Increasing a Company’s Share Capital by Board Resolution: What Must Be Decided in Advance?

The company agrees with an investor that the investor will acquire the entire new share issue. This requires an increase in the company’s share capital and the disapplication of the existing shareholders’ pre-emption rights. The company has a board, but the board has not been authorised to make these decisions. As a result, a general meeting of shareholders must be convened even though the investment terms have already been agreed.

As a general rule, shareholders of a Lithuanian private limited liability company (uždaroji akcinė bendrovė, UAB) must be given at least 21 days’ notice of a general meeting. The law provides for circumstances in which shorter notice periods may apply, including where all shareholders entitled to vote give written consent to waive the notice period. If no exception applies, the notice period alone can mean a three-week wait before the meeting.

From 1 July 2026, the Law on Companies of the Republic of Lithuania (the “Law on Companies”) allows shareholders to authorise the board in advance to increase the company’s share capital and amend the articles of association in connection with that increase. This requires a resolution of the general meeting of shareholders specifying a period of no more than five years from the date of the resolution and the maximum amount by which the share capital may be increased.

The resolution must also specify whether the board may disapply shareholders’ pre-emption rights and increase the share capital through non-cash contributions. Authorisation requires at least three-quarters of the votes attached to shares held by shareholders participating in the meeting and entitled to vote on the matter, unless the articles of association require a higher majority.

Accordingly, the shareholders first convene a general meeting to set the limits for the board’s future decisions. Article 49(2) of the Law on Companies does not require the articles of association to be amended in advance solely to grant the board this authority. The provisions on the amount of share capital and the number of shares are amended later, when a specific capital increase is implemented. The first general meeting follows the usual notice procedure; time is saved when subsequent decisions are made.

When a new investor comes in, the board later decides on the specific capital increase and the related amendments to the articles of association, within the limits set by the shareholders. If the board has also been authorised to disapply pre-emption rights, it may decide to do so for the particular share issue, stating the reasons, the investor’s details and the number of shares the investor may acquire. The pre-emption rights are disapplied for all of the company’s shareholders.

Suppose the general meeting requires 21 days’ notice, while the company’s procedures allow a board meeting to be convened within three days. If the board has been granted these powers in advance, the decision-making stage could be shortened by 18 days in this scenario. The 21-day notice period does not apply to a board meeting, but the company’s rules on convening meetings, quorum and voting must still be followed.

The shares must still be subscribed for and paid up, and the amended articles of association must still be registered. When the board first decides to increase the share capital, the shareholders’ resolution granting the board this authority must also be submitted to the Register of Legal Entities. The share capital is considered increased only once the amended articles of association have been registered with the Register of Legal Entities.

Where several financing rounds are planned, a prior shareholders’ resolution allows the general meeting procedure to be completed once, with specific matters then decided by the board. Before adopting such a resolution, the company should align the capital increase limit and the duration of the authority with its financing plan, and check whether the shareholders’ agreement requires any additional approvals.

The supplied description of the new authorisation mechanism is reflected in Article 49(2) of the Law on Companies.