REPUBLIC OF LITHUANIA
LAW ON SECURITIES MARKET
16 January 1996, No. I-1169
Vilnius
(reading of the Law No. IX-655 of the Republic of Lithuania of 17 December
2001) (effective from 1 April 2002), (Official Gazette, 2001, No. 112-4074)
CHAPTER 1
GENERAL PROVISIONS
Article 1. Purpose of the Law
1. The purpose of this Law is to provide legal basis for a fair, open and
efficient functioning of the securities market, seeking to maximize security of
investors’ interests and to restrict systemic risk.
2. This Law is intended to bring into line the regulation of the securities
markets with the regulations of the European Union listed in Annex to this
Law.
Article 2. Main Definitions
1. Block of shares means 1/10 or more shares or voting shares of a
company.
2. Secondary trading in securities means an offer to acquire securities
and their transfer after the primary trading is over.
3. Person related to the issuer means:
1) legal person whose block of shares is held by the issuer;
2) subsidiary of the issuer or a person controlling the latter;
3) manager of the issuer;
4) person holding the issuer’s securities carrying over 1/20 of all the
votes.
4. Accountable issuer means an issuer who has registered an issue of
securities
with the Securities Commission.
5. Depositary receipt in respect of shares means a security representing the
right of its holder to receive income from the issuer in the amount depending
on the amount of the issuer’s income from another issuer’s shares and the
right to change the receipt into shares.
6. Subsidiary means an undertaking controlled by another undertaking.
An undertaking controlled by a subsidiary shall be regarded as a subsidiary
of the parent undertaking which is the ultimate parent of those undertakings.
7. Issue means the issuance of a series of securities conferring identical
property and non- property rights to their owners.
8. Issuer means a legal person proposing to issue or issuing its
securities.
9. Material event means an event which is related to the issuer’s activity
and therefore is or must be known to it, and which might have a significant
influence on the market price of the issuer’s securities.
10. Financial brokerage firm means an undertaking
holding an
authorization to provide investment services.
11. Investment services mean:
1) reception and transmission of orders in relation to securities;
2) execution of orders to acquire or transfer securities for clients’
account;
3) execution of orders to acquire or transfer securities for own account;
4) management of clients’ securities portfolios according to individual
orders (further – orders) placed by the clients;
5) underwriting on the basis of a firm commitment (guaranteeing the
sale of securities) or best efforts (not giving such a guarantee);
6) safekeeping, accounting, and administration of securities;
7) granting of a loan to a client to allow him to carry out a transaction
in securities, where the grantor is involved in the transaction;
8) consulting on issues of investment into securities.
12. Investor means a person who holds securities by the right of
ownership or intends to acquire them.
13. Control means the right to manage and influence directly or
indirectly the financial and economic activity of a legal person. While
counting the voting rights in the shareholders’ meeting, the voting rights of
controlled legal persons shall be added to the voting rights of the controlling
person. Control exists where a person:
1) holds more than half of all the votes of the shareholders of the legal
person concerned;
2) being a shareholder of the legal person concerned, has the right to
appoint or dismiss head of that legal person’s administration, the
majority of the members of the board or the supervisory board, or
3) may exert a significant influence on the legal person as provided in
the agreement with that legal person and in the latter’s founding
documents, or
4) being a shareholder of the legal person concerned, may, acting
under an agreement with other shareholders, decide how to use
more than half of all the voting rights at a meeting of shareholders.
14. Persons of sufficiently good repute are persons:
1) having no criminal records for a major offence, or an offence
or violation of the finance system, economic order, or
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business order, property, property rights or property
interests”;
2) having no criminal records for an offence or infringement
not specified in item 1, or whose conviction has already
expired or has been repealed;
3) not addicted to alcohol, drugs, toxic or psychotropic
substances.
15. Parent undertaking means an undertaking controlling another
undertaking.
16. Primary trading in securities means an offer made by an issuer or an
intermediary of public trading in securities to acquire securities and a transfer
of these securities at the time of their issuance.
17. Professional investor means a pension fund, an investment company,
the management enterprise of a pension fund or an investment company, a
credit institution, a financial brokerage firm, an insurance firm, or any other
person recognised as a professional investor by the Securities Commission on
the basis of the person’s ability to make adequate evaluation of investment
risk.
18. Prospectus means a document intended for investors and the
general public and containing the main information on the issuer and the
securities offered by it.
19. Advertising or addressing the general public means an advertisement
in a means of the mass media, information on selling of securities indicating
the characteristics of the securities, announced in any type of publications,
interviews published in a means of the mass media, advertisements
publicised in a written, visual, or audio form or via distant communication
means.
20. Account managers mean intermediaries of public trading in securities
and the Central Securities Depository of Lithuania.
21. Systemic risk means a possibility that insolvency of one intermediary
of public trading in securities may negatively affect the interests of a great
number of other public trading intermediaries and investors.
22. Debt security means a security representing the right of its holder to
receive from the issuer a fixed principle amount, interest or any other
equivalent sum at a future date and under terms stated in the security.
23. Foreign supervisory authority means:
1)
an institution which registers securities prospectuses, issues
authorisation to provide investment services, supervises
provision of investment services, or executes other functions
similar to those of the Securities Commission in a Member
State of the European Union and which is indicated by that
state to the European Commission;
2)
an institution performing in a country that is not a member of
the European Union the functions referred to in part 1 above.
24. Manager means a member of the supervisory board, the board, the
manager of the issuer.
25. Trading in securities means offering and transfer of securities.
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26. Registration of an issue of securities (hereinafter – registration of
securities) means an administrative act constituting permission of the
Securities Commission to offer securities.
27. Securities Commission means an institution which regulates and
supervises the securities market.
28. Securities portfolio means a collection of securities held by a single
investor.
29.Securities market means a place where securities are traded in an
organised way.
30. Public trading in securities means offering and transfer of securities
by addressing the general public or more than 100 persons.
31. Intermediaries of public trading in securities (hereinafter –
intermediaries) mean financial brokerage firms and commercial banks
authorised to provide investment services.
32. Inside information shall mean information of a precise nature
relating, directly or indirectly, to one or several issuers of securities on the
material events that have already or are planned to take place, which, it were
made public, would be likely to have a significant effect on the price of those
securities or related commodities, provided such information has not yet been
made public. In relation to derivatives on commodities “inside information”
shall mean information of a precise nature which has not yet been made
public, relating, directly or indirectly, to one or more such derivatives and
which users of markets on which such derivatives are traded would expect to
receive in accordance with accepted market practices on those markets. For
persons charged with the execution of orders concerning securities, “inside
information” shall also mean information of a precise nature conveyed by the
client, related to the client’s orders, which relates directly or indirectly to one
or more issuers or securities, and which, if it were made public, would be
likely to have a significant effect upon the price of the securities concerned or
the related derivative instruments.
33. Manager of a financial brokerage firm – as defined in par. 1 of Art. 20
of the Law on Financial institutions.
Article 3. Application of the Law to Securities
1. For the purpose of this Law, the following shall be deemed securities
subject to trading on securities markets:
1) shares of public companies and depositary receipts in respect of
shares;
2) debt securities;
3) securities giving the right to acquire securities referred to in items 1
and 2 of this paragraph by subscription or exchange, including
equivalent cash-settled instruments.
2. The following securities or transactions shall be deemed investment
instruments:
1) units of collective investment undertakings;
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2) money-market instruments (instruments which are normally dealt
in on the money market: certificates of deposit, etc.);
3) financial futures contracts, including equivalent cash-settled
instruments;
4) forward interest-rate agreements;
5) interest rates, currency, equity and equity index swaps;
6) options to acquire or dispose of securities or other investment
instruments, including equivalent cash-settled instruments as well
as options on currency and on interest rates.
3. Investment instruments specified under paragraph 2 of this Article
shall be deemed securities for the purpose of Chapters 4, 5, 7, and 8 of this
Law.
4. Securities referred to in Articles 9 and 10 of this Law are used only in
the meaning of securities and derivative instruments specified under pars. 1
and 2 of this Article and the following:
1) derivatives on commodities;
2) any other instruments admitted to trading on a regulated market in a
Member State or for which a request for admission to trading on such
a market has been made.
5. Securities of the Government of the Republic of Lithuania and the
Bank of Lithuania, as well as securities representing debt of international
financial organizations whose member is the Republic of Lithuania and which
hold an authorization issued by the Minister of Finance of the Republic of
Lithuania to offer securities shall be subject only to Chapters 4, 6, 7, and 8,
except paragraphs 2 and 3 of Article 46.
6. For the purpose of this Law, bills issued pursuant to the Law on Bills
of Exchange and Ordinary Bills of the Republic of Lithuania as well as
other payment means prescribed in the Law on Payments of the
Republic of Lithuania shall not be deemed securities.
CHAPTER 2
SECURITIES TURNOVER
Article 4. Obligation to Register Issues of Securities
1. Registration of securities shall confirm that the information
furnished by the issuer complies with the provisions of the rules regulating
disclosure of information established in this Law and other legal acts.
Registration of securities does not certify truthfulness of the information
disclosed; neither may it be considered a recommendation of the Securities
Commission for investors. Revocation of securities registration shall mean
that offering of these securities is prohibited.
2. The following entities must register securities with the Securities
Commission:
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1) a public company of the Republic of Lithuania which is being
founded or which already operates, or an enterprise of any other type which
is being reorganised into a public company;
2) a person intending to issue securities into public trading within the
territory of the Republic of Lithuania.
3. The Securities Commission, having considered the characteristics of
the securities, the peculiarities of their offering, and the need to disclose
information, shall determine what securities may be denied registration.
Article 5. The Contents of a Prospectus
1. In its prospectus an issuer must provide data of financial statements,
information about its activities, securities, the managing bodies, and contracts
entered into with persons related with the issuer and persons who are the
issuer’s business partners. Information must be sufficient so as to allow
making of a sound and substantiated conclusion about the issuer’s assets,
obligations, financial position, profit and losses, and rights attaching to
securities being issued.
2. Where securities are intended for a private placement, an abridged
variant of a prospectus – a memorandum – may be drawn up.
3. The Securities Commission shall specify detailed requirements for
the contents of a prospectus (memorandum). Different requirements of
information disclosure may be established depending on the character of the
issuer’s activities, the type of securities already issued or securities to be
issued, the number of securities holders, and on the presence of plans to list
the securities on the stock exchange.
4. A prospectus (memorandum) shall contain findings of an auditor
concerning the compliance of the issuer’s accounting and financial
accountability (not less recent than 15 months) with the laws of the Republic
of Lithuania and the general accounting principles or the international
accounting standards.
Article 6. The Procedure of Securities Registration and Revocation of
their Registration
1. An issuer intending to register securities must file the following
documents with the Securities Commission:
1) application;
2) prospectus (memorandum);
3) where securities are being registered for the first time, original or
notarized copies of the founding documents, or original or notarized copies of
amendments to the founding documents introduced during the period since
the last registration of securities;
4) original or notarized copies of decisions on the basis of which the
issuer has issued or intends to issue securities,
5) reorganization terms, where the securities are being registered due
to the issuer's reorganization.
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2. The Securities Commission shall specify what documents must be
submitted by an issuer intending to withdraw registration of securities.
3. The Securities Commission must within 30 days consider the
documents filed for the registration or de-registration of securities, and reply
in writing to the issuer. The Securities Commission shall have the right to
request from the issuer additional information necessary for the protection of
investors' interests, as well as an explanation or revision of the furnished data.
In such cases, the Securities Commission shall reply to the issuer within 20
days since the day when additional information or explanations and
amendments were submitted.
4. The Securities Commission shall have the right to refuse to register
securities if:
1) the issuer fails to abide by the rules of data submission prescribed
by the Securities Commission;
2) the issuer fails to submit documents, data or explanations specified
in this Article, or it has turned out that they are incorrect;
3) securities are issued, their type, class or nominal value are changed
in violation of the laws of the Republic of Lithuania or regulations of the
Securities Commission.
5. The Securities Commission shall have the right to refuse to deregister securities if:
1) the issuer has failed to provide documents required for securities
de-registration;
2) de-registration of securities is performed in violation of the laws of
the Republic of Lithuania or the regulations of the Securities
Commission.
6. The Securities Commission shall have the right to revoke the
registration of
securities if:
1) the grounds specified under paragraph 4 of this Article have been
detected only after the registration of securities;
2) the issuer has violated the procedure of primary trading in
securities specified under Articles 11 and 12.
