LITHUANIA Law and Practice Contributed by: Evaldas Klimas and Vygintas Kuprys, WALLESS
subordinated to the debt financing. In the case of insufficient equity, additional funds are sought
• registry expenses (these are usually approxi - mately EUR150 for each security instrument). Enforcement of Lithuanian law-governed secu - rity over real estate also involves: • a notary fee of up to EUR338, with the exact amount depending on the value of the mort - gaged real estate; and • a bailiff fee consisting of: (a) up to EUR220 as administration expens - es (the exact amount depends on the amount subject to recovery); (b) a success fee calculated as a percentage of the amount subject to recovery (from 4% to 19%); plus (c) additional expenses. All fees exclude VAT, which will be charged at a 21% rate, if applicable. 3.5 Legal Requirements Before an Entity Can Give Valid Security The creation of security by a Lithuanian entity may raise two concerns: • potential non-compliance with Lithuanian financial assistance restrictions; and • potential non-compliance with corporate ben - efit requirements. Article 45(2) of the Law on Companies of the Republic of Lithuania indicates that a company may not directly or indirectly advance funds, make a loan nor grant security to individuals or corporate entities if doing so facilitates the acquisition of shares by these persons. This means that the Lithuanian entity is not permit - ted to secure debt obligations if the only purpose and utilisation of these funds is to finance the acquisition of the Lithuanian entity.
by way of mezzanine or senior debt. 3.2 Typical Security Created by Commercial Investors
A security package for the financing of the acqui - sition and/or development of real estate in Lithu - ania is tailored to each transaction, considering the specific circumstances and the risk profile of the borrower. Usually, at least the following security is sought by lenders in Lithuania: • a pledge over shares in the borrower; • a pledge over the borrower’s receivables (rental income) and funds in bank accounts; • a mortgage over the borrower’s real estate, land (or land leasehold rights) and/or building(s) (or premises); and • upstream or cross-stream guarantees. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are no restrictions under Lithuanian law on granting security over real estate to foreign lenders nor on repayments being made to a for - eign lender under any security document or loan agreement. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security The creation and perfection of Lithuanian law- governed security over real estate involves a notary and registration fee, which is calculated as follows: • up to EUR360 (the exact amount depends on the value of the real estate that is subject to the mortgage) multiplied by the number of different real estate assets that are subject to the mortgage; plus
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