This is an unofficial translation of the Lithuanian court judgment, provided for information only. The Lithuanian original is authoritative. Read the original (Lithuanian)

Civil case No [anonymised]

Judicial proceedings No [anonymised]

Procedural decision categories: 2.1.4.2.;

2.2.2.8.2.; 3.3.1.14.

VILNIUS REGIONAL COURT

RULING

IN THE NAME OF THE REPUBLIC OF LITHUANIA

25 March 2025

Vilnius

Judge [anonymised] of the Civil Cases Division of Vilnius Regional Court,

in a court hearing, in appeal written proceedings, examined the civil case on the appeal of the defendant, State Enterprise “[anonymised]”, against the decision of 25 November 2024 of Vilnius City District Court in the civil case on the claim of the claimant, private limited liability company “[anonymised]”, against the defendant, State Enterprise “[anonymised]”, for the annulment of the decision to liquidate a legal entity,

and

found:

I. The essence of the dispute

1. The claimant, private limited liability company (hereinafter UAB) “[anonymised]”, brought a claim against the defendant, State Enterprise (hereinafter SE) “[anonymised]”, and, having amended it, asked for the defendant SE “[anonymised]”’s decision of 15 April 2024 to liquidate the legal entity to be annulled. The claim was based on the following arguments:

1.1. On 20 December 2022 a notice of an intended initiation of liquidation at the initiative of the Register Manager under Article 2.70 of the Civil Code of the Republic of Lithuania (hereinafter the CK) was issued, on 3 April 2023 a decision to initiate the liquidation of the legal entity was adopted, and the claimant acquired the legal status “liquidation being initiated”. The decision to liquidate the legal entity was adopted on 15 April 2024;

1.2. On 30 April 2024 the claimant applied to Vilnius City District Court with a request to restore a time limit and to revoke the claimant’s liquidation, and in the ruling of 2 May 2024 adopted in the civil case No [anonymised] opened as a result it was stated: “<...> an interested person who considers that the liquidation procedure of a legal entity carried out by the manager of the Register of Legal Entities did not meet the requirements of lawfulness and that his rights have been violated may challenge in court, in the manner laid down by law, the decision of the manager of the Register of Legal Entities to liquidate the legal entity (Article 2.70(10) of the CK) (ruling of 4 January 2024 of the Supreme Court of Lithuania in civil case No [anonymised]) <...>”;

1.3. On 9 May 2024 the claimant applied to SE “[anonymised]” with a complaint, hoping that SE “[anonymised]” itself would annul its decision. However, SE “[anonymised]” stated that the complaint had been left unexamined;

1.4. By ruling of 27 May 2024 in administrative case No [anonymised], the Vilnius Chambers of the Regional Administrative Court refused to accept the complaint of the claimant UAB “[anonymised]” and stated that the claimant should apply to Vilnius City District Court;

1.5. The claimant was active and sought first of all to resolve the dispute out of court, and applied to the court immediately only after receiving a negative answer. It noted that the time limit had been missed only slightly and should therefore be restored. On receiving the notice of the intended initiation of liquidation, the claimant immediately turned to its accountant, who stated that everything was in order and there was nothing to worry about. The claimant’s director is not a lawyer and, trusting the accountant, believed that everything was in order and that when the time limit expired the liquidation would be discontinued. Only on 15 April 2024, when the status changed, did he realise that he had been deceived;

1.6. If the contested decision adopted by the defendant is not annulled, the legal entity (the claimant) will be removed from the market. The claimant is an operating company that has [anonymised] employees; is engaged in [anonymised]; and operates profitably. Financial statements were not submitted to the defendant because the company’s main server failed and all financial documents were lost, and all the data had to be restored manually. At present all the financial statements have been prepared, but because of the company’s status the defendant, SE “Centre of Registers”, no longer allows these documents to be submitted.