7. The decision of the Securities Commission to refuse to register or deregister securities, or revoke their registration must be reasoned. Documents
filed by the issuer anew shall be considered following the general procedure.
8. The Securities Commission must publish data on the class and
volume of the issue of registered securities in the supplement “Informaciniai
pranešimai” of “Valstybės žinios” (Official gazette) and provide investors with a
possibility to familiarise themselves with the prospectus (memorandum). The
issuer must provide a possibility to persons willing familiarise oneself with
the documents filed for the registration of securities to anybody willing to do
so.
9. The Securities Commission shall have the right to specify:
1) in what cases securities are registered without submitting a
prospectus (memorandum);
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2) peculiarities of the registration of securities the prospectus of which
has been verified by the supervisory authority of a Member State of
the European Union;
3) peculiarities of the registration of securities issued under special
programmes.
Article 7. Periodical Disclosure of Information
1. An accountable issuer must, according to the procedure and at time
intervals set by the Securities Commission, draw up and submit to the
Securities Commission, the stock exchange on which its securities are listed,
and the general public the following periodical reports:
1) annual prospectuses–reports;
2) other regular reports.
2. The Securities Commission shall lay down detailed requirements for
the contents of annual prospectuses–reports and other regular reports. The
Securities Commission shall have the right to exempt a person from the
obligation to disclose certain information if such disclosure would inflict great
losses on the issuer, while non-disclosure would not mislead investors.
Annual financial statements must be submitted alongside with the findings of
an independent auditor.
3. Other regular reports may be produced on a quarterly or semiannual basis. The regularity of these reports shall be established by the
Securities Commission, which must take into consideration the size of the
accountable issuer and the volume of its securities turnover, as well as
whether these securities are listed on a stock exchange.
4. The accountable issuer must provide to each holder of the securities
issued by it a possibility to familiarize himself with all the reports specified in
this Article free of charge and, on the latter’s request, provide to him copies of
these reports. The issuer may charge a fee in the amount set in its Statutes,
which may not exceed the amount of copy production expenses.
Article 8. Disclosure of Information on Material Events
1. An accountable issuer must, in the manner prescribed by the
Securities Commission, promptly notify the Securities Commission, the stock
exchange, on which its securities are listed, and at least two national news
agencies or daily periodicals about every material event, and publish the
information on the material event in its Internet website (where it operates
such), with the exception of events specified in paragraph 3 of this Article.
The notification must specify the type of event and provide a brief description
of it.
2. The news agency or the daily periodical in which information about
material events is to be announced must be indicated in the issuer’s annual
prospectus-report. The Securities Commission, taking into consideration the
size of the issuer and the volume of turnover of its securities, may provide
that a material event is disclosed not immediately but within 5 working days.
3. If disclosure of information referred to in paragraph 1 hereof may
inflict financial or competition-related losses on the accountable issuer, and
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the non-disclosure of such information would not mislead the public and the
issuer is able to ensure the confidentiality of such information, it shall be
exempt from the obligation to publish this information and shall submit it
only to the Securities Commission with a mark ”confidential information”
and a written explanation of the reasons precluding the disclosure of
information. The issuer must specify therein the date until which the
information must remain confidential. On the day the confidentiality of the
information expires it must be disclosed in the manner set out in paragraph 1
hereof. The Securities Commission may require disclosure of information on a
material event prior to the expiry of the confidentiality term specified by the
issuer if:
1) the basis for non-disclosure of information referred to in this
paragraph no longer exists;
2) information has been disclosed to persons who should not be aware
of it.
4. The stock exchange may set out additional requirements for the
disclosure of
material events to be applied to issuers whose securities are listed on it.
Article 9. Prohibition of Insider Dealing in Securities Trading
1. Persons who are in possession of the inside information by virtue of
being the issuer’s employees, members of supervisory or management bodies,
or they have access to such information by virtue of their profession or by
virtue of being shareholders of the issuer, or because they have obtained such
information by virtue of their criminal activities, shall be prohibited from
attempting to conclude or conclude deals in securities to which the
information relates on their own account or the account of a third party until
the information is publicly disclosed. Where the person referred to above is a
legal person, such prohibition shall also apply to the natural person who take
part in the decision to carry out the transaction for the account or in the name
of the legal person concerned.
2. Persons referred to in par. 1 of this Article shall be prohibited from:
1) disclosing directly or indirectly inside information to other persons,
except when information is disclosed by virtue of their position or in the
course of executing their professional duties,
2) on the basis of the inside information recommending or soliciting
other parties to enter into transactions in respect of securities to which the
information concerned is related.
3. Prohibitions specified in this Article shall also be imposed on any
person possessing the inside information, who is aware or should be aware
that such information is not publicly disclosed. Prohibitions specified in par. 1
of this Article shall not apply to the transactions executed before the person
came into possession of the information concerned.
4. Managers of the issuer and persons closely related to such managers
the list whereof shall be established by the Securities Commission, in
accordance with the procedure and within the time limits established thereby,
shall notify of the transactions concluded on their own account thereby in
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respect of the securities of the issuer managed thereby, as well as derivative
instruments and other instruments related to such securities. Such
notifications shall specify the types of transactions, the number and the dates
of the transactions, type and number of transferred or acquired securities,
amount of transactions, form of settlement and other data required by the
Securities Commission. The information specified in this paragraph shall be
made public in the manner specified by the Securities Commission.
5. The issuer or the person acting on the account and in the name of the issuer,
while disclosing the inside information to any third person in normal exercise
of his employment, profession or duties, shall at the same time (or in case of
non-intentional disclosure – promptly after such disclosure), make complete
and effective public disclosure of such information. This requirements shall
no apply where the person who has come into possession of such information
owes a duty of confidentiality, arising from legal acts, articles of association or
a contract. Issuers and persons acting in the name of or on the account of the
issuers, shall in the manner prescribed by the Securities Commission furnish
to the Commission the data (including personal codes) on persons entitled to
have access to inside information by virtue of the employment contract or on
other basis, and on persons related to the issuer.
6. An intermediary, while performing his intermediation duties who
reasonably suspects that the transaction would be effected in violation of
prohibitions provided for in pars. 1, 2 or 3 or Article 10 shall forthwith notify
the Securities Commission thereof.
7. The prohibitions stipulated in this Article and Article 10 shall not apply to
transactions carried out in pursuit of monetary policy, exchange-rate policy,
public debt and reserves management policy by the Republic of Lithuania,
other Member State, the Bank of Lithuania, the European system of Central
banks or other body officially designated to carry similar functions.
8. The prohibitions laid down in this Article and Article 10 shall not apply to
the buy-back of own shares or to the price stabilization provided such
operations are executed in the manner prescribed by legal acts.
9. The prohibitions laid down in this Article and Article 10 and the
requirements in respect of securities traded on the regulated markets
established or operating in the Republic of Lithuania (or for which a request
for admission to trading on such a market has been made) shall apply
irrespective of whether the action has been performed inside or outside the
territory of the Republic of Lithuania. The prohibitions laid down in this
Article and Article 10 and the requirements in respect of securities traded on
the regulated markets of the European Union (or for which a request for
admission to trading on such a market has been made) shall apply to actions
performed in the territory of the Republic of Lithuania, even though the
transaction has been executed outside such a market.
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10. The prohibitions specified in this Article shall also apply to securities
which are not traded on the markets specified in par. 9 of this Article, where
their value is related to the securities stipulated in par.9 of this Article.
Article 10. Prohibition to Manipulate market
1. All persons shall be prohibited from:
1) concluding purchase/sale transactions or place buy/sell orders in respect
of securities where these transactions or orders form a misleading impression
about the demand, supply or price of the securities and the person or person
acting in concert thus maintain unusual or artificial price of one or several
securities. The prohibition provided for in this item shall not apply where the
person who entered into the transaction or issued the orders to trade
establishes that his reasons for so doing are legitimate and that these
transactions or orders to trade conform to accepted market practices on the
regulated marker concerned approved by a supervisory authority;
2) concluding transactions or placing orders to trade which employ fictitious
devices or any other form of deception or contrivance;
3) dissemination of information through the media, including the internet, or
by any other means, which gives or is likely to give, false or misleading
signals as to the securities, where the person who made the dissemination
knew or ought to have known that the information was false or misleading. In
respect of journalists where they act in their professional capacity, such
dissemination of information is to be assessed taking into account the rules
governing their profession, unless those persons derive, directly or indirectly,
an advantage or profits from the dissemination of the information in question.
2. The actions prohibited under par. 1 of this Article may be effected in the
following forms:
1) conduct by a person, or persons acting in collaboration to secure a
dominant position over the supply or demand of securities which has the
effect of fixing, directly or indirectly, purchase or sale price or creating other
unfair trading conditions;
2) the buying or selling of securities at the close of the market with the effect
of misleading investors acting on the basis of closing prices;
3) taking advantage of occasional or regular access to the mass media by
voicing an opinion about securities (or directly about their issuer) while
having previously taken positions on that securities and profiting
subsequently from the impact of the opinions voiced on the price of the
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securities, without having simultaneously disclosed that conflict of interest to
the public in a proper and effective way;
4) in other forms the model list whereof shall be compiled by the Securities
Commission;
3. Persons who produce or disseminate research concerning securities or
issuers of such securities and other information, designed to develop or
propose the investment strategy shall ensure that such information is fairly
presented and disclose their interests or indicate conflicts of interest
concerning the securities to which the information is related.
4. With a view to ensuring the compliance with the requirements indicated in
Articles 8 and 9 of this Law, the Securities Commission may take all necessary
measures to ensure that the public is correctly informed (including the
disclosure of any known information).
5. Institutions disseminating public information liable to have a significant
effect on financial markets shall disseminate them in a fair and transparent
way.
Article 11. Primary Trading in Securities
1. Securities shall be placed for primary trading when the issuer offers
securities either itself or under a contract with intermediaries. Offering may
be executed through a stock exchange in accordance with the rules approved
by the Securities Commission.
2. During primary trading, all persons entitled to acquire securities
must be provided equal conditions of securities acquisition. Each investor
shall be ensured a possibility of acquainting himself with the prospectus and
other documents on the basis of which the issuer’s securities have been
registered.
3. The procedure and terms of an offering and settlement specified in
the prospectus (memorandum) may be amended only during the offering of
the securities upon obtaining consent of the Securities Commission. It shall be
prohibited to change the issue price, nominal value, the class and type of
securities. Where securities are placed on a stock exchange and in cases
specified by the Securities Commission a prospect may indicate ceiling and
bottom prices of securities.
4. If, before the primary trading or during it, data provided in the
prospectus (memorandum) changes or a material event occurs, the issuer
must notify of that following the procedure prescribed for disclosure of
material events and make respective changes in the prospectus
(memorandum). In such cases persons who have already subscribed for the
securities of the issuer shall have the right to renounce them within 5 days
after the new information was disclosed, whereas the issuer must within 10
12
days return to these persons their contributions without making any
deductions.
5. The Securities Commission shall have the right to suspend the
registration of an issuer's securities if:
1) the issuer or the intermediary does not comply with the public
trading rules;
2) it turns out that incomplete or incorrect data have been presented
for the registration of the securities.
Article 12. Peculiarities of Primary Public Trading in Securities
1. It shall be prohibited to advertise securities and to announce
subscription for
them if these securities have not been registered with the Securities
Commission. An issuer or an intermediary acting on behalf of the former shall
have the right to carry out a market research prior to the registration of
securities, creating a possibility for investors to acquaint themselves with the
draft prospectus submitted to the Securities Commission.
2. The issuer must publish in at least one national daily either the
complete prospectus or an advertisement indicating where the prospectus
may be accessed. In the latter event, the issuer must create a possibility for
interested persons to receive copies of the prospectus free of charge at the
issuer’s office and at places where securities are offered.
3. Draft versions of advertisements must be submitted in advance to
the Securities Commission. Only information contained in the prospectus or
regular reports may be used in advertisements. Every advertisement must
state where and when one may familiarize oneself with the issuer’s
prospectus and reports.
Article 13. Primary Public Trading in Securities Carried Out by an
Intermediary
All the requirements applicable to primary public trading in securities
shall be applicable to underwriting.
Article 14. Secondary Trading in Securities
1. Public trading in securities which are issued into circulation or
public offering to transfer them may be carried out only through
intermediaries. This requirement shall not be applicable to privatization of
securities owned by the state or municipalities.
2. Were securities are admitted to the official or current listing on a
stock exchange registered in the Republic of Lithuania, secondary trading
transactions must be concluded only on that stock exchange.
