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Content updated: 21-05-2019 13:08

The legal regulation laid down in the Regulations of the Register of Legal Persons, according to which an owner can deregister from his/her premises only the domicile of a legal person in liquidation or in bankruptcy, declared unconstitutional

04-05-2018

By its ruling passed today, the Constitutional Court has recognised that Item 195 (as amended on 9 December 2015 and 11 October 2017) of the Regulations of the Register of Legal Persons (hereinafter referred to as the Regulations), as approved by the government resolution (No 1407) of 12 November 2003, is in conflict with Paragraphs 1 and 2 of Article 23 of the Constitution and the constitutional principle of a state under the rule of law, insofar as the said item provides that the owner of premises on which the domicile of a legal person, the domicile of its branch, or that of its representation office is registered has the right to apply to the registrar of the Register of Legal Persons (hereinafter referred to as the Registrar of the Register) regarding the deregistration of such a domicile only in cases where the legal status of the said legal person has been registered as “liquidation initiated”, “in liquidation”, “in bankruptcy”, or “bankrupt”, as specified in this item of the Regulations.

The Vilnius Regional Administrative Court, the petitioner, when examining an administrative case on the decision of the Vilnius branch of the state enterprise Registrų centras to refuse to remove from the Register of Legal Persons (hereinafter also referred to the Register) the domiciles of legal persons registered on the premises owned by the applicant in the administrative case, had doubts about the constitutionality of Item 195 of the Regulations, because, according to the petitioner, the owner of the premises did not have any opportunity to apply to the Registrar of the Register, requesting the deregistration of the domicile of a legal person, the domicile of its branch, or that of its representation office on other grounds than those laid down in Item 195 of the Regulation, i.e. the owner can do so only if the legal person’s legal status specified in the said item of the Regulation has been registered.

It was noted in this ruling of the Constitutional Court that, in order to effectively implement constitutional rights and freedoms, among other things, those provided for in Paragraph 1 of Article 35 and Paragraph 1 of Article 46 of the Constitution, it is allowed to found subjects of legal relations (inter alia, associations, political parties, economic operators) whose legal form is a legal person and whose objectives are related to the implementation of the interests of their founders in the political, economic, cultural, social, and other spheres of life.

It was also noted that, according to the Constitution, among other things, the constitutional principle of a state under the rule of law, the legislature, while regulating the founding of legal persons and having regard to requirements determined by the public interest, must stipulate that the registration of legal persons requires the provision of certain mandatory data. The domicile of a legal person may be among such data. However, when introducing the legal regulation governing the implementation of constitutional rights and freedoms, among other things, those enshrined in Paragraph 1 of Article 35 and Paragraph 1 of Article 46 of the Constitution, in the course of founding legal persons, including the consolidation of the necessity to provide certain mandatory data when registering legal persons, where the provision of the said data is determined by the public interest, the requirement to find a balance among constitutional values must be complied with: the implementation of these constitutional rights and freedoms when founding legal persons must be balanced with other constitutional values, among other things, with the right of ownership, which is defended under Paragraphs 1 and 2 of Article 23 of the Constitution.

The Constitutional Court noted in this ruling that, according to the impugned legal regulation, the owner of premises on which the domicile of a legal person, the domicile of its branch, or that of its representation office had been registered was not entitled to apply to the Registrar of the Register, requesting the deregistration of this domicile even if the owner, in the manner prescribed by the provisions of the Civil Code (Civilinis kodeksas (CK), hereinafter referred to as the CK) that regulate contract law, had terminated the agreement on the consent to provide the premises for the registration of the domicile of the legal person, the domicile of its branch, or that of its representation office and such consent had expired.

Consequently, in order to ensure the implementation of the requirement that a legal person may act only if it has a domicile, the impugned Item 195 of the Regulations created the preconditions for a situation where the domicile of a legal person, the domicile of its branch, or that of its representation office could be registered for an indefinite period of time on the premises owned by an owner and in disregard of the owner’s will; therefore, such a legal regulation had created the preconditions for the legal person, its branch, or its representation office to have a domicile against the will of the owner of the premises on which it was registered.

In this context, the Constitutional Court noted that, the objective to ensure when regulating the activities of legal persons the requirement, provided for in the CK, that a legal person may act only if it has a domicile may also be implemented in a way that is less restrictive of the ownership rights of the owner of the premises on which such a domicile is registered, for instance, by providing for a certain reasonable period of time during which the owner of premises must notify a legal person concerned about the termination of the agreement on the consent to provide premises to register its domicile, thus enabling the legal person, its branch, or its representation office to change the domicile during that time.

The Constitutional Court held that the impugned legal regulation, consolidated in Item 195 of the Regulations, had disregarded the requirement, arising from the Constitution, inter alia, from the constitutional principle of a state under the rule of law, to find a balance among constitutional values, i.e. the requirement, when introducing the legal regulation governing the implementation of the constitutional rights and freedoms (among other things, the rights of associations, freedom of economic activity) in the course of founding legal persons, including the consolidation of the necessity to provide the mandatory piece of information – the domicile of a legal person – when registering legal persons, where the provision of the said piece of information is determined by the public interest, to balance the implementation of these constitutional rights and freedoms with the right of ownership, which is defended under Paragraphs 1 and 2 of Article 23 of the Constitution.

In this ruling, the Constitutional Court also noted that the legal regulation entrenched in Item 195 of the Regulations had created the preconditions for legal persons, their branches, and their representation offices to have fictitious domiciles in situations where the legal persons’ legal status specified in the said item of the Regulations had not been registered and the owner of the premises on which the domicile of a legal person, the domicile of its branch, or that of its representation office had been registered, terminated the agreement on the consent to provide the premises for the registration of this domicile, i.e. such consent had expired.