2. In its response to the claim the defendant, SE “[anonymised]”, asked that the claim not be granted. It based its disagreement on the following arguments:

2.1. The claimant did not submit to the manager of the Register of Legal Entities (hereinafter also the JAR) the documents set out in Article 2.66(4) of the CK within twelve months of the end of the time limits laid down in this Code or other laws for submitting those documents to the JAR. On 3 April 2023 the defendant adopted a decision to initiate the company’s liquidation (Article 2.70 of the CK), and on 15 April 2024 a decision to liquidate the company;

2.2. The JAR manager sent the notice to the company’s registered office and to the home address of the company’s director indicated in the Register of Legal Entities. In addition, the intended initiation of the company’s liquidation was publicly announced on 23 December 2022 in the electronic information publication No [anonymised], notices No [anonymised] No [anonymised];

2.3. The JAR manager registered in the Register the information on the company, that is, entered the data provided for in sub-paragraph 23.17 of the Regulations of the Register of Legal Entities approved by Resolution No 1407 of 12 November 2003 of the Government of the Republic of Lithuania (as worded by Resolution No 1292 of 9 December 2015) (hereinafter also the Regulations): “Liquidation intended to be initiated at the initiative of the Register Manager under Article 2.70 of the CK. Date of sending the notice 2022-12-20”. These circumstances confirm that the JAR manager complied with the procedures laid down in legal acts;

2.4. Since, within three months of the sending of the notice and its public announcement on 23 December 2022 in the electronic information publication No [anonymised], the documents referred to in paragraph 189 of the Regulations were received, the JAR manager adopted on 3 April 2023 a decision to initiate the company’s liquidation and on 5 April 2023 registered the company’s legal status “Liquidation being initiated”. The JAR manager publicly announced the information on the company’s legal status “Liquidation being initiated”, changed in the Register of Legal Entities on 5 April 2023, in the electronic information publication of 6 April 2023 No , notices No [anonymised] No , published by the Register Manager. The decision of 3 April 2023 to initiate the company’s liquidation was formalised by software means, and the company’s legal status “Liquidation being initiated” was registered in the database of the Register of Legal Entities on 5 April 2023. A separate written document – a decision of the manager of the Register of Legal Entities of 3 April 2023 – under the legal acts referred to above, does not have to be drawn up.

II. The essence of the decision of the court of first instance

3. By decision of 25 November 2024 Vilnius City District Court granted the claim and annulled the decision of SE “[anonymised]” of 15 April 2024 to liquidate the legal entity UAB “[anonymised]”.

[…]

5. Having assessed the defendant’s actions, the court concluded that the defendant had properly fulfilled the duty to send the notice in accordance with the requirements of the CK and the Regulations, and that the soundness of this conclusion is not refuted by the question of whether the claimant actually received and (or) became acquainted with the data sent by the defendant and additionally published in two sources.

[…]

7. The court stated that in the present case there was no dispute between the parties that the manager of the Register of Legal Entities had not formally violated the procedures laid down by law, either in initiating the liquidation of the legal entity or in adopting the decision to liquidate the legal entity itself. However, it also noted that the initiation of liquidation and the liquidation procedure of the claimant UAB “[anonymised]” must be assessed not only for compliance with the procedures laid down in legal acts, but also in the context of the principles of justice, reasonableness and good faith.

[…]

10. The court, having assessed the circumstances established, that the claimant is an operating legal entity employing four employees, concluded that liquidating the company would in essence mean the irreversible loss of this legal entity’s activity carried on for more than seven years. It held that such a decision of the manager of the Register of Legal Entities to liquidate the claimant materially violates its rights. The court therefore granted the claim to annul the decision of the manager of the Register of Legal Entities of 15 April 2024 to liquidate UAB “[anonymised]”.

III. Arguments of the appeal and of the response to the appeal

11. By its appeal the defendant, SE “[anonymised]”, asks the court to set aside the decision of 25 November 2024 of Vilnius City District Court and to adopt a new decision – not to grant the claim of the claimant UAB “[anonymised]”. The appeal is based on the following arguments:

[…]

12. In its response the claimant UAB “[anonymised]” did not agree with the defendant’s appeal, asked that it not be granted and the contested decision be left unchanged, and that litigation costs be awarded from the defendant. The response is based on the following arguments:

[…]

rules:

IV. Circumstances of the case established by the court of appeal instance, legal arguments and conclusions

13. Under Article 320(1) and (2) of the Code of Civil Procedure of the Republic of Lithuania (CPK), the limits of examination of a case in the court of appeal instance are formed by the factual and legal basis of the appeal and by review of the absolute grounds for invalidity of the court decision. The court of appeal instance examines the case within the limits set by the appeal, except where public interest requires otherwise and without going beyond the limits of the appeal the rights and legitimate interests of a person, society or the State would be violated. The court of appeal instance checks of its own motion whether there are absolute grounds for invalidity of the decision under Article 329 of the CPK. Having examined the civil case on appeal, the court of appeal instance holds that no absolute grounds for invalidity of this decision, as provided for in Article 329(2) of the CPK, have been established in the case.