3. In cases and in the manner prescribed by the Securities Commission,
account managers must notify about transactions concluded off exchange.
CHAPTER 3
ACQUISITION OF A SHARE HOLDING
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Article 15*. Obligation to Inform about Acquisition or Disposal of a
Share Holding
1. A person who, acting independently or in concert with other
persons, acquires 1/20, 1/10, 1/5, 1/4, 1/3, 1/2, 2/3 or 3/4 of votes at the
general meeting of shareholders of an accountable issuer or acquire 19/20
votes at the general meeting of an issuer whose shares are admitted to the
Official or Current List of the stock exchange registered in the Republic of
Lithuania, must, not later than within 7 days, inform the Securities
Commission and the issuer about the total amount of votes and furnish data
on securities entitling him to vote or hold securities of the issuer in the future.
This obligation shall also be binding where the specified limits are exceeded
in the diminishing direction.
2. The obligation provided for in paragraph 1 of this Article shall arise
on the day when the person finds out about the acquisition or disposal of a
respective amount of votes or, depending on circumstances, is supposed to
find that out.
3. If the amount of shares provided for in paragraph 1 of this Article is
acquired or disposed of by acquiring or transferring depositary receipts in
respect of shares, the disclosure obligation shall be binding to the owners of
the receipts.
4. The obligation provided for in paragraph 1 of this Article shall not
be binding to an enterprise belonging to a group of enterprises obliged to
draw up consolidated financial statements, if a respective notification is
submitted to the enterprise by its parent undertaking or by the ultimate
parent undertaking of both.
5. The Securities Commission may exempt intermediaries from the
obligation provided for in paragraph 1 of this Article, if they transfer acquired
securities within 30 days from the acquisition moment and do not exercise
voting rights attaching to them.
 The Law No. IX-2174 of 27 April 2004 stipulates that:
1. Provisions of par. 1 of Art. 15 of the Law on Securities Market concerning the obligation to
notify the acquisition of 19/20 votes in the general meeting of the issuer whose securities have
been admitted to the Official or Current List of the Stock Exchange registered in the Republic
of Lithuania and Art. 12 shall come into effect on 1 January 2005.
2. Persons who, acting independently or in concert with other persons have, by 1 January
2005, acquired 19/20 votes in the general meeting of the issuer whose securities have been
admitted to the Official or Current List of the Stock Exchange registered in the Republic of
Lithuania, shall not later than 10 January 2005 notify of the number of votes held thereby in
the manner set forth by Art. 15 of the Law on Securities Market of the Republic of Lithuania.
3. Persons holding 1/20 of the votes of the issuer at the time of the coming into effect of this
Law shall notify of the votes held thereby in the manner set forth in Article 15 of the Law on
Securities Market of the Republic of Lithuania, not later than 10 days prior to the next general
meeting of shareholders where the information has not been published in the 2003
prospectus-report of the issuer.
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6. The Securities Commission may exempt a person from the disclosure
obligation provided for in paragraph 1 of this Article, if such disclosure
would inflict great losses on the issuer, while non-disclosure would not
mislead investors.
7. The Securities Commission shall prescribe a procedure for
submitting notifications specified under paragraph 1 of this Article and shall
inform the public of their receipt within 9 days.
8. A person who fails to fulfill the obligation specified in paragraph 1 of
this Article within a set term, for two years from the moment of submission of
correct data, shall loose the right to hold at general meetings of the issuer’s
shareholders more votes than the last threshold about which he has duly
informed. Moreover, all decisions adopted during the period between the
acquisition of the share holding and the moment of correct information
disclosure may be annulled following judicial procedure if the issuer's
managers have been changed or property or non-property rights of
shareholders have been violated by these decisions.
Article 16. Procedure of Calculation of Votes Held by a Person
1. For the purpose of this Law, voting rights attaching to the following
shares shall be regarded as votes held by a person:
1) shares held by the person by the right of ownership (except where
they are lodged as security and the agreement thereof provides for
a transfer of the voting right to the entity holding the security);
2) shares, voting rights attaching to which are held by legal persons
controlled by that person;
3) shares, voting rights attaching to which are held by another person
with whom that person has concluded a voting agreement on a
lasting common policy towards the management of the company in
question;
4) shares, voting rights attaching to which have been transferred to
that person or a legal entity controlled by it under an agreement on
the transfer of the voting rights concluded with another person;
5) shares bearing voting rights which that person or other persons
acting in concert with that person and specified under items 1, 2, 3,
4 or 8 of this paragraph and paragraph 2 are entitled to acquire
under an agreement providing that declaration of his (their)
intention is sufficient for transferring the votes (in such cases, the
obligation to inform shall arise on the day when the agreement was
concluded);
6) shares, voting rights attaching to which entitle that person to
exercise them at his own discretion acting in accordance with his
authorization;
7) shares entrusted to that person if he may exercise voting rights
attaching to those shares at his own discretion, provided no specific
instruction have been provided;
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8) shares, voting rights attaching to which are held by the spouse of
that person, except cases when nuptial agreements provide that
securities are regarded as personal property of each of the spouses.
2. The Securities Commission shall establish a detailed procedure for
the calculation of votes held by a person. The manager of the issuer shall be
considered to be holding votes of other managers of the issuer if the Securities
Commission, having considered evidence submitted by the manager to prove
independence of his actions, has not resolved otherwise.
17. Tender Offer
1. A tender offer means the procedure of announcing a person’s
intention to acquire a part of or all the securities of an issuer.
2. All holders of the securities of an accountable issuer must be
provided equal possibilities to receive information about offers made and to
sell securities. A tender offer must be executed within a period not shorter
than 30 days and not longer than 60 days.
3. An offeror must submit to the Securities Commission and the
accountable issuer circular disclosing main information about the offer in
question.
4. If, prior to the execution of a tender offer, a person acquires
securities for which he has submitted the tender offer at a price higher that the
tender offer price, the price of the offer must be raised accordingly.
5. If a person who has submitted a tender offer during one year after
the execution of the offer acquires the securities for which he submitted the
tender offer at a price higher than the offer price, he must pay the difference
of the price to persons who replied to the offer.
5. 6. The Securities Commission shall specify in the rules on submission
and execution of tender offers when tender offers may be withdrawn, the
terms may be amended or when their validity expires. Tender offers shall be
registered by the Securities Commission and executed on a stock exchange.
Article 18. Duties of an Issuer during the Validity of a Tender Offer
1. Within 5 days from the receipt of the circular registered with the
Securities Commission, the issuer’s board must publish in a means of mass
media specified in the circular its opinion concerning the tender offer.
2. The managers of the issuer shall be prohibited from taking actions
that would cause any evident worsening of the issuer’s financial condition or
would hamper otherwise execution of the tender offer.
3. The prohibition specified under paragraph 2 shall remain binding
from the moment when the managers of the issuer become aware of the
intention to announce a tender offer until the expiration of the tender offer’s
term.
4. The prohibition specified under paragraph 2 shall not be applied if
such actions are approved of by the general meeting of shareholders
convened after the announcement of the tender offer.
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Article 19. Obligation to Announce an Obligatory Tender Offer
1. If a person, acting independently or in concert with other persons,
acquires more than 40 percent of votes at the general meeting of shareholders
of an accountable issuer, he must, within 30 days, either:
1) transfer securities exceeding this threshold or
2) announce a tender offer to buy up the remaining voting securities
of the issuer and the securities confirming the right to acquire
voting securities.
2. The price of a mandatory tender offer may not be lower than the
highest price of the securities which the offeror acquired over one year before
exceeding the threshold. In other cases the price of the securities purchased
under the mandatory tender offer shall be established by the assets valuator.
The assets valuator shall be approved by the Securities Commission on the
proposal of the offeror. The Securities Commission shall have a right to refuse
to approve the assets valuator where he is related to the offeror or other
persons holding a property interest in respect of the securities of the issuer.
Each shareholder of the issuer shall have the right to appeal to court with a
request to oblige the person who has submitted the mandatory tender offer to
increase the price of that offer so that it complies with the fairness
requirements. In such cases Articles 2.118, 2.119 and 2.127-2.130 of the Civil
Code shall apply mutatis mutandis.
3. A person acting independently or in concert with other persons shall
be devoid of all the votes at the general meeting of shareholders from the
moment of exceeding the threshold referred to in paragraph 1 of this Article.
Voting rights shall be regained on the day when:
1) the mandatory tender offer is registered with the Securities
Commission or
2) the amount of votes held falls at least to the threshold specified in
paragraph 1 of this Article due to a securities transfer transaction or
other reasons.
4. The Securities Commission shall have the right to establish general
cases of exceptions when announcement of a mandatory tender offer is not
compulsory if the requirement to announce a tender offer would be unfair,
inexpedient or contradictory to the market interests.
5. Where within one year from the expiry of the tender offer the person
who has submitted a mandatory tender offer acquires the securities in respect
of which he has submitted the mandatory tender offer at the price higher than
the price of the mandatory tender offer, he shall obligated to pay the
difference in the price to the persons who responded to the mandatory tender
offer.
„Article 191. Mandatory sale and purchase of shares
1. The shareholder of an issuer the shares whereof have been admitted
to the Official or the Current List of a Stock Exchange registered in the
Republic of Lithuania, acting independently or in concert with other persons
and having acquired shares representing not less than 95 percent of the total
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votes at the general meeting of shareholders of the issuer shall have a right to
require that all the remaining shareholders of the issuer sell the voting shares
owned by them, and the shareholders shall be obligated to sell the shares in
the manner established by the present Law.
2. Votes of the shareholder acting independently or in concert with
other persons shall be calculated in accordance with Article 16 of this Law.
Where the issuer has issued shares of different classes, the votes shall be
counted and the rules for the sale and purchase of shares shall be applied
individually in respect of each class of shares. Where, in the manner
stipulated by this Article, the shareholder purchases shares acting
independently or in concert with other persons:
1) persons acting in concert shall be jointly liable for the fulfilment of
the obligation to acquire the shares;
2) the number of shares acquired by persons acting in concert shall be
proportionate to the number of votes of the issuer held thereby at the moment
of the submission of the notification referred to in par. 7 of this Article unless
the agreement concluded by persons acting in concert provides differently.
3. Where a shareholder acting independently or in concert with other
persons is obligated to submit a mandatory tender offer, the sale and
purchase of shares in accordance with this Article may be executed only after
the shareholder‘s obligation to submit the mandatory tender offer is fulfilled
in the prescribed manner.
4. The price offered for the shares shall be fair. The price of the shares
shall be established in accordance with the following principles:
1) where the shareholder acting independently or in concert with other
persons and having acquired not less than 95 percent of votes in the general
meeting of shareholders of the issuer, submits a mandatory tender offer, the
fair price shall be the one paid to him for the shares of the issuer while
acquiring the shares in this manner;
2) where a shareholder, acting independently or in concert with other
persons and having acquired shares entitling it to not less than 95 percent of
votes at the general meeting of shareholders of the issuer, submits a voluntary
tender offer, the fair price shall be the one paid to the shareholder for the
shares of the issuer while acquiring the shares in this manner, provided
through the tender offer the bidder acquired not less than 90 percent of
tendered shares;
3) in other cases the price of the shares shall be established in the
manner opted by the person acquiring the shares and ensuring a fair
remuneration for the shares being bough-up.
5. The price shall be established in the manner defined in items 1 and 2
of par. 4 of this Article only provided not more than 3 months have elapsed
from the moment of the expiry of the tender offer until the submission of the
notification of the shareholder to the issuer set forth in par. 7 of this Article.
Where the time period is longer, the price shall be established in accordance
with item 3 of par. 4 of this Article.
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6. Where the price is established in accordance with item 3 of par. 4 of
this Article, the tendered price shall be in advance approved by the Securities
Commission. The Securities Commission shall have a right, upon duly
grounded reasons, to order to change the price. The notification provided for
in par. 7 of this Article shall be submitted to the issuer not later than within 30
days from the date of the final establishment of the price.
7. The shareholder acting independently or in concert with other
persons, and seeking to buy-up all the shares of the issuer shall submit to the
issuer a notification on the intended purchase of the shares specifying the
following:
1) data on the shareholder buy-up the shares acting independently or
in concert with other persons (name, last name of the natural person,
residence, name and registered office of the legal person);
2) number of shares of the shareholder acting independently or in
concert, by classes and votes granted thereby;
3) the requirements of the shareholder buying-up the shares acting
independently or in concert with other persons that other shareholders sell all
shares of the issuer of the appropriate class;
4) price offered for the shares and the method of the establishment of
the price;
5) the procedure and the venue of the purchase of the shares.
