Category: Lithuania

Sorainen has advised travel planning tools provider Kayak on the acquisition of a business unit from software development company NFQ Technologies in Lithuania. The seller was reportedly represented by Roedl and Partner.

Kayak operates a portfolio of brands including Kayak, Momondo, Cheapflights, Swoodoo, Checkfelix, and Mundi, which together process over two billion consumer queries annually. It operates sites in more than 60 countries and territories.

According to Sorainen, the purchased business unit consists of “approximately 40 engineers, who have worked as technology partners at Kayak for several years.” According to the firm, “upon completion of the transaction, the engineers will be employed by Kayak Lithuania.” The team will continue to operate out of the Kayak Technology Center located in NFQ Technologies’ office in Kaunas, Lithuania.

Giorgos Zacharia, CTO of Kayakm commented: “With this agreement, a team of highly skilled engineers will join our organization as full time employees. We have worked with the team for many years and are confident they will continue to support our long-term commitment to raising the bar within travel search and ensure we can effectively scale and accelerate our tech innovation.”

Sorainen’s team included Partner Algirdas Peksys, Senior Associate Indre Sceponiene, and associates Gerda Skirbutiene, Aurelija Daubaraite, and Monika Tukaciauskaite.

Roedl and Partner did not reply to our inquiries. 

Partner Vilius Bernatonis, Head of TGS Baltic’s Banking & Finance and Energy practice groups, is taking over as Managing Partner of the firm’s Lithuanian office. Marius Matonis, Head of M&A, Baltics, has been elected Executive Partner.

On September 1, 2018, Bernatonis took over as Managing Partner from founder Eugenija Sutkiene, whose term of office is coming to an end. On the same day Matonis’s new position as an Executive Partner will come into effect.

Sutkiene will take the position of Senior Partner in the Lithuanian office of TGS Baltic. She will continue advising clients and contributing to strategic activities. Sutkiene will serve on the Boards of several Lithuanian companies and charitable organizations.

Sutkiene has been a leader of TGS Baltic (and it predecessors, including, most recently, Tark Grunte Sutkiene as reported by CEE Legal Matters on May 9, 2017), for 27 years. According to the firm, she was among the lawyers who participated in forming the principles of commercial law after Lithuania regained its independence. In 2017 she earned CEE Legal Matters’s Market Maker Award for Lithuania (as reported by CEE Legal Matters on October 18, 2018) for her life-long contribution to the creation of the Lithuanian legal services market.

“I have been considering the idea of passing the position of the Managing Partner at TGS Baltic to the younger generation for some time and I am certain that now is the best time,” Sutkiene said. “The generational shift has not been successfully implemented in Lithuanian law firms yet, as it is a complicated process. However, I am certain that our firm now has the necessary maturity for this step.” She noted with confidence that the firm has a strong team capable of ensuring the continuity of the firm’s business principles, values, culture, and work quality.

“We have enough potential for an innovation shift in our business as well. Vilius Bernatonis, who has been unanimously elected to the position of Managing Partner by the firm’s partners, has been my colleague and my right hand for many years,” Sutkiene said. “I trust his competence and I am certain that he and the team will continue realizing our common vision – to stay the best team of business law consultants for our clients.”

Bernatonis has been active in legal services for more than 18 years. He specializes in banking and finance, energy, dispute resolution, development and regulation, project financing, commercial law, and other areas.

Matonis will be responsible for the improvement of internal, administrative and service provision processes in at TGS Baltic, as well as innovation and efficiency. He has been practicing as a lawyer for 16 years. He specializes in competition, M&A, private equity and venture capital, real estate transactions, and corporate and commercial law. 

Ramunas Audzevicius, Partner at Motieka & Audzevicius in Vilnius, claims that the situation is quite calm in Lithuania, though he admits there are still issues in various areas affecting business.