14. The subject matter of the dispute in the case examined on appeal is the assessment of the lawfulness and soundness of the decision of the court of first instance by which the decision of the manager of the Register of Legal Entities to liquidate a legal entity, adopted under Article 2.70 of the CK (liquidation at the initiative of the manager of the Register of Legal Entities), was annulled.

On the arguments of the appeal

15. The data in the case establish the following essential facts:

a) According to the extended extract of the Register of Legal Entities, the claimant UAB “[anonymised]” is registered [anonymised] This extract also establishes that the notice of 20 December 2022 of the intended initiation of liquidation at the initiative of the Register Manager under Article 2.70 of the CK was registered on 22 December 2022, and on 3 April 2023 the decision to initiate the liquidation of the legal entity was registered on 5 April 2023, and the decision to liquidate the legal entity was adopted on 15 April 2024 (Article 2.70 of the CK);

b) SE sent the notice of 20 December 2022 of the intended initiation of the liquidation of the legal entity to the registered office address of UAB “[anonymised]” and to the home address of the director indicated in the Register of Legal Entities; the consignment was delivered on 29 December 2020. It was established that the intended initiation of liquidation was also announced publicly on 23 December 2022 in the electronic information publication No [anonymised], notices No [anonymised] No ;

c) By the claim brought, the claimant asked for the decision of SE “[anonymised]” of 15 April 2024 to liquidate the legal entity to be annulled. The claimant relied on the fact that deregistering a legal entity that operates profitably and employs [anonymised] employees would not be consistent with the principles of justice and reasonableness. The defendant, for its part, took the position that the manager of the Register of Legal Entities had complied with the procedures laid down in legal acts and that there was therefore no legal ground to annul the decision of the defendant, SE “[anonymised]”, of 15 April 2024 to liquidate the legal entity.

d) The court of first instance, granting the claim, noted that although the manager of the Register of Legal Entities had complied with the procedural requirements laid down in legal acts, the actions required to deregister a legal entity being liquidated at the initiative of the manager of the Register of Legal Entities are carried out entirely formally and in many cases are formalised by software means. The court also held that the liquidation and deregistration of a legal entity that carries on activity is disproportionate to the failure to perform the legal entity’s duties under Article 2.70(1)(1) of the CK, and that a decision to liquidate an actively operating legal entity cannot be regarded as reasonable and fair.

16. Article 2.70(1) of the CK, which regulates liquidation of a legal entity at the initiative of the manager of the Register of Legal Entities, provides that the manager of the Register of Legal Entities has the right to initiate the liquidation of a legal entity where at least one of the circumstances set out in paragraph 1 of this Article exists, including that the legal entity did not submit the documents set out in Article 2.66(4) of the CK within twelve months of the end of the time limits laid down in this Code or other laws for submitting those documents to the Register of Legal Entities (Article 2.70(1)(1) of the CK). Where the circumstances provided for in Article 2.70(1) of the CK exist, the manager of the Register of Legal Entities must send a notice of the intended initiation of the liquidation of the legal entity to the registered office of the legal entity and to the addresses of the members of its management body indicated in the Register of Legal Entities; where it is not possible to send the notice to the registered office of the legal entity and (or) to the addresses of the members of its management body indicated in the Register of Legal Entities, the register manager publicly announces the intended initiation of the legal entity’s liquidation in the source specified in the regulations of the Register of Legal Entities and serves this notice by the other means specified in those regulations. Under the regulation laid down in the Article of the CK in question, the legal entity is given three months to submit to the manager of the Register of Legal Entities documents refuting the existence of the circumstances constituting the ground for liquidation, and if such documents are not submitted within the set period, the manager of the Register of Legal Entities, in the manner laid down in the regulations of the Register of Legal Entities, adopts a decision to initiate the liquidation of the legal entity and the legal entity acquires the status of a legal entity whose liquidation is being initiated; the register manager announces this publicly in the source specified in the regulations of the Register of Legal Entities (Article 2.70(3) of the CK). Article 2.70(5) of the CK provides that the liquidation of a legal entity being initiated may be revoked by a court decision in the manner laid down in Chapter XXXIX of the CPK; a participant or a member of the management body of the legal entity may apply to the court with a request to revoke the liquidation being initiated within one year from the acquisition of the status of a legal entity whose liquidation is being initiated. If the court did not accept the request referred to in Article 2.70(5) of the CK and the claim referred to in paragraph 6, or the court does not revoke the liquidation being initiated, the JAR manager, in the manner laid down in the JAR regulations, adopts a decision to liquidate the legal entity and the legal entity acquires the status of a legal entity in liquidation; the register manager announces this publicly in the source specified in the JAR regulations (Article 2.70(7) of the CK).