8. Attached to the notification to the issuer specified in par. 7 of this
Article shall be the documents used as a basis to establish the price of shares:
1) in cases specified in items 1 and 2 of par. 4 of this Article – the
circular and the report of the tender offer;
2) in cases specified in item 3 of par. 4 of this Article – other documents
substantiating the method of the establishment of the price of the shares in
accordance with the selected method of establishing of the price.
9. Upon receipt of the notification of the shareholder buying-up the
shares acting independently or in concert with other persons, the issuer shall
not later than within 5 days notify of the purchase of the shares by
recommended mail each shareholder, the Securities Commission and the
National Stock Exchange and publish an appropriate announcement in the
Lithuanian national daily specified in the by-laws of the issuer, which
publishes all announcements. The announcement shall indicate:
1) name, registered office and the code of the issuer;
2) the information notified to the issuer in accordance with par. 7 of
this Article;
3) information specifying the Lithuanian national daily in which the
issuer has announced a mandatory buy-up of shares (this information shall be
indicated only in the notifications sent by recommended mail);
4) the time limit indicated in par. 10 of this Article during which the
shares must be sold or the proposed share sale price must be contested, or the
time limit upon which the shareholder buying-up the shares shall be deemed
to have acquired the right to compulsory buy up the shares in the manner
provided in par. 11 of this Article;
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5) information that in the registered office of the issuer each
shareholder shall have a right to familiarize himself with the documents
substantiating the establishment of the price of the shares, submitted in
accordance with par. 8 of this Article.
10. Within 90 days from the date of the announcement of the notice
indicated in par. 9 of this Article in the Lithuanian national daily specified in
the by-laws of the issuer all shareholders shall be obligated to sell their shares
to the shareholder indicated in the notice on the buy-up of the shares, acting
independently on in concert with other persons, or contest the price proposed
for the shares in the manner stipulated in par. 14 of this Article.
11. Where within the term indicated in par. 10 of this Article the
shareholder fails to sell the shares and does not contest the proposed price for
the shares on the last day of the time limit indicated in par. 10 of this Article
the shareholder buying-up the shares shall be deemed to have acquired the
right to necessarily buy-up the shares by transferring the proposed price for
the shares into the account indicated by the shareholder or the depository
account. In this case the shareholder, not later than within 30 days from the
term he is deemed to have acquired the right to necessarily buy-up the shares,
shall:
1) transfer to the shareholders who have not sold their shares the
proposed price for the shares into the deposit account in the manner provided
for in Article 6.56 of the Civil Code where they avoid accepting payments in
other ways;
2) having produced to the securities account managers a document on
the transfer made to the deposit account of the shareholder who refused to
sell the shares have a right to require the shareholder whose shares are being
necessarily bought-up to make entries in the securities accounts on the
transfer of the title to the securities to the shareholder who purchases the
shares. In this case the account managers shall make appropriate entries in the
securities accounts.
12. Where the shareholder buying up the shares fails to pay the
proposed price for the shares within the established time limit, it shall be
deemed that the shareholder’s right to obligatorily purchase the shares has
expired and the shareholder shall loose his right to require the shares to be
sold to him in the manner provided for in this Article.
13. The settlement for the shares being bought-up shall be made only in
cash.
14. Within the time limit established in par. 10 of this Article each
shareholder shall have a right to appeal to the District Court requiring to
establish the price of the shares so that the price does not infringe the
principles of fairness. In this case Articles 2.118, 2.119 and 2.127-2.130 of the
Civil Code shall apply mutatis mutandis. Where at least one shareholder has
applied to the court the Court shall have a right to suspend the procedure of
the mandatory buy-up of shares until the date the ruling of the court
concerning the establishment of the price of the shares comes into effect.
Within the period when the procedure of the purchase of shares is suspended
the shareholders shall be exempted from the obligation to purchaser or sell
20
the shares, and the time limits in respect of the fulfilment of obligations of the
shareholders shall not be counted. The price applicable to all shares, including
those sold to the shareholder who has made a notice on the buy-up of the
shares prior to the appeal to the court, shall be not less than established by the
ruling of the Court.
15. Any shareholder of the issuer whose shares are admitted to the
Official or the Current Trading List of a Stock Exchange registered in the
Republic of Lithuania shall have a right to require the shareholder acting
independently or in concert with other persons who has acquired the shares
entitling it to not less than 95 percent of all votes in the general meeting of
shareholders of the issuer, to purchase the voting shares owned by him and
the shareholder concerned shall have to buy-up the shares in the manner
provided by this Law. In this case the shareholder who requires to sell the
shares shall submit an appropriate notice to the issuer. The notice shall
indicate:
1) data on the shareholder (name, last name, place of residence of the
natural person; name and registered office of the legal person);
2) the number of shares owned by the shareholder requiring the buy
up the shares by classes and the votes carried by such shares;
3) the requirement of the shareholder to buy up the shares held by him
of the issuer of an appropriate class;
4) the price asked for the shares and the methods of the establishment
of the price;
5) the place of the sale of shares.
16. In cases where any shareholder requires that another shareholder
acting independently or in concert with other persons and has acquired
shares entitling it to not less than 95 percent of votes in the general meeting
of shareholders of the issuer requires that the latter purchases the shares of
the shareholder, provisions of pars. 2-10, 13, 14 of this Article shall apply
mutatis mutandis.
17. Where the shareholder fails to fulfil its obligation to mandatorily
buy-up the shares and does not contest the price of the shares within the time
limit indicated in par. 10 of this Article, he shall be obligated to pay the 10
percent annual interest in respect of the amount overdue.”
CHAPTER 4
INTERMEDIARIES
Article 20. Investment Services
1. Only undertakings holding a licence specified under Article 21 and
23 of this Law shall have the right to provide investment services. An
intermediary shall have a licence to provide at least one of the services
stipulated in items 1-5 of par. 11 of Article 2 of this Law. Investment services
may be provided in a foreign currency.
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2. An intermediary of public trading in securities may provide any one
of the services stipulated in its license and may engage in the following
activity:
1) provide safe custody services,
2) give advice to undertakings on capital structure, industrial strategy,
and related matters, and provide advice and services related to
reorganization, restructuring an takeover of undertakings;
3) provide other services related to distribution of a securities issue
under an agreement with the issuer.
3. Licence referred to in this Article shall not be obligatory to:
1) insurance undertakings,
2) undertakings which provide investment services exclusively to
their parent undertakings, to their subsidiaries or to other
subsidiaries of their parent undertakings,
3) lawyers, notaries, and auditors engaged in their professional
activity,
4) undertakings which exclusively administer employee-participation
schemes or provide alongside services referred to in item 2 of this
paragraph,
5) undertakings subject to the regulation of the rules approved by
supervisory authorities if they may not hold clients’ funds or
securities and which for that reason may not place themselves in
debit with their clients and which may provide only services
defined under Article 3 (1) and item 1 of Article 3 (2) of this Law,
and which may transmit orders only to intermediaries and
commercial banks authorised in the Republic of Lithuanian or a
Member State of the European Union, to investment companies
with variable capital or their management enterprises, to those
investment firms shares of which are dealt in on a regulated
market, to branches of intermediaries or departments of commercial
banks of countries that are not members of the European Union,
6) persons whose main business is trading in commodities amongst
themselves or with producers or professional users of such
products and who provide investment services to them to the
extent necessary for their main business,
7) persons whose investment services consist exclusively in dealing
on financial-futures or options markets for their own account or for
the account of other members of those markets, if the responsibility
of guaranteeing for those persons is assumed by clearing members
of the same markets.
4. Chapter 4 of this Law shall not apply to the Bank of Lithuania, the
European
Central Bank, the central banks of the Member States of the European Union
or other bodies charged with management of the public debt.
5. Publication of financial and business news in the means of mass
media addressing an unspecified group of persons shall not be deemed
consultation on issues of investing into securities.
22
6. Securities portfolios of pension funds may be managed only by
persons holding a license specified in the relevant laws.
Article 21. Licensing of Intermediaries
1. Licenses to provide investment services shall be granted by the
Securities Commission to the following entities:
1) public companies or private companies registered in the Republic of
Lithuania,
2) financial brokerage firms licensed in countries that are not members
of the European Union.
2. An undertaking holding a license specified under paragraph 1 of
this Article
shall be called a financial brokerage firm. The words “financial brokerage
firm” or similar combinations of these words may appear only in the names
and advertisements of those undertakings, which have a right to provide
investment services. Undertakings specializing in the management of
securities portfolios of other persons may use in their titles the words
“investment management firm” or similar combinations of these words.
3. Commercial banks shall be authorized to provide investment
services by a bank license, where this license does not set a restriction to
engage in such an activity. The Securities Commission shall submit to the
Bank of Lithuania its conclusion on the preparedness of a commercial bank in
question to provide investment services by establishing a special internal unit
with that aim. Commercial banks shall be subject to the same requirements
and restrictions as financial brokerage firms, except cases when, as provided
for in this Law, certain rules apply only to financial brokerage firms.
Article 22. The Procedure of Issuing Intermediaries’ Licenses
1. A legal person willing to provide investment services shall file an
application with the Securities Commission. The application must contain
information on the legal person, its shareholders, management, activities and
their prospective development, initial own capital and other data and
documents laid down in the rules approved by the Securities Commission.
Public and municipal authorities must provide to the Securities Commission,
on its request, all the information held by them on the applicant’s
shareholders, their financial position, activities, detected violations of laws
and regulations, conclusions drawn after carrying out inspections and other
information necessary for the adoption of a decision concerning licensing.
2. The Securities Commission may refuse to issue the licence if:
1) the application does not meet the requirements or if the data
provided in it is incomplete or untrue;
2) initial own capital of the legal person is lower than the minimum
amount established by the Securities Commission or if other statutory
requirements are not met;
3) holders of a block of the legal person’s shares fail either to meet the
requirements set out in items 1 and 2 of Article 26 (3) of this Law or to
provide information on their shareholders, activities and financial position;
23
4) at least one of the employees of the legal person is an employee of a
stock exchange or the Central Securities Depository of the Republic of
Lithuania (hereinafter – the Central Depository);
5) members of the Board of the legal person or the head of the
administration are of insufficiently good repute, their qualifications do not
meet the requirements set out by the Securities Commission or they have no
work experience in financial or other analogous institutions;
6) premises and equipment owned or rented are inadequate for the
provision of
investment services;
7) the head office of the legal person is situated outside the territory of
the Republic of Lithuania (that of a foreign legal person is situated not in the
state which has issued the authorization);
8) a close link exists between the legal person and another person,
which might hamper efficient supervision to be exercised by the Securities
Commission;
9) the legal person is connected by a close link with persons from a
country that is not a member of the European Union whose legal acts
governing the activity of these persons, or difficulties involved in their
enforcement impede efficient exercising of the supervisory functions.
3. The Securities Commission may refuse to issue a license to a
financial brokerage firm authorized in a foreign state, if the Securities
Commission has not concluded agreements with the foreign supervisory
institution ensuring proper supervision of the activity and submission of
information.
4. The Securities Commission must inform the legal person about its
consent or refusal to issue the licence within 6 months from the filing of all
relevant documents and data. The Securities Commission shall have the right
to request the applicant to present additional data or explanations. In this
case the time limit for the consideration of the application shall be calculated
from the date when the last data or documents were filed. The Securities
Commission must reply in writing within two months. Its refusal to grant the
licence must be reasoned in writing and may be appealed in court.
5. It shall be deemed that a close link exists between persons if they are
connected by a significant influence or control. Significant influence means a
possibility to take part in the shaping of the undertaking’s strategy without
controlling it. Such influence exists when at least 1/5 of the voting rights or
capital of the undertaking is held by the right of ownership or control at the
general meeting of shareholders. A situation when two or more persons are
permanently linked to a third person by control relations shall be regarded as
constituting a close link between the former persons.
6. A license may be granted only upon consulting on issues referred to
par. 8 of Article 26 of this Law with the relevant supervisory authority of the
Member State of the European Union, or the supervisory authority of credit
institutions or insurance companies, if:
24
1) the legal person is a subsidiary of a public trading intermediary or a
credit institution or an insurance company licensed in a Member
State of the European Union,
2) the legal person is a subsidiary of the parent undertaking of a
public trading intermediary or a credit institution or an insurance
company licensed in a Member State of the European Union,
3) persons controlling the legal person also control a public trading
intermediary or a credit institution, or an insurance company
licensed in a Member State of the European Union.