Audzevicius highlights the tax reform approved by the Lithuanian parliament and signed by the President Dalia Grybauskaite at the end of June 2018. “The personal tax has changed dramatically in a negative way,” he sighs. “People will be taxed more than they expected.”

The reform also involves changes in the employment income tax, raising two personal income tax rates to 20% and 27%. This means income up to 120 times the national average wage — so approximately 107,500 EUR per year — will be taxed at 20%. However, income exceeding this threshold will be taxed at 27%, which the highest rate in Eastern Europe. 

According to Audzevicius, the change in Lithuania’s personal income tax, which will come into force in January, 2019, was not unexpected, as it had been proposed by the ruling party in the campaign leading up to the October 2016 election. “They promised to implement a progressive tax in the future,” he says. “So they’re fulfilling that promise.” Not everyone is excited, he says. “There are many debates, commentaries, and a lot of criticisms from the opposition parties and the business community regarding this; however, we have what we have. 

Still, despite the promises made during the campaign, Audzevicius believes the government failed to provide sufficient justification for introducing such drastic changes in the tax law. The stated purpose of the new law was to reach a balance between wealthy people and the rest, but he believes the real purpose is simply to collect more revenue, which he describes as: “the easiest way to support the government budget.” In practice, he says, the new tax rate means that, “it will be more difficult to compete for attractive foreign direct investments for Lithuania, which has been the goal of each Lithuanian government after my homeland restored its independence in 1990.”

Although Lithuania appears among the most aggressive countries in Eastern Europe on personal taxation rates, it is among the most progressive in the world in blockchain technology regulations. Audzevicius says, “Lithuania is moving to be the leader in FinTech, as it was suggested by our financial authorities.”

Recently, Lithuania has made a number of changes to improve the country’s financial technology market, including the issuance by the country’s Ministry of Finance of guidelines for cryptocurrency and initial coin offerings (ICOs). These guidelines provide information about applicable regulations, taxes, accounting, Anti-Money Laundering, and Combating the Financing of Terrorism issues. “This was important for businesses dealing with ICO projects,” Audzevicius explains, “as the new framework established clearance and a more secure environment for FinTech and blockchain business.”

Audzevicius reports that Lithuania’s ICO regulations, which came into force on June 7, 2018, are among the first such in the world. He says with excitement, “it provides legal certainty for law firms which have never advised on ICOs,” and he believes that the new regulations will help increase the number of ICO deals in the country, thus bringing in more business.

Despite the changes in Lithuania’s law and economy, the legal market itself has not changed much recently, Audzevicius says, and he describes himself as positive about its status and growth.

Sorainen has assisted retail footwear chain Batu Kalnas in a case involving the company’s claim that its trademark had been fraudulently used on Instagram to set up a fake Batu Kalnas profile and invite people to become influencers for the footwear brand.

According to Sorainen, ”in order to stop illegal use of the company’s brand, a request to delete the fake account and relevant documents were sent to Instagram, and a process is to be launched to identify the individuals responsible for the illegal activities.”

Sorainen Counsel Stasys Drazdauskas commented: “Scamming related to illegal use of trademarks on social networks spreads rapidly. Illegal campaigns mislead users and cause harm to the company’s image and reputation also posing a threat to consumers.”

The Sorainen team included Partner Laurynas Lukosiunas and Counsel Stasys Drazdauskas. 

Cobalt has advised the Stemma Group on the sale of 100% of shares in private limited liability companies Vejo Vatas and Vejo Gusis, which operate three wind farms with a total capacity of 34MW, to Lietuvos Energija.

Lietuvos Energija is a state-controlled company group operating in the Baltic States. The main activities of the group include the production and supply of electricity and heat, trade in and distribution of electricity and natural gas, and maintenance and development of the power sector.

According to Cobalt, ”the Stemma company group is one of the major renewable energy investors in Lithuania, currently operating four wind farms with total power of 108.73MW. After the consummation of the intended transaction, the Stemma company group will keep operating the Pagegiai wind park, which is the largest in Lithuania.”