17. The Supreme Court of Lithuania, interpreting Article 2.70 of the CK, held that under the legal regulation laid down in this Article the procedure for liquidating a legal entity at the initiative of the manager of the Register of Legal Entities may be interpreted as consisting of three stages – the stage of liquidation intended to be initiated, the stage of liquidation being initiated and the liquidation stage – the end of each of which, where the circumstances laid down by law exist, gives rise to the corresponding legal consequences laid down by law. Actions of the JAR manager carried out during the procedure for liquidating a legal entity at the initiative of the JAR manager may be appealed to the court in the manner laid down by law (Article 2.70(10) of the CK). The legal entity liquidation procedure carried out at the initiative of the JAR manager and the decision adopted to liquidate the legal entity are directly related to a change in the legal entity’s status, which, among other things, gives rise to certain consequences of a civil-law nature. Given such a decision and the legal consequences it gives rise to, an interested person who considers that the legal entity liquidation procedure carried out by the JAR manager did not meet the requirements of lawfulness and that his rights have been violated may challenge such a decision of the JAR manager in court in the manner laid down by law (ruling of 4 January 2024 of the Supreme Court of Lithuania in civil case No e3K-3-49-701/2024).

18. In the present case there is no dispute that the claimant UAB “[anonymised]”, registered in 2017, did not submit documents to the Centre of Registers, and that the manager of the Register of Legal Entities formally did not violate the procedures laid down by law, either in initiating the liquidation of the legal entity or in adopting the decision to liquidate the legal entity itself. Thus, it has not been established that the defendant’s actions failed to comply with the procedures for initiating liquidation and for liquidation laid down in legal acts. The court of first instance also found this, having discussed in detail the legal regulation and assessed the defendant’s actions throughout the liquidation process. The claimant also did not rely on a violation of the procedures laid down by law. However, contrary to what the appellant argues, although it has not been established that the legal entity liquidation procedure carried out by the JAR manager failed to meet the requirements of lawfulness, in the assessment of the court of appeal instance legal norms should not be applied formally but, as the court of first instance rightly stated, on the basis of the principles of justice, good faith and reasonableness (Article 3(1) of the CPK, Article 1.5(4) of the CK). Thus, in this respect the appellant cannot be agreed with that, having found no defect or unfoundedness in the liquidation procedure, the court had no legal basis to annul the defendant’s decision of 15 April 2024 to liquidate UAB “[anonymised]”.

19. As the contested decision shows, the court of first instance discussed the importance of the principles of justice, reasonableness and good faith, noting that they must be followed both by the court in interpreting and applying laws and other legal acts and by participants in civil relations. It also stated that the court applies and interprets the law in a specific case, resolving a specific dispute in each specific case. Thus, as can be seen, the principles of justice, reasonableness and good faith are an important value criterion by applying which the court is able, in each specific case, to adopt a fair, reasonable and honest decision in the case. By contrast, in the appellant’s arguments that the court, having found no procedural violations in applying the liquidation procedure, that is, that the procedure was carried out unlawfully and/or without justification, had no legal basis to annul the defendant’s decision of 15 April 2024 to liquidate the claimant, priority is given to formal application of the law, denying the importance of the principles discussed above to the specific dispute that has arisen. In adopting the contested decision the court of first instance was guided, among other things, by these principles, so the appellant’s arguments that the ground for annulling the defendant’s decision has not been stated are unfounded.