7. The Securities Commission shall communicate granting or
revocation of
licenses to a relevant registrar of the Register of Enterprises and announce
thereof in the supplement “Informaciniai pranešimai” of “Valstybės žinios”
(Official Gazette).
Article 23. The Right of Financial Brokerage Firms Licensed in
Member States of the European Union to Provide Investment Services in
the Republic of Lithuania
1. A financial brokerage firm licensed in a Member State of the
European Union may establish a branch in the Republic of Lithuania,
provided that the foreign supervisory authority has communicated to the
Securities Commission the firm’s programme of operations, setting out the
types of business, envisaged address, the structure of the branch, and
information on the branch’s management. Upon receiving such a
communication, the Securities Commission shall prepare for the
implementation of the supervision of the branch and shall indicate to the
financial brokerage firm what activity requirements established in public
interests shall be binding to it. The branch may be established when the
financial brokerage firm receives such a notification from the Securities
Commission, or, if it does not receive it – in two months after the foreign
supervisory authority communicated to the Securities Commission
information specified in this paragraph.
2. If the financial brokerage firm specified under paragraph 1 of this
Article already has at least one branch in the Republic of Lithuania, the
procedure specified in this Article shall not apply to the establishment of its
other branches.
3. A financial brokerage firm licensed in a Member State of the
European Union may start providing investment services in the Republic of
Lithuania without establishing a branch in one month after the foreign
supervisory authority communicated to the Securities Commission the
programme of the firm’s operations.
4. If information on a financial brokerage firm specified under
paragraph 1 of this Article changes, the firm must submit a prior notification
to the Securities Commission not later than one month in advance. A financial
brokerage firm providing investment services without establishing a branch
must inform the Securities Commission beforehand about changes in its
operation programme.
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Article 24. Duties of Intermediaries
1. In observance of prudential requirements intermediaries must:
1) have reliable administrative procedures and accounting records
systems, control and safeguard arrangements for electronic data
processing;
2) implement internal control and monitor personal transactions of its
employees;
3) conduct separate accounting of its own securities and the securities
of each of its clients and not use the client’s securities without the
client’s express consent;
4) keep separate records of each client’s funds;
5) retain documents of executed transactions for periods not shorter
than 10 years since the day of the transactions’ execution, where
other laws do not provide for longer periods;
6) be structured in such a way as to avoid conflicts of interests
between the firm and its clients or between one of its clients and
another.
2. A financial brokerage firm shall deposit its clients’ cash funds in a
commercial bank on fiduciary basis separately from its own cash funds. The
client’s cash funds transferred to the brokerage firm for purchasing of
securities and the client’s cash funds held at the brokerage firm after the sale
of the client’s securities shall be deemed the property of the client, against
which no claims of creditors of the brokerage firm may be directed.
3. When carrying out their activities, intermediaries must:
1) act honestly and fairly in the best interests of clients and the integrity
of the market,
2) act with due skill, care and diligence,
3) have and employ effectively the resources and procedures,
4) seek from clients information regarding their financial condition,
investment experience and objectives which they pursue using
investment services,
5) in dealings with clients, disclose to them adequately relevant
material information, including information on the investor
compensation scheme or the absence of such a scheme,
6) try to avoid conflicts of interests and, where they can not be avoided,
ensure that clients are fairly treated.
4. When fulfilling the requirements specified under paragraph 3 of
this Article, an intermediary must consider whether the client is a
professional investor or not (which applies to cases when investors
place orders via another intermediary).
5. Current and previous managers and employees of the
intermediary must keep information which they have received in the
course of their duties confidential and may not use it for personal
benefit or for the benefit of others. The intermediary must have at least
one employee holding the broker’s license or a document evidencing
that he has qualifications recognised by the Securities Commission.
26
6. The Securities Commission shall have the right to specify the
statutory duties of intermediaries by establishing:
1) the code of ethics of intermediaries;
2) the procedure of providing securities and money necessary
for the execution of a transaction;
3) the procedure of placement and execution of clients’ orders;
4) the methodology of capital adequacy calculation;
5) the contents and procedure of submission of reports and
notification (including notifications about the financial
position, branches and transactions concluded) to be filed
with the Securities Commission;
6) the contents and submission procedure with regard to the
intermediary’s report addressed to the public;
7) procedure of announcing about services provided;
8) requirements for safe keeping of confidential information;
9) internal control implementation procedure;
10) actions to be taken by intermediaries with regard to
investment services in cases of license revocation.
Article 25. Agreements of Intermediaries
1. Agreements between intermediaries and their clients shall be
executed in a simple written form.
2. A public trading intermediary shall, in the manner and form
stipulated beforehand, inform the client of the peculiarities and risks related
to acquisition, accounting and realisation of the rights of ownership attaching
to securities not registered with the Securities Commission, as well as about
any other peculiarities or increased risk which is generally not characteristic
of services provided previously, transactions, or securities.
3. The agreement of securities portfolio management shall specify the
following:
1) initial composition of the securities portfolio,
2) objectives which the client pursues,
3) rights and duties of the intermediary stemming from the
management of the portfolio,
4) filing procedure and the contents of the securities portfolio
management reports.
4. An intermediary may, in the name of the represented client,
conclude with
itself or with another person whom it represents a securities sale or purchase
transaction.
5. A spouse’s authorisation to conclude transactions in respect of
transfer or restriction of ownership of securities which are admitted to the
trading lists of the stock exchange and which constitute joint ownership of the
spouses may be granted by executing a simple written document.
Article 26. Acquisition of a Block of Shares in a Financial Brokerage
Firm
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1. Any person willing to acquire a block of shares in a financial
brokerage firm or increase the holding he already has so as to increase the
proportion of the votes or the authorised capital he holds to the threshold of
1/5, 1/3 or 1/2 or so as to make the financial brokerage firm its subsidiary
must obtain a prior approval of the Securities Commission. For the purpose of
this Article, a block of shares means also an amount of voting or non-voting
shares smaller than 1/10 of all the shares or of the voting shares if it allows to
exercise influence over the management of the firm. Votes held by a person
shall be calculated in accordance with the procedure prescribed in Article 16
of this Law.
2. The above mentioned person shall file with the Securities
Commission an application of a form specified by the Securities Commission
and the latter shall within 3 months from the date when the application was
received inform the applicant of its decision either to approve or refuse to
approve of the acquisition of a holding.
3. The Securities Commission may refuse to allow the acquisition of a
holding if:
1) the person (where it is a legal person – managers and controlling
persons) is not of a sufficiently good repute,
2) the person is an employee of the stock exchange, the Securities
Commission or the Central Depository,
3) the legal person has failed to provide information on its
shareholders, activities and financial position,
4) after the issuance of the licence, a close link would occur which
would constitute the grounds for the refusal to issue the license.
4. A refusal to approve the acquisition of a block of a financial
brokerage firm’s shares must be substantiated in writing and may be
appealed to court. Where the Securities Commission does not object to the
acquisition of a share holding, it shall set a deadline for the implementation of
the acquisition.
5. A person must also inform the Securities Commission before
reducing his holding in a financial brokerage firm so that the proportion of
the voting rights or of the capital held by him would fall below the thresholds
of 1/10, 1/5, 1/3, 1/2 or so that the financial brokerage firm would cease to
be its subsidiary.
6. On becoming aware of the acquisition or transfer of its capital, which
exceeds the threshold referred to in this Article, a financial brokerage firm
shall without delay within 5 days, inform of it the Securities Commission.
7. If a person acquires shares in a financial brokerage firm without
obtaining approval of the Securities Commission, where such an approval is
necessary, the voting rights attaching to the shares held by that person at
general meetings of shareholders shall be suspended.
8. If a public trading intermediary, a credit institution or an insurance
company licensed in a Member State of the European Union, a parent
undertaking of such an intermediary, a credit institution or an insurance
company, or a person controlling an intermediary, a credit institution or an
insurance company licensed in a Member State of the European Union seeks
28
to acquire a share holding in the financial brokerage firm so that after the
acquisition the latter would become its subsidiary or would be controlled by
it, the approval may be granted only upon obtaining the approval of the
relevant foreign supervisory authority, credit institutions or insurance
companies supervisory authority. An opinion shall be sought on the eligibility
of other shareholders of the same group of companies, experience and
reputation of their managers”.
Article 27. Management of a Financial Brokerage Firm
Financial brokerage firms shall establish a single-person body of
management, - the manager of the firm and the collegial body of management
– the Board.
Article 28. Brokers
1. A natural person who holds a licensed issued by the Securities
Commission entitling him to engage in one or more predefined brokerage
activities shall be considered a broker.
2. A person who applies for a broker’s licence must pass examinations
organised by the Securities Commission or present a qualifications certificate
recognised by the latter. The Securities Commission shall have the right to set
educational or professional requirements for brokers. A broker’s licence may
not be issued to a person whose reputation is not impeccable.
3. The Securities Commission shall have the right to revoke a broker’s
license:
1) on a written request of the broker;
2) upon death of the broker;
3) if, within 12 months, the broker has not engaged in the professional
activity related to the functioning of the securities market referred
to in the rules approved by the Securities Commission regulating
issuance of the licences for financial brokers or if he has not been
engaged in it for more than 12 months;
4) if, after issuance of the licence, facts have been revealed which
would have prevented the issuance of the licence;
5) if conditions form due to which the broker may no longer be
considered having a sufficiently good repute;
6) if the broker is in breach of this Law the or the regulations passed
by the Securities Commission.
4. The revocation of the broker’s licence shall result in the suspension
of the
licence of the brokerage firm at which the broker is employed only provided
the firm no longer qualifies for the licence it has been issued.
5. The Securities Commission shall have the right to conduct, from time
to time but no more frequently than once a year, re-evaluation of brokers’
qualifications on the basis of grounded complaints of clients or data of
inspections evidencing inadequate qualifications of a broker. On the basis of
the results of the qualifications’ re-evaluation, the number of functions which
the broker is authorised to perform may be reduced and where it turns out
29
that the broker’s qualifications are completely inadequate or where he does
not participate in the re-evaluation, his licence shall be revoked.
6. The Securities Commission shall communicate issuance or
revocation of a broker’s license in the supplement “Informaciniai pranešimai”
of “Valstybės žinios” (Official Gazette).
Article 29. Audit of Financial Brokerage Firms
The procedure for the auditing of a financial brokerage firm, requirements to
the auditor or an audit firm, the duties and responsibilities of the auditor or
an audit firm shall be stipulated by the Law on Audit and the Law on
Financial Institutions.
Article 30. The Right of Financial Brokerage Firms of the Republic of
Lithuania to Provide Investment Services in Foreign States
1. This Article sets out requirements applicable to a financial brokerage
firm establishing a branch in a Member State of the European Union or
providing investment services in such state without establishing a branch. A
financial brokerage firm shall have the right to establish a branch or provide
services without establishing a branch in a country that is not a member of
the European Union in accordance with the procedure prescribed in this
Article where a proper supervision of activities and communication of
information is guaranteed under agreements concluded between the
Securities Commission and a relevant foreign supervisory authority. Where a
financial brokerage firm already has at least one branch in a foreign state, the
procedure prescribed under this Article shall not apply to its other branches
in that state.
2. Prior to establishing a branch in a foreign state, a financial brokerage
firm must communicate that to the Securities Commission, submitting
together with the communication a programme of its operations indicating
the types of activity, the address where the branch may be found and the
structure of the branch, as well as data on the managers of the branch.
3. The Securities Commission must within 3 months forward
information specified under paragraph 2 of this Article to a relevant foreign
supervisory authority together with information on investors compensation
scheme. The Securities Commission may ban the establishment of a branch or
refuse to forward the above information only where the administrative
structure of the intended branch or the financial position of the financial
brokerage firm fails to meet the requirements prescribed by the Securities
Commission to such an activity. A financial brokerage firm must be promptly
informed of the transfer of information or of a refusal to transfer it.
4. A financial brokerage firm willing to provide investment services in
a foreign state without establishing a branch must inform of that the
Securities Commission. It must file, together with the notification, a
programme of its operations stating what investment services it intends to
30
provide. The Securities Commission shall, within one month, forward this
information to the foreign supervisory authority and inform of that the
financial brokerage firm.
5. In the event information filed by a public trading intermediary
together with the notification about the establishment of a branch changes, the
intermediary shall notify of that the Securities Commission at least one
month in advance. Where the situation specified under paragraph 3 of this
Article forms, the Securities Commission must indicate to the branch to cease
its activity. The Securities Commission must inform the foreign supervisory
authority of changes in the investor compensation scheme. In the event a
change is made in the operation programme of a firm providing services
without establishing a branch, that firm must notify thereof the Securities
Commission and the foreign supervisory authority in advance.
