new in the market but showing promise.

-Insurance intermediary and insurance companies

-Pension and investment funds – they are common in this niche.

-Currency exchange companies.

-Specialized Banks – requires only EUR 1 Mio. Share capital to start with and is a stand alone bank with full transaction and credit facilities.

-Crowdfunding license – usually used for Real Estate crowdfunding projects, but recently caught an eye for crypto projects thus being regulated ICO through a crowdfunding regulation.

The Licensing Process

In all of these companies, the licensing process is the same, although the requirements differ. 

Different licenses require different assessment times, for example; consumer credit intermediary requires 3 business days, but EMI application up to 90 days.

The authority will then consider the application for issuing a license within three months of submitting all of the required documents. If the documents submitted have deficiencies, the deadline is renewed when the right documents are provided.

The deadline is two months for restricted activities, and it can be extended with additional documents requested and provided.

Once the supervisory authority completes accessing the documents, a summary is provided to the Bank of Lithuania’s Board for their consideration. Then, the board decides on granting the license or refusal.

General Requirements for a Financial License

This license will require at least one employee to be based and be a resident of Lithuania. The minimum capital required is as follows;

For Consulting Services – at least 50,000 euros, 

-For Brokerage Services – at least 50,000 euros

-For other services that do not require storage of funds - at least 50,000 euros

-For Fund Management companies – at least 125,000 euros

-For Placement of securities and Forex Companies – at least 730,000 euros.

Banking License in Lithuania

As an entrepreneur, you can obtain a license for a banking business in Lithuania, but it is subject to compliance with all conditions and requirements enforced in the country. In addition, the Lithuanian Government offers a simple process of obtaining the license for people who already have similar licenses in other countries even though they are not part of the EU. 

The main features and requirements for a Banking License

-Perpetuity - the license is issued for an unlimited validity period, subject to complying with all the conditions required for processing. 

-There’s a minimum amount of paperwork required.

-It is more accessible from a legal point.

-Great opportunities: Lithuania is a part of the EU, and therefore, anyone with a banking license for Lithuania can conduct banking business in the region across the other countries.

Brokerage Licenses in Lithuania

Forex markets are the most famous stock exchange businesses globally, and in Lithuania, they are considered investment companies. This is because they engage in a field of activities that are considered investment ones.

These activities are licensed as per the protocols of legal entities in the financial sector. In addition, the state lists all sorts of services that the organization can provide and financial instruments required to conduct its business.

The procedure of obtaining a brokerage license in Lithuania is the same for both Lithuanian citizens and other applicants from the EU nations. 

The applicant, however, must have permission to conduct brokerage activities that are issued by their jurisdiction in the state of establishing the organization.

Requirements for the Holder

For this type of business, permissions are required from the Supervision Commission of the Lithuanian Financial Market. This is the main organization that regulates the securities market, financial and investment services.

All of their registration rules are prescribed in their act of local legislation.

For the Shareholders

-For the co-owners who own more than 10% of shares in the company, they must document confirmation of their work experience in the financial market, and must hold a managerial position. In addition, their certificates and diplomas must be provided that indicate their knowledge in capital management.

-If a shareholder owns securities in any other corporation, which differs from brokerage, this should not prevent them from developing the new forex enterprise.

-Each owner should confirm their income level and their source of receiving funds impeccably.

-The Commission reserves the right to decide, independently, the depth of knowledge for the shareholders regarding work experience and Stock Exchanges.

Staff and Office Requirements

-Regardless of your jurisdiction of incorporation, when applying for a brokerage license in Lithuania, you are obliged to employ at least one or two directors.

-The management staff must have work experience in the financial field of between three to eight years, depending on their position and responsibility levels.

-Again, the Commission reserves the right to verify all personnel and give their recommendations regarding dismissals of people who do not have the right experience and reputations that do not agree with the commission.

-To obtain a brokerage license, the applicant should organize the actual office for the company in Lithuanian territory.

-If the company has some subsidiaries, they must also be engaged in the same financial industry; otherwise, this application will be prohibited.

-The requirements on capital are similar to other European countries, and particularly, they are similar to Malta. There should be at least 730,000 euros in the account for the license and at least 125,000 euros for an STP permit to be issued. They do not consider intangible assets.

-Once you have received the permission, you must maintain a capital within the proper levels and then multiply it. In case of any discrepancies between the financial amount and the properly prescribed norms, this license can be revoked by the commission.

Electronic Money Licensing in Lithuania

Licensing has a lot of activities that must be realized, and even though in Lithuania, there is a direct order to get a license for EMI activities, the owner must meet specific requirements such as;

-They must be at least 18 years of age.

-They must have an initial capital of at least 350,000 euros. 

-They do not require a minimum initial capital for the license to be issued.

-Must have a bank account 

-Must have availed all documents that confirm income – this could be a certificate from the tax control authorities or a tax declaration.

-Acquisition of the building or office for the company.

-Preparation of the business model or plan

-Filling in the management positions

-Preparation of the IT system.

-Preparation of the accountancy system.

-Contracting a third-party audit company. 

Other Important Documents for Licensing of an EMI Company

A program of operations

-Articles of Association

-A business plan should include a forecasted budget for the next three years. In addition, it should demonstrate that the company can operate soundly and shall employ all of the appropriate internal control systems, resources, and procedures.

-Evidence of having the minimum amount of equity capital.

-A description of all measures taken to safeguard the electronic money funds and where the payment services will be provided.

-A description of internal control mechanisms, e.g., administrative, accounting procedures, risk management, and an in-depth description of all governance arrangements.

-Internal control mechanisms are established to comply with all obligations that pertain to preventing terrorist financing and money laundering.

-Description of the structural organization includes the intended use of agents, branches, and natural/legal persons who will distribute or redeem the electronic money.

-The identity of the directors and persons who will be responsible for the management of the electronic money, and evidence that they meet the requirements set forth by the commission and that they are of good repute.

-The address of the registered office.

If you are interested in any of the financial licenses or are planning to start your business in Lithuania, please contact MUNDO’s specialists for a free consultation on the issue!

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