20. In the assessment of the court of appeal instance, the court of first instance rightly held that it is not justified that the claimant, registered in 2017, did not submit documents to the Centre of Registers. The claimant itself agrees with this, admitting that it did not submit the financial statements in good time within the time limits set by the defendant. At the same time the argument of the court of first instance can be agreed with that the purpose and aim of Article 2.70 of the CK is to deregister legal entities that are in fact inactive, not to punish them for data and/or documents not being submitted to the manager of the Register of Legal Entities. It is established in the case, and there is no dispute about it, that the claimant is a viable legal entity that carries on activity. The following circumstances should be emphasised as important: the claimant carried on profitable activity until it learned of the liquidation, paid taxes to the State, and has [anonymised] employees. The claimant states that the financial statements have now been prepared. It is also an important circumstance that the claimant’s director, on learning of the adopted decision to liquidate the legal entity, immediately took specific steps to prevent the legal entity from being deregistered (applied to SE “ -”, to the court). Thus, the court of appeal instance agrees with the conclusion of the district court that in the present case formal application of Article 2.70 of the CK and the liquidation and deregistration of a viable legal entity that carries on activity would defeat the purpose of the legal norm in question (as mentioned above, the purpose of deregistering legal entities that are in fact inactive) and would contradict its purpose and would not meet the principles of justice, reasonableness and good faith. Although the appellant states, and the court of appeal instance, as already mentioned, agrees, that the appellant did not commit unlawful acts, applying the norm of Article 2.70 of the CK in the present case would be a sanction too harsh for the claimant for failing for a long time to submit documents to the Register of Legal Entities, which, as already mentioned, is incompatible with the essence of this Article.

21. As mentioned, the court interprets and applies the law not abstractly or hypothetically, but in each specific case, examining and resolving questions of the defence of persons’ violated or disputed rights or interests protected by law (ruling of 3 June 2020 of the Supreme Court of Lithuania in civil case No 3K-3-175-1075/2020; ruling of 4 January 2024 in civil case No e3K-3-49-701/2024). Therefore, contrary to what the appellant argues, in the present case the court of first instance individualised the factual circumstances of the case and the legal relations that had arisen, properly assessed the legal consequences that the decision adopted by the claimant gives rise to for an operating legal entity, that is, that the legal entity ceases to exist, and did not merely apply legal norms formally. In the assessment of the court of appeal instance, by annulling the decision of 15 April 2024 to liquidate the claimant the court of first instance did not depart from the practice of the cassation court and the legal regulation, and resolved the dispute not by applying legal norms formally but by analysing whether the decision adopted violates the claimant’s legitimate interests and whether it meets the principles of lawfulness, justice and proportionality.

On the procedural outcome of the case

22. On the basis of the legal and factual circumstances established, it must be held that the court of first instance properly established the circumstances of the case and correctly classified the legal relations between the parties, so the arguments of the appeal do not give grounds to set aside or amend the decision of the court of first instance (Article 326(1)(1) of the CPK).

23. The other arguments of the appeal have no bearing on the lawfulness and soundness of the contested court decision, so the court of appeal instance does not address them.

On litigation costs

24. Under Article 93(1) and Article 98(1) of the CPK, the party in whose favour the court decision is adopted has the right to reimbursement of the costs incurred, which are awarded in proportion to the part of the claims granted and rejected.

25. The appeal of the defendant (appellant) was dismissed, so the claimant acquired the right to reimbursement of litigation costs. The latter submitted to the court evidence of €300 of legal assistance costs incurred in the court of appeal instance in preparing the response to the appeal. The litigation costs incurred are of reasonable amount and meet the criteria of necessity and justification, so they are to be awarded from the losing party, the defendant (Article 93(1) and Article 98(1) of the CPK).

The judge of the Civil Cases Division of Vilnius Regional Court, guided by Article 326(1)(1) of the Code of Civil Procedure of the Republic of Lithuania,

rules:

not to grant the appeal of the defendant, State Enterprise “[anonymised]”.

To leave unchanged the decision of 25 November 2024 of Vilnius City District Court.

To award the claimant, private limited liability company “[anonymised]”, from the defendant, State Enterprise “[anonymised]”, €300 (three hundred euros) of legal assistance costs in the court of appeal instance.

This ruling of Vilnius Regional Court enters into force on the day it is adopted.

Judge [anonymised]