Article 31. Sanctions Imposed on Intermediaries
1. The Securities Commission shall have a right to impose on
intermediaries the following sanctions:
1) to ward them for the shortcomings and violation of their activities
and set the term for their elimination;
2) to impose on their employees administrative fines and other fines
stipulated in this Law;
3) to revoke the licence authorizing them to provide one, several or
all of the operations;
1) to appoint an interim representative of the Securities Commission
for the
supervision of the activity.
2. The Securities Commission shall have the right to apply to
commercial banks only the sanctions referred to in items 1 and 2 of this
paragraph.
Article 32. Grounds and Procedure of Imposition of Sanctions
1. The sanctions set forth in this Law shall be imposed on a public
trading intermediary on at least one of the following grounds:
1) the intermediary has furnished incorrect information to the
Securities Commission;
2) the Securities Commission has not been provided with requested
information or documents necessary for the supervision;
3) conditions under which the licence was issued are no longer
satisfied;
4) the laws or other legal acts of the Republic of Lithuania have been
violated;
5) the intermediary fails to meet its obligations under its liabilities or
there is evidence that it will not be able to do that in the future.
2. The choice of a sanction shall depend on the type of the violation
and the impact of the violation and the sanction on the firm and its safety. The
question concerning application of a sanction shall be considered at a
meeting of the Securities Commission provided the intermediary has been
31
informed thereof and given a possibility to present explanations. In the event
the representative of the intermediary fails to attend the meeting or to present
explanations, a decision concerning application of a sanction shall be taken
without his participation.
3. A decision to apply a sanction may be taken provided not more than
2 years have elapsed since the day the violation was made, while in cases of
continuous violations - since the day the last acts were committed.
Article 33. Revocation of the Licence due to Non-implementation of
the Activity
1. The Securities Commission shall have the right to revoke the licence
or restrict the scope of services specified in the license if the holder of the
license:
1) applies in writing for the revocation of the licence or restriction of
the scope of services specified in the license;
2) fails to commence the licensed activities within 12 months or
suspends such activities for more than 6 months.
Article 34. Temporary Representative for the Supervision of
Activities
1. In urgent cases, upon receiving information on violations of
legislation and seeking to protect securities and funds transferred to financial
brokerage firms by clients, the Securities Commission shall have the right to
delegate a temporary representative for the supervision of the activities of the
financial brokerage firm in question.
2. After the appointment of a temporary representative, the managers
of the firm will be obliged to obtain his approval for the decisions relative to
the activities of the firm.
3. The services of the temporary representative may be terminated
prior to the expiry of his term if:
1) the financial brokerage firm is considered able to function in a
trustworthy and stable manner;
2) bankruptcy proceedings have been instituted against the firm.
Article 35. Supervision of Financial Brokerage Firms of the
Republic of Lithuania Operating Abroad
1. The Securities Commission shall supervise the compliance of the
financial brokerage firms of the Republic of Lithuania providing investment
services abroad with the prudential requirements. Where a foreign
supervisory authority informs the Securities Commission about violations
committed by such a financial brokerage firm, the Securities Commission
must impose sanctions and notify of that the foreign supervisory authority.
2. The Securities Commission shall have the right to ask the foreign
supervisory authority to carry out an inspection of the branch of a financial
brokerage firm or shall carry out such an inspection itself upon giving a prior
notification to the foreign supervisory authority.
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3. The Securities Commission shall immediately inform the foreign
supervisory authority of the suspension of the license of a financial brokerage
firm providing investment services in the foreign state.
Article 36. Supervision of the Activity of Foreign Intermediaries
Providing Investment Services in the Republic of Lithuania
1. Foreign intermediaries providing investment services in the
Republic of Lithuania must abide by the requirements prescribed in the
legislation of the Republic of Lithuania. The organizational structure of their
branches must satisfy the requirements prescribed by the Securities
Commission which are aimed at prevention of conflicts of interests of the
intermediary and its clients or conflicts of interests of the firm’s clients.
2. The Securities Commission shall have the right to request from
foreign intermediaries providing investment services in the Republic of
Lithuania the same reports, specified by this Law, as from intermediaries
licensed in the Republic of Lithuania. Additionally, the Securities Commission
may request, for statistical purposes, branches to report on their activities.
3. The foreign supervisory authority and persons authorized by it,
having given a prior notice to the Securities Commission, shall have the right
to carry out inspections of the branch of a foreign intermediary.
4. Where a foreign intermediary acting in the Republic of Lithuania
violates the statutory requirements, the Securities Commission shall require it
to put an end to its irregular situation. If the intermediary fails to take the
necessary steps within the prescribed term, the Securities Commission shall
inform the supervisory authorities of the foreign state accordingly and shall
have the right to apply the following sanctions:
1) impose on the employees of the intermediary administrative
penalties or fines set out in this Law;
2) prevent the intermediary from providing investment services in
the Republic of Lithuania.
5. The Securities Commission shall not be obliged to abide by the
procedure of application of sanctions specified in paragraph 4 of this Article
if the foreign intermediary has violated the requirements established in public
interest set out for its activity. Where other requirements have been violated
and protection of interests of investors requires imposition of sanctions, the
procedure specified under paragraph 4 of this Article shall not be binding to
the Securities Commission, which must inform at the earliest opportunity the
foreign supervisory authority accordingly. Where sanctions are imposed on
an intermediary licensed in a Member State of the European Union, the
Securities Commission shall inform of that the European Commission as well.
6. Upon being notified about the revocation of the license of a foreign
intermediary, the Securities Commission shall promptly take measures
necessary to terminate the activities of the intermediary carried out in the
Republic of Lithuania.
Article 37. Reorganization of a Financial Brokerage Firm
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Financial brokerage firms may be reorganized only upon obtaining a
prior consent of the Securities Commission. The Securities Commission may
refuse to give its consent only if after the reorganization cash funds and
securities entrusted by the clients to the brokerage firm would no longer be
safe.
Article 38. Bankruptcy of a Financial Brokerage Firm
1. A financial brokerage firm’s bankruptcy case shall be brought
before the court.
2. The Securities Commission shall have the right to apply to the
court for initiating a bankruptcy against a financial brokerage firm.
3. Upon receipt of an application to initiate a bankruptcy, the court
shall on the same day ban the financial brokerage firm from disposing of bank
accounts and securities.
4. No later than within 15 days after the application was filed, the
court shall pass a decision either to initiate a bankruptcy or not.
5. The administrator of the financial brokerage firm shall return to
the firm’s clients their cash funds either held at the firm or deposited in
commercial bank accounts opened by the firm in the clients’ name.
CHAPTER 5
STOCK EXCHANGE
Article 39. Prohibition to Engage in the Activities of a Stock
Exchange without Holding a License
1. Only a public company holding a license issued by the Securities
Commission authorising it to act as a stock exchange shall have the right to
engage in the activities aimed at concentrating, by organisational and
technical facilities, supply and demand of securities and thus enabling trading
parties to conclude transactions in accordance with the prescribed trading
rules. The name of an exchange must contain the words “Vertybinių popierių
birža” (Stock Exchange) or the acronym VPB.
2. The Securities Commission shall enter trading lists of stock
exchanges which have their offices in the Republic of Lithuania on the list of
regulated markets operating in the Republic of Lithuania.
3. Actions by which markets entered on the lists of regulated markets
of Member States of the European Union provide intermediaries in the
territory of the Republic of Lithuania with facilities requisite for their
membership shall not be deemed an infringement of the prohibition specified
under paragraph 1 of this Article.
Article 40. Duties of a Stock Exchange
1. A stock exchange must:
1) organise securities trading, listing, quotation, safe and
transactions and their settlements;
efficient
34
2) promote fair trading in securities and seek to preclude
manipulation of the market prices and other unfair actions;
3) spread information allowing to evaluate securities quoted on the
stock exchange as well as information on their issuers;
4) ensure protection of confidential information and implementation
of internal control.
2. A stock exchange shall have the right to engage only in the activities
which are directly related to the activities specified in its license and the
duties set out in this Law.
3. A stock exchange must, in the manner prescribed by the Securities
Commission, inform the latter of:
1) securities transactions concluded;
2) orders not executed;
3) listing or removal of securities from the trading lists;
4) admission or expulsion of exchange participants.
4. The Securities Commission shall define the minimum amount of the
own capital of a stock exchange and impose restrictions on investment of its
funds.
Article 41. Licensing of a Stock Exchange
1. An operating public company or a public company which is being
founded and which wants to obtain a license for the activity of an exchange,
must file the following documents with the Securities Commission:
1) an application stating the purpose of founding the exchange, its
name, registered office, information concerning the founders
(shareholders) and managers;
2) the founding agreement;
3) economic, financial and technical substantiation of the exchange’s
activities (business plan);
4) the Statutes of the exchange;
5) the trading rules of the exchange.
2. Upon receipt of all the required documents, the Securities
Commission must within 3 months issue a license or present a substantiated
written refusal to issue it. The Securities Commission may request the
company to present additional information or explain the data filed. In such
cases counting of the prescribed period shall commence anew from the last
filing of appropriate data or explanations, while the Securities Commission
shall communicate its answer in writing within 2 months.
3. The Securities Commission shall refuse to issue a license for the
exchange activity if :
1) the Statutes or the founding agreement of the exchange or other
documents submitted fail to comply with the provisions of the laws or
other legal acts of the Republic of Lithuania;
2) the documents submitted contain false information;
3) the substantiation of the activity of the exchange is insufficient for it
to perform adequately its functions;
35
4) the owners of the applicant’s block of shares do not satisfy the
conditions referred to in Article 42 of this Law.
5) members of the supervisory Board, the Board or the Manager of the
Stock Exchange are not persons of impeccable repute, do not hold
qualification established by the Securities Commission or a working
experience in the financial institutions or other comparable institutions.
4. The Securities Commission shall have the right to revoke the license
authorising to engage in the activity of a stock exchange where the exchange
fails to meet the requirements set forth in respect of its activity.
Article 42. Acquisition of a Share Holding in a Stock Exchange
1. Acquisition of a share holding of a stock exchange shall be subject to
the same procedure as the acquisition of a share holding in a financial
brokerage firm, as set out in this Law. The Securities Commission may refuse
to allow the acquisition of a share holding of a stock exchange if:
1) the person (where it is a legal person – managers and controlling
persons) is not of an sufficiently good repute;
2) the legal person has failed to provide information on its
shareholders, activities and financial position.
Article 43. Management of a Stock Exchange
1. The Supervisory Council and the Board shall be formed at a stock
exchange.
2. A representative of the Securities Commission shall have the right to
attend meetings of the Council and the Board of the exchange with the
deliberative vote and to receive material provided to other participants of
meetings.
Article 44. Trading in Securities on a Stock Exchange
1. Trading in securities on a stock exchange shall be conducted in
accordance with the trading rules approved, on proposal of the exchange, by
the Securities Commission.
2. The trading rules of a stock exchange must regulate:
1) the conditions, procedure, and terms of securities listing and delisting;
2) the methods of settling disputes arising due to transactions on the
exchange;
3) types of transactions concluded on the exchange;
4) the procedure of trading in securities on the exchange;
5) the time-frame of the exchange’s trading sessions;
6) requirements for members of the stock exchange, their rights and
duties, the procedure and conditions for suspension of the right to
participate in the stock exchange trading, and liability for failures to
fulfil duties;
7) the procedure for setting the price of securities;
8) the procedure of announcing prices and the trading volume;
36
9) the amounts of fees of annual membership, exchange transactions,
securities listing, as well as annual quoting fees.
3. All securities registered with the Securities Commission and
intended for public trading may be admitted to the stock exchange listing
following the requirements set forth in the trading rules of the stock
exchange. The issuer whose securities are listed on the exchange must submit
to it, in accordance with the procedure established by it and within the time
period set by it, information requested under other Articles of this Law.
4. Membership of the stock exchange and admission to its settlement
system shall be available to the intermediaries which enjoy the right to
provide in the Republic of Lithuania investment services specified under
items 2 and 3 of Article 2 (11) of this Law.
5. A stock exchange shall be entitled to receive information on the
financial and economic activities of its members, to inspect the compliance of
its members with the requirements prescribed by it, and to impose sanctions
for violations as provided for in its trading rules.
6. The Securities Commission shall have the right to instruct to a stock
exchange to terminate trading in securities where it is necessary for the
protection of investors’ interests.