The power generated by all the wind farms operated by the Stemma company group currently constitutes approximately 22% of the total wind power generated in Lithuania and 17% of the total renewable energy produced in Lithuania.

The close of the transaction remains subject to the authorization from the Competition Council.

The Cobalt team was led by Partner Elijus Burgis and Associate Julija Timoscenko.

Cobalt did not reply to our inquiries on the matter. 

Tvins has assisted Domestique Asset Management UAB with its successful application for an asset management company license under the Law on Collective Investment Schemes Designed for Qualified Investors of the Republic of Lithuania.

According to Tvins, Domestique Asset Management intends to manage collective investment schemes.

The Tvins team was led by Managing Partner Tomas Talutis.

Sorainen has advised Mobilieji Mokejimai, a company founded by three competitors in the Lithuanian telecommunications sector – Telia Lietuva, Tele2, and Bite Lietuva – on launching and managing MoQ, the first mobile payment platform in the Baltics.

Sorainen’s team advising on competition law, financial services, and regulation aspects included Partners Daivis Svirinas and Augustas Klezys, Senior Associates Monika Malisauskaite and Dalia Augaite, and Associate Urte Armonaite. 

TGS Baltic has represented Lithuanian waste management company UAB Ecoservice on its acquisition of a controlling 66.31% interest in UAB Marijampoles Svara from UAB Alga. The remaining shares are held by the Marijampole Municipality of Lithuania and a private individual.

According to TGS Baltic, ”the implemented transaction will enable UAB Ecoservice to carry out its activities more efficiently and improve the quality of waste management in Marijampole, Kalvarijos, Sakiai, Kazlu Ruda, and Vilkaviskis.”

UAB Ecoservice is a waste management company in Lithuania engaged in collection, carriage, treatment of different waste, urban cleaning, and street maintenance. UAB Ecoservice is indirectly controlled by investment company BaltCap. At the end of 2017, the Group’s consolidated income amounted to EUR 30.9 million, and the consolidated net profit was EUR three million. In 2017 the Group had 603 employees. 

The TGS Baltic team consisted of Partners Marius Matonis and Dalia Tamasauskaite-Ziliene, Associate Partner Aurimas Pauliukevicius, and Associate Indre Vickaite-Liatuke.

TGS Baltic did not reply to our inquiries on the matter.

Sorainen has assisted Freor LT and its majority shareholder Rytis Bernatonis on Mezzanine Management’s sale of a block of Freor LT shares to Baltics-based private equity fund Livonia Partners. Mezzanine Management was advised by Cobalt on the sale, and Livonia Partners was advised by TGS Baltic.

According to Cobalt, ”Freor LT is the only company in the Baltic States producing commercial refrigeration equipment and developing energy saving and environmentally friendly refrigeration solutions; it exports about 90% of its refrigeration equipment.” In 2017, the company’s revenue increased by 47% to EUR 36 million. At the beginning of 2015, AMC III invested EUR 7 million in Freor LT.

The company sells its products to Lithuanian, West European, and East Asian retail chains operating around the world.

Mezzanine Management is a manager of four funds in the Accession Mezzanine Capital group. In 2000, the group launched its mezzanine-type financing activities in Central Europe and has been investing in medium-sized businesses. Mezzanine Management has been operating in Central and Eastern Europe since 2001 and has offices in Vienna, Warsaw, Bucharest, Budapest, and Prague.

Livonia Partners is a private equity firm based in the Baltic States, which is running Livonia Partners Fund 1 and Livonia Partners EIF Co-Investment Fund with EUR 83 million under management.

The Sorainen team included Partner Sergej Butov and Associate Laura Matuizaite.

Cobalt’s team included Partner Juozas Rimas and Associate Lawyer Julija Timoscenko.

The TGS Baltic team consisted of Partner Marius Matonis, Associate Partner Aurimas Pauliukevicius, and Associate Andrius Voska.