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On 13 June 2024, the Supreme Administrative Court of Lithuania (SACL), by its ruling of 13 June 2024, appealed to the Constitutional Court and suspended the proceedings in the case involving a dispute between the applicant Charity and Support Foundation (the Foundation) and the defendant Center of Registers.

The Foundation is registered in the Register of Legal Persons and has chosen the form of a charity and support foundation with untouchable capital management. According to the Statute of the Foundation, the Foundation must have a board of 7 members. The sole shareholder of the Foundation (a natural person) has decided to set up a Board consisting of this sole shareholder and 6 other natural persons who are not shareholders of the Foundation. An application for registration of the members of the Board of the Foundation has been submitted to the Centre of Registers.

The dispute in the present case arises from the refusal of the Centre of Registers to register the Foundation's data in the Register of Legal Persons. The Centre of Registers argued that according to Article 9(7) of the Law on Charitable and Support Foundations, the members of the governing body of the Foundation may be natural persons, i.e. the shareholders of the Foundation, and natural persons nominated by the shareholders, i.e. the legal persons. Since the Foundation had a single shareholder and the other 6 persons did not meet the requirements laid down in the aforementioned provision, the Centre of Registers took the position that such a collegial governing body of the Foundation could not be formed.

Disagreeing with the Centre of Registers, the Foundation argued that the Law on Charity and Support Funds does not prohibit a single person from establishing a foundation with an untouchable capital management, and that the Law does not regulate the situation when a charity and support fund with an untouchable capital management is established by a single person as a founder and/or a shareholder. In the Foundation's view, the position of the Centre of Registers contradicts the principle of reasonableness because, seeing that the founder and the shareholder of the Foundation is one person, it continues to insist on the establishment of a 7-member collegiate management body from the shareholders.

The Supreme Administrative Court of Lithuania pointed out that the legal regulation provided for in the Law on Charity and Support Foundations has led to a legal situation where a Foundation, established by a single shareholder, having taken a decision to form a non-tangible capital and having registered it in the Register of Legal Entities, and having the following, in order to be able to carry out its commercial activities (investment and management of the untouchable capital), which is required to set up a collegiate management body responsible for the implementation of the procedure (strategy) for the investment of the funds transferred to the untouchable capital and the achievement of the objectives of the investment and management of the funds constituting the untouchable capital, is unable to do so.

The Foundation is therefore unable to fulfil the objectives for which it was set up, to fulfil its legitimate rights, interests and expectations, and to carry out on an equal footing activities of particular importance to society. Therefore, according to the assessment of the Supreme Administrative Court, the applicant in the present case is right in pointing out that the legal regulation is contradictory, and that Article 9(7) of the Law on Charity and Support Foundations contradicts the principle of equality of persons before the law enshrined in the Constitution, as it essentially prevents a Foundation with one or two shareholders from carrying out its activities.

Administrative case No eA-342-520/2024.