CHAPTER 6
ACCOUNTING OF SECURITIES
Article 45. Accounting of Securities
1. Securities shall be registered by making entries in personal securities
accounts managed in accordance with the rules on accounting of securities
and their circulation. These rules shall be drawn up by the Central
Depository and shall be approved by the Securities Commission. Securities
accounts may be managed manually in paper form or by computer. Accounts
shall be opened in the name of the owner of securities, except cases specified
under paragraphs 2 and 3 of this Article.
2. Accounts of collateralised securities may be opened in the name of
the holder of the collateral, indicating the owner of the securities. Entering of
collateralised securities into an account opened in the name of the collateral
holder shall be considered a transfer of these securities to the disposal of the
collateral holder.
3. Accounts of clients of account managers registered abroad may be
opened in the name of the account managers, indicating that they act as
account managers.
Article 46. Management of Securities Accounts
1. The right to open and manage personal securities accounts shall be
conferred to intermediaries and the Central Depository.
2. An issuer must submit documents for opening of the account of
securities issued by it or for making changes in entries in the accounts
37
pursuant to the procedure and terms stipulated in the rules on accounting of
securities and their circulation.
3. Before launching the primary securities trading, an issuer must
conclude with an account manager an agreement stipulating the procedures
of opening and managing personal securities accounts. The Central
Depository shall inform the Securities Commission, following the procedure
specified by the latter, about authorised account managers. An account
manager authorised by the issuer must open personal accounts of securities
issued by the issuer to each owner who has not delegated by a written
statement the management of the account to another account manager.
4. The issuer shall have the right to request at any time that the account
managers present a list of owners of its securities. This right shall be exercised
by submitting an inquiry to the Central Depository. To have such a request
satisfied, an inquiry must be filed with the Central Depository, which shall
provide, depending on the choice of the issuer, either a list of account
managers or a list of securities owners. The issuer shall be entitled to exercise
the above right before each general meeting of shareholders free of charge.
5. Securities accounts may be managed on behalf of the account
manager as well as the contents of the account may be changed only by
employees holding a written authorisation issued by the account manager.
Each manager of accounts must present a list of such employees to the
Central Depository. The account manager must, on a continuous basis,
guarantee that owner enjoy the right to dispose of their securities.
6. Executives and employees of account managers must ensure
confidentiality of the information of which they have become aware in the
course of account management, with the exception of cases when the law
obliges them to furnish such information.
Article 47. Statements of Accounts
1. An account manager must notify the owner of securities in writing
of any change in the latter’s account, unless the agreement between them
provides otherwise. After a calendar year ends, the account managers must,
pursuant to the procedure stipulated in the agreement, present statements of
securities accounts by the end of the last day of the past year.
Article 48. The Central Depository
1. The Central Securities Depository of Lithuania is a public company
acting in accordance with this Law and its own Statutes.
2. Only the Republic of Lithuania, the Bank of Lithuania, credit
institutions, financial brokerage firms, insurance firms, investment
companies, and their management enterprises, pension funds and their
management enterprises, stock exchanges, and central depositories licensed in
the Republic of Lithuania, a Member State of the European Union or a state
which has opened official negotiations concerning its membership of the
European Union may be shareholders of the Central Depository. The Central
Depository may issue only ordinary registered shares.
38
3. Members of the Board, Supervisory Board and the Manager of the
Central Securities Depository shall be persons of sufficiently good repute,
their qualifications shall meet the requirements set out by the Securities
Commission or they shall have work experience in financial or other
analogous institutions.
Article 49. Rights and Duties of the Central Depository
1. The Central Depository must:
1) prepare and present to the Securities Commission for its approval
rules on accounting of securities and their circulation;
2) prepare and approve instructions of securities accounting which
would specify separate procedures provided for in the rules;
3) open and manage securities accounts of account managers and
personal securities accounts;
4) ensure that during execution of transactions with regard to securities
the said securities are timely transferred from the securities account of one
account manager to the securities account of another account manager;
5) ensure that the number of securities of each issue placed for
circulation corresponds to the number of securities actually outstanding;
6) prepare and implement measures ensuring the integrity and
security of the securities accounting system;
7) ensure compliance of the account managers with the rules and
instructions of securities accounting;
8) accumulate, process, and disseminate information concerning
securities accounting, train and consult specialists in securities accounting;
9) provide to account managers statements of their securities accounts;
10) ensure protection of confidential information and implement internal
control;
11) submit to the Securities Commission proposals concerning securities
accounting issues and provide reports on the development of the
accounting system and the main problems related thereof;
12) provide free of charge to the Bank of Lithuania and the Securities
Commission information necessary for the performance of their
functions.
2. The Central Depository shall have the right to:
1) handle cash settlements for transactions with regard to securities;
2) take from account managers against which bankruptcy has been
instituted management of securities accounting;
3) provide to issuers and intermediaries other services related to
account management.
3. A representative of the Securities Commission shall have a right to
attend meetings of the managing bodies of the Central Depository with the
deliberative vote and shall have the right to receive material provided to
other participants of meetings.
4. The instructions and directions issued by the Central Depository on
the issues of securities accounting and its safety requirements shall be binding
to all account managers.
39
5. The Board of the Central Depository shall set the amounts of the
account managers’ entrance fee, annual fee, quarterly fee for account
management and transactions fee for accounting records, which must be
coordinated with the Securities Commission.
CHAPTER 7
THE SECURITIES COMMISSION
Article 50. The Securities Commission as the Supervisory Authority
of the Securities Market
1. Trading in securities shall be regulated and supervised by the
Securities Commission of the Republic of Lithuania (hereinafter – the
Securities Commission).
2. The Securities Commission is a legal entity with its official stamp
depicting the coat of arms of the State of Lithuania and having a bank
account.
3. The Securities Commission shall be formed and liquidated by the
Seimas of the Republic of Lithuania on the proposal of the Government of the
Republic of Lithuania.
Article 51. The Composition of the Securities Commission and the
Procedure of its Formation
1. The Securities Commission shall consist of a chairman and four
commissioners. They shall be appointed for a five-year term by the Seimas on
the proposal of the President.
2. The same person shall not be elected a commissioner of the Securities
Commission for more than two consecutive terms of office. The Chairman of
the Securities Commission shall designate his deputies from members of the
Commission. The Chairman and the commissioners of the Securities
Commission must be citizens of the Republic of Lithuania.
3. Upon the expiry of the term of their powers, commissioners of the
Securities Commission shall remain in their office until the appointment of
new commissioners.
4. The chairman and commissioners of the Securities Commission shall
be dismissed from their posts prior to the expiry of the term of their powers
only in the following cases:
1) on their own request;
2) if their citizenship of the Republic of Lithuania is revoked;
3) due to a worsened state of health (if they remain unable to work for
more than three months);
4) upon the enactment of the court sentence convicting them of
committing an intentional crime;
5) if they grossly violate the provisions of this Law setting forth
limitation to securities trading applied to the commissioners and
administration staff of the Securities Commission.
40
5. President of the Republic of Lithuania may propose the Seimas to
dismiss a commissioner of the Securities Commission from his post prior to
the expiry of the term of office. The Seimas on the proposal of the President
the Republic of Lithuania shall appoint other persons to take the vacant posts
of the commissioners of the Securities Commission dismissed prior to the
expiration of their term of office for a term of 5 years.
6. A commissioner of the Securities Commission may not engage in any
other activity that is incompatible with the requirements of civil service.
7. The Labour Code shall be applicable to the members of the Securities
Commission to the extent their status is not regulated by other legal acts.
Members of the Securities Commission may be promoted. These relations
shall be mutandis mutandis subject to the provisions of legal acts governing the
promotion of civil servants. The decision concerning the promotion of a
member of the Securities Commission shall be taken by Chairman of the
Securities Commission. The decision concerning the promotion of the
Chairman of the Securities Commission shall be the collegiate decision by
members of the Securities Commission.
Article 52. The Objectives and Functions of the Securities
Commission
1. The objectives of the Securities Commission shall be as follows:
1) to monitor the compliance with the rules of fair trading in securities;
2) to take measures assuring effective functioning of the securities
market and protect the interests of investors;
3) submit proposals with regard to shaping of the state economic
policy which would promote the development of the securities market;
4) to spread knowledge about the principles of the securities market
functioning;
5) to take other measures aimed at implementing this Law and other
legal acts concerning the securities market.
2. When implementing the objectives provided for in paragraph 1
hereof, the Securities Commission shall perform the following functions:
1) prepare, approve, amend or repeal the rules regulating the licensing,
establishment, reorganisation, liquidation and activities of stock exchanges
and intermediaries, issuance of and trading in securities;
2) establish, amend or repeal the forms of prospectuses (memoranda),
annual and periodical reports and establish the procedure for filing and
announcing the above documents for the issuers of securities;
3) provide explanations and recommendations on issues concerning
public trading in securities;
4) issue, suspend or revoke licenses for stock exchanges, brokerage
firms, and brokers;
5) monitor, analyse, inspect and in other way supervise the activities of
intermediaries, stock exchanges and their members, the Central Depository,
and account managers;
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6) impose sanctions provided for in this Law and other laws of the
Republic of Lithuania on persons who violate this Law and the rules and
instructions approved by the Securities Commission;
7) register issues of securities;
8) publish or take part in publishing of publications concerning the
functioning and regulation of the securities market;
9) organise examinations and qualifications tests with the purpose of
evaluating the knowledge and competence of brokers;
10) cooperate with associations of intermediaries;
11) conclude agreements with counterpart foreign authorities on
cooperation and exchange of information;
12) cooperate and exchange information with counterpart foreign
authorities;
13) cooperate with other supervisory bodies and appoint its
representative to the Commission for coordination of regulation
and supervision of the activities of financial institutions and
insurance undertakings;
14) perform other functions provided for in this Law and other laws of
the Republic of Lithuania.
3. The Securities Commission shall have the right to:
1) refer to court regarding protection of a violated interest of general
good in representation of the interests of investors;
2) publicly disclose the information necessary for the protection of the
market and the interests of its participants;
3) establish the principles of advisory nature of good governance of
public companies in addition to those provided by the Company Law.
4. The Securities Commission must prepare and present to the public
and the Seimas its annual activity reports. The report must overview the
development of the securities market and principal events which took place
during the accounting period.
5. The Securities Commission’s acts or failure to act may be appealed in
accordance with the procedure laid down in the Law on Administrative
Procedure.
Article 53. Organisation of the Work of the Securities Commission
1. The work of the Securities Commission shall be managed by the
chairman and in his absence - by the deputy chairperson.
2. The chairman of the Securities Commission shall:
1) ensure that meetings of the Securities Commission be called
regularly, determine issues to be considered at every meeting, submit reports
on the activities of the Securities Commission, in the period between meetings
give instructions to the commissioners of the Securities Commission and
control their implementation;
2) sign the decisions (resolutions) of the Securities Commission;
3) approve the administrative structure of regular employees, not
exceeding the annual payroll fund approved by the Seimas;
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4) head the administration, unless he has delegated this function to an
employee of the administration.
3. Each commissioner of the Securities Commission shall be in charge
of a sphere of the Securities Commission’s activities assigned to him and shall
participate in the consideration and adoption of decisions on all issues falling
within the Commission’s competence. If the agenda of a meting of the
Securities Commission includes an issue related to private interests of a
commissioner which create a conflict of private and public interests, the
commissioner shall indicate presence of such a situation prior to the meeting
and shall be precluded from taking part in the consideration of the issue and
adoption of a decision (resolution).
4. The Securities Commission shall organize open and closed meetings.
Issues concerning the violations of this Law and other legal acts, as well as
issues concerning the confidential information shall be considered at closed
meetings. Other issues shall be discussed at open meetings.
5. A meeting of the Securities Commission may take place if attended
by at least 3 commissioners of the Commission.
6. Decisions shall be taken by a simple majority vote of those attending
the meeting. In cases when legal acts are adopted, amended or recognized
invalid decisions shall be deemed passed if at least 3 members of the
Securities Commission voted for it.
7. The commissioners of the Securities Commission shall have equal
rights of the casting vote. They shall not have the right to refuse to vote or to
abstain. In the event of a tie vote, the chairman of the meeting shall have the
casting vote. The decisions (resolutions) of the meetings shall be adopted by
open ballot voting if requested at least by one member of the Securities
Commission. Decisions (resolutions) and their motives shall be announced
publicly. The fines or sanctions imposed by the Securities Commission shall
be made known publicly except where such publicity would incur damage to
the market or a disproportionate harm to interested persons.
