When starting a business, choosing the form of a legal entity is one of the most important decisions. Of course, the legal form can be changed, but this causes a lot of problems later and can require a lot of expenses. Therefore, it is best to make a responsible decision at the beginning of the activity and think everything through. In this article, we will discuss the activities for which the establishment of a VšĮ (public institution) is appropriate. It is a specific form of legal entity, but in some situations it is really worth choosing it.
What is a Public Company and what makes this legal form special?
According to the definition, a Public Enterprise is a non-profit organization whose purpose is public benefit. Simply put, this form of legal entity pursues socially beneficial goals with its activities. This does not mean that such companies cannot make a profit – they can, but it is not distributed to the owners or paid out as dividends to UAB. The profit can be used for further activities. Most of the time, the establishment of a Public Enterprise is expedient when the activity is related to public welfare: education, culture, social assistance, events, media, etc.
What are the advantages of establishing a public limited liability company?
Like every legal form, a Public Company provides certain advantages that can be skillfully used in carrying out activities beneficial to society. First of all, establishing a public limited liability company is a good choice due to limited civil liability – the founder does not risk all of his personal assets. There is no requirement for the size of the authorized capital, so it can be contributed as needed, depending on the activity.
Like other non-profit entities, VšĮ can reduce the taxable profit with funds allocated for activities satisfying public interests. Also, the establishment of a public limited liability company is useful in cases where you plan to receive support from legal entities or residents for your activities.
One of the disadvantages should be the fact that, even though a public limited liability company can engage in commercial activities, it cannot pay out profits to its shareholders. This can be done only if the participant is an employee of the Public Enterprise and receives a salary. There is also a restriction on the transformation of VšĮ into UAB – this is an attempt to protect the public interest and prevent fraud.
What kind of activity is a Public Enterprise suitable for?
Social activities and humanitarian aid are a typical example of the activities of public enterprises. For such activities, the establishment of a Public Company is the best option, as it is possible to receive support and provide services to vulnerable groups. Such institutions often organize events, charity campaigns, and allocate the received income to provide services.
Another case is educational and cultural activities. Although an educational institution can make a profit, its main purpose is to provide benefits to society, so the establishment of a public limited company is also suitable for this activity. It is also convenient that VšĮ can receive support from residents, which allows everyone to contribute to a common goal and increases community involvement.
VšĮ is often chosen as a form of activity by various sports and health care institutions. Their activities are related to services to society, satisfaction of its interests and direct benefits. Although such institutions provide paid services and may make a profit, their main purpose remains the satisfaction of public needs.
