Share Capital: Meaning, Minimum Amount, and More (2025)

Share capital is the initial amount of funds allocated to ensure a company’s financial stability and continuity of operations. It is an important legal and economic indicator recorded in the company’s founding documents. Share capital not only enables a company to start operations but also helps build trust with creditors, clients, and investors.

This article discusses the importance of share capital, requirements for different business forms, and the processes of increasing or decreasing it. We also provide answers to frequently asked questions and suggestions on how to manage financial processes effectively using modern business management systems.

Share capital is mandatory for certain business forms, namely:

• Private Limited Liability Company (UAB)
• Public Limited Liability Company (AB)

Share capital ensures the company’s initial financial stability and is necessary for it to operate. Its size is often associated with the company’s reliability and ability to meet obligations.

However, smaller businesses such as Sole Proprietorships (IĮ) or Small Partnerships (MB) are not subject to share capital requirements. These forms are more flexible and intended for smaller-scale operations, with financial stability ensured through other means, such as the personal liability of the owners.

The size of share capital and its adjustment is an important financial management tool that can be used to achieve strategic business goals. This process must comply with the laws of the Republic of Lithuania to protect the interests of shareholders and creditors.

Increasing share capital allows companies to obtain additional funds needed for expansion, investment, or modernization. This can be done through:

• Issuing additional shares: The most common method to attract new investors.
• Increasing the nominal value of shares: Existing shareholders invest additional funds.
• Using reserve funds: Accumulated company funds are allocated to increase capital.

Increasing share capital not only strengthens financial standing but also enhances the company’s credibility in the market. More information on this process can be found in Article 49 of the Law on Companies of the Republic of Lithuania.

Capital reduction may be carried out for various reasons:

• Compensating financial losses: The company may reduce capital to balance its financial position.
• Distributing funds to shareholders: Sometimes the company returns part of the funds to shareholders by reducing the number or nominal value of shares.

Capital reduction must comply with all legal requirements to protect creditor interests. More information can be found in Article 52 of the Law on Companies of the Republic of Lithuania.

Capital reduction must comply with all legal requirements to protect creditor interests. More information can be found in Article 52 of the Law on Companies of the Republic of Lithuania.

What is the function of share capital in a company?

• Ensures financial stability and initial funding
• Demonstrates reliability to creditors and investors
• Is a legal requirement for certain business forms (e.g., UAB or AB)

What is the minimum share capital in Lithuania?

• UAB: €2,500
• AB: €25,000
• MB, IĮ: No minimum capital requirement

Can share capital be contributed in assets? Yes, share capital can be contributed not only in cash but also in assets such as real estate or equipment. The assets must be properly evaluated according to legal requirements.

Must share capital be deposited before company registration? Yes, before registering a company, the share capital must be deposited into a special bank account or contributed as a non-monetary asset.

How is the value of shares related to share capital calculated? The value of a share is calculated by dividing the total share capital by the number of issued shares. For example, if the share capital is €2,500 and 250 shares are issued, each share’s nominal value is €10.

Do the articles of association need to be changed if the share capital changes? Yes, when the share capital changes, the company’s articles of association must be updated and submitted to the Register of Legal Entities.

What is the role of the Register of Legal Entities in capital changes? The Register is essential in the process of increasing or decreasing share capital, as changes are not legally valid without its confirmation.

• Capital increase: Requires submission of shareholder resolution, bank certificate of paid-in capital, or asset valuation documents. Updated articles must also be registered.
• Capital decrease: Creditors must be notified, and the resolution and updated articles submitted. The Register ensures creditor interests are protected.

Registration ensures legal clarity, transparency, and trust in the company’s financial stability.

When is share capital reduced? Share capital may be reduced when the company wants to:

• Distribute funds to shareholders
• Cover financial losses
• Restructure or reduce obligations

How can share capital be increased? Capital can be increased by:

• Issuing additional shares to new investors
• Increasing the nominal value of existing shares
• Using reserve funds

What happens if share capital is insufficient for operations? Insufficient capital can hinder the company’s ability to operate, pay debts, and ensure stable growth. It also reduces trust from creditors and investors.

How to ensure smooth capital management? Using reliable business management systems like Rivile ERP allows automation of financial processes and effective monitoring of capital changes.

Effective financial management requires reliable tools. Rivile offers:

• Rivile ERP – a comprehensive business management system covering accounting, financial reporting, and VAT processes
• Rivile MSCAN – a warehouse management system ensuring control over goods movement
• Rivile MGAMA – a personnel and document management solution

These products help not only to manage company finances more efficiently but also to ensure smooth share capital management