Accelerating Startup Funding Rounds: Delegated Share Capital Increases in Lithuania

Timing is often critical in startup funding rounds. The investor is ready to sign, the commercial terms have been agreed, but the company still needs to approve an increase in its share capital.

At this stage, a procedural obstacle frequently arises: the company has a large shareholder base, some shareholders are passive, live in different jurisdictions or are unable to participate in decision-making quickly. As a result, the completion of an investment may be delayed not because of a commercial or legal dispute, but because the company cannot obtain the required shareholder approvals in time.

From 1 July 2026, amendments to the Lithuanian Law on Companies have introduced greater flexibility to the share capital increase process. The general meeting of shareholders may resolve that, for a period of up to five years, the company’s share capital may be increased by a decision of the board or, where no board has been formed, by a decision of the company’s manager. The board or manager may also be authorised to amend the articles of association accordingly.akcininkų teisių apsauga.

This is particularly relevant for startups whose shareholder structures become more complex after several funding rounds, employee option programmes or the entry of early-stage investors.

By granting the management body a clearly defined mandate in advance, a company can implement an agreed investment more efficiently and reduce the risk of a transaction being delayed by the need to convene and obtain a new shareholder resolution.

However, the new framework should not be understood as an unlimited right for the board or manager to act at its discretion.

The shareholder resolution should clearly define the maximum amount by which the share capital may be increased. It should also address whether the management body may withdraw shareholders’ pre-emption rights to subscribe for newly issued shares and whether the capital increase may be completed through non-cash contributions.

These questions directly affect shareholder dilution, the terms on which an investor enters the company and the overall balance of control.

The shareholder resolution should be coordinated with the company’s articles of association, shareholders’ agreement and investment documents. These may include additional safeguards, such as:

• a maximum issue size;
• defined categories of investors;
• notice periods;
• reserved matters;
• and investor consent requirements.

A properly structured mechanism allows a company to move faster while preserving shareholder control where it matters most.

Companies planning further funding rounds, or those that already have a broader shareholder base, should therefore assess whether their articles of association and shareholders’ agreements allow them to use this new flexibility under Lithuanian company law.

A legal review can help determine whether the company would benefit from a delegated share capital increase mandate, what limits would be appropriate and how to balance the efficient implementation of an investment with the protection of existing shareholders’ rights.