Article 54. Delegation of Powers
The Securities Commission may adopt a decision to authorize a
commissioner of the Securities Commission or an employee of the
administration to perform any of its functions, except adoption, amending or
declaring void of legal acts, issuance or revocation of licenses, and imposition
of sanctions referred to in this Law.
Article 55. Restrictions Applicable to the Commissioners and the
Employees
of the Administration of the Securities Commission
Concerning Trading in Securities
1. Seeking to avoid conflicts of interests, the commissioners and
administration employees of the Securities Commission as well as their
spouses shall be banned from transferring acquired securities, which are
traded on regulated markets of the Republic of Lithuania, earlier than six
months after their acquisition.
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2. The ban referred to in paragraph 1 of this Article shall not be applied
to:
1)
2)
3)
4)
inherited securities;
securities for which a tender offer is placed;
securities transferred to portfolio manager;
securities of the Government of the Republic of Lithuania or the
Bank of Lithuania.
Article 56. The Duty of the Commissioners and the Employees of the
Administration of the Securities Commission not to Disclose Confidential
Information
1. Current and former commissioners and administration employees of
the Securities Commission shall have no right to use for their own benefit or
to disclose to other persons confidential information of which they have
become aware in the course of executing their professional duties at the
Securities Commission. This prohibition shall also be imposed on persons
who have carried out instructions of the Securities Commission, and persons
who, in cases provided for by the law, have the right to receive confidential
information from the Securities Commission.
2. The following shall also not be considered divulging of confidential
information prohibited under paragraph 1 of this Article:
1) provision of information on public trading intermediaries in such a
generalized form that it is not possible to identify any concrete
intermediary;
2) forwarding of information for the investigation or hearing of a
criminal case in the manner prescribed by criminal laws;
3) disclosure of information in civil cases concerning bankruptcy or
compulsory winding up of an intermediary;
4) transfer of information following the procedure stipulated under
Article 57 of this Law.
Article 57. The Right of the Securities Commission to Provide
Confidential Information
1. The Securities Commission shall have the right to supply
confidential information to supervisory authorities of the Republic of
Lithuania, foreign supervisory authorities established in Member States of the
European Union and other institutions referred to in this Article for the
performance of supervisory functions. Confidential information indicated in
this Article may be supplied only provided the beneficiary authority is subject
to conditions of professional secrecy equivalent to those applied to the
Securities Commission. Supervisory functions shall mean enforcement of legal
acts, imposition of sanctions or participation in court proceedings with regard
to decisions adopted by the supervisory authority.
2. The Securities Commission shall also have the right to conclude
agreements on cooperation concerning exchange of confidential information
with foreign supervisory authorities established in countries which are not
members of the European Union, or with other institutions specified under
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this Article. Confidential information shall be used only for the exercise of the
functions of these institutions.
3. Confidential information may be supplied to the following
institutions:
1) authorities carrying out supervision of credit institutions,
investment firms, other financial institutions, insurance companies,
and financial markets;
2) bodies charged with the implementation of liquidation or
bankruptcy procedures of intermediaries or investment firms;
3) auditors of intermediaries, credit institutions, investment firms,
other financial institutions, and insurance companies;
4) authorities administering investment services of insurance funds;
5) authorities charged with the
supervision of auditors of
intermediaries, credit institutions, investment firms, other financial
institutions, and insurance companies;
6) central banks or other bodies with similar functions;
7) public authorities supervising the payment systems;
8) clearing and settlement houses.
4. Information may be supplied to entities referred to in items 1-3 and 5
of paragraph 3 of this Article only in cases when such information is
necessary for their supervisory functions. Authorities referred to in item 4 of
paragraph 3 of this Article may be provided such information only for the
administration of investment services of insurance funds. Authorities referred
to in items 6 and 7 of paragraph 3 of this Article may be provided such
information only for the performance of their functions. Authorities referred
to in item 8 of paragraph 3 of this Article may receive such information only
when it is considered necessary for ensuring a proper functioning of the
market.
5. Information received from a foreign supervisory authority may be
used only for the purpose of the fulfillment of supervisory functions.
Confidential information received from a foreign supervisory authority
established in a Member State of the European Union may be communicated
to institutions referred to in paragraph 2 and items 5 and 8 of paragraph 3 of
this Article only with a consent of the institution sending the information and
only for the purpose for which the consent has been granted. Confidential
information received from a supervisory institution located in other than the
EU Member State may be communicated to other institutions only subject to
prior consent of the institution providing the information.
6. The Securities Commission shall have the right to forward
confidential information to an association of intermediaries supervising the
compliance of its members with the rules established by the association,
provided representatives of the association performing supervision functions
guarantee protection of confidentiality.
7. The Securities Commission shall exchange information, render
assistance to and cooperate with the foreign supervisory authorities where
necessary for the investigation of infringements specified in Articles 9 and 10
of this Law. Upon the request of foreign supervisory authorities the Securities
45
Commission shall forthwith communicate thereto the information necessary
for such investigative purposes. Where the Securities Commission is not in
possession of such information it shall take measures necessary for the
collection of such information and notify the requesting authority of the
reasons for non-submission of the information immediately.
8. The Securities Commission may refuse to communicate to the
foreign supervisory institution the information requested thereby or conduct
inspections as requested thereby or permit its employees to participate in
inspections conducted in the territory of the Republic of Lithuania, where:
1) such an investigation might adversely affect the sovereignty, security or the
public policy of the Republic of Lithuania;
2) judicial proceedings have already been initiated in respect of the same
actions and against the same persons before the authorities of the Republic of
Lithuania;
3) a final judgment has already been delivered in relation to such persons for
the same actions in the Republic of Lithuania.
9. In cases provided for in par. 8 of this Article the Securities
Commission shall appropriately inform the foreign supervisory authority and
shall provide information, as detailed as possible, on the course of such
proceedings and the judgments. The same information shall be provided by
the Securities Commission in cases where a foreign supervisory authority
informs of its suspicions concerning the infringements committed or intended
to be committed in the territory of the Republic of Lithuania in respect of
securities traded on the regulated markets of the Republic of Lithuania.
Where necessary, the Securities Commission shall consult the foreign
supervisory authority concerning the possible investigative actions.
10. Where the Securities Commission is in possession of the data that
actions prohibited by Articles 9 or 10 are being or have been carried out on
the territory of another Member State or are related to securities traded on the
regulated market of another Member State, the Securities Commission shall
give notice of that fact to the relevant supervisory authority.
Article 58. Financing of the Securities Commission
The Securities Commission shall be financed from the State Budget.
Article 59. The Rights of the Securities Commission in Investigating
Violations of Legal Acts Regulating Functioning of the Securities Market
1. The Securities Commission shall have the right to organize and carry
out investigations in order to monitor observance of this Law and subordinate
legislation enacted on the basis thereof.
2. When carrying out investigations, officers of the Securities
Commission shall have the right to:
46
1) obtain explanations in a written or oral form from persons connected
to violations under investigation, require these persons to arrive to the office
of the officer carrying out the inspection in order to give evidence;
2) upon producing official certificates and a reasoned decision of the
Securities Commission or its employee authorized to conduct an inspection
(check up), have an unimpeded access to the premises of intermediaries,
stock exchanges, the Central Depository, issuers and other business entities
related to potential violations, to check the documents, accounting books and
other sources of information which might be of use for the inspection
conducted, and receive conclusions about the inspection material from the
expertise institutions;
3) insist on being provided copies of accounting documents, contracts,
orders, memoranda and other documents considered by the Securities
Commission to be of consequence for the investigation;
4) take away temporarily documents of the inspected intermediaries
of public trading in securities, stock exchanges, the Central Depository, and
issuers, which may be used as proof of committed or intended violations,
leaving behind a description of the taken away documents;
5) upon producing a reasoned decision of the Securities Commission,
receive from the banking institutions data, certificates and copies of
documents concerning financial transactions related to the object under
inspection.
6) receive documents or copies of such documents related to the person
placed under investigation from other undertakings, also public and
municipal authorities.
3. For the implementation of the rights provided for in paragraph 2 of
this Article the Securities Commission may request an assistance of police
officers.
4. Upon the decision of the Securities Commission trading in securities
may be suspended, persons may be temporarily prohibited from engaging in
their professional activities related to the provision of investment services, or,
upon the request of the Securities Commission, property may be placed under
temporary attachment by the ruling of the judge. The requests of the
Securities Commission concerning placing the property under attachment
shall be examined by the Vilnius District Administrative Court.
5. The Securities Commission may request foreign supervisory
authorities to carry out the necessary inspections in the territory of those
States and its own personnel be allowed to accompany the personnel of the
supervisory authority during such inspections. Where a supervisory authority
of a Member State fails to act on time concerning the request for the
submission of the information or refuses to provide such information, the
Securities Commission may bring that non-compliance to the attention of the
Committee of European Securities Regulators.
CHAPTER 8
LIABILITY FOR VIOLATIONS OF THIS LAW
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Article 60. Effects of Violation of the Law
1. Persons who violate this Law must:
1) act in line with the instructions of the Securities Commission to
terminate their actions, restore the situation to its original condition and
comply with other orders;
2) compensate for the losses inflicted;
3) fulfil sanctions imposed by the Securities Commission as provided
under this Law.
Article 61. Pecuniary Penalties for Violations of the Law
1. The Securities Commission shall have the right, in observance of the
approved rules, to impose pecuniary penalties on:
1) issuers who are obliged under this Law to register their securities,
but who have failed to do that,  in the amount of up to 10% of the total
nominal value of the securities registered;
2) issuers, intermediaries or other legal persons who organise or
conduct public trading in securities which have not been registered with the
Securities Commission and securities the registration of which has been
annulled – up to LTL 10 000, where the total nominal value of the securities
offered for public trading is lower than LTL 100 000, and in the amount up to
the total nominal value of the securities offered for public trading , where the
total nominal value of these securities is higher than LTL 100 000;
3) issuers who do not meet the requirements set forth in Article 8 of
this Law - in the amount of up to LTL 100 000;
4) legal persons who do not meet the requirements set out in Articles
9 and 10 of this Law up to LTL 100 000, where the amount of the illegally
received income is up to LTL 100 000, and up to the threefold amount of the
illegally received income, where the amount of the illegally received income is
in excess of LTL 100 000;
5) legal persons who do not meet the requirements set out in Article
14 of this Law – in the amount of up to LTL 100 000;
6) legal persons who have registered a tender offer with the Securities
Commission but who have failed to execute it, - up to LTL 500 000;
7) legal persons acting as intermediaries without the licence specified
by this Law - in the amount of up to LTL 100 000, where the amount of the
proceeds received illegally is lower than LTL 10 000, and up to a double
amount of the proceeds received illegally where this amount is higher than
100 000 Lt;
8) intermediaries who fail to meet the requirements set forth in Article
24 of this Law - in the amount of up to 100 000 Lt;
9) economic entities who engage in the activities of a stock exchange
without holding the license issued by the Securities Commission as referred to
in this Law - in the amount of up to 100 000 Lt, where the amount of the
proceeds received illegally is lower than 10 000 Lt, and up to a double
48
amount of the proceeds received illegally where this amount is higher than
100 000 Lt.
10) legal persons who, in the manner provided for in Article 19¹ of this
Law, have required that other shareholders sell to him their shares owned by
them but have failed to effect settlement with such shareholders in a timely
manner or have failed to fulfill its obligation to purchase the shares of any
shareholder upon the latter’s requirement, - up to LTL 100 000 .
2. Penalties referred to in paragraph 1 of this Article may be imposed
on legal persons only if not more than 2 years have passed since the violation
was committed, while in cases of continuous violations – since the day when
the last acts were committed.
3. The application of a sanction set forth in paragraph 1 of this Article
to legal persons shall not exempt their managers from the statutory civil,
administrative and criminal liability.
Article 62. Procedure of Imposing Pecuniary Penalties
1. Prior to passing a decision to impose a pecuniary penalty specified in
this Law, the Securities Commission shall allow at least a 5-day term for the
submission of explanations and shall inform thereof the legal person subject
to the investigation. If explanations are not submitted within the set term, it
shall be deemed that the person has refused to provide them.
2. The Securities Commission shall inform the person whose actions
are subject to investigation about the date and the venue of the meeting at
which the issue of penalty imposition will be discussed by sending to him a
notification by registered mail. The person’s representatives and lawyers shall
have the right to attend the meeting. The issue of imposing a penalty shall be
considered at the meeting even if the representative of the person whose
actions are being investigated fails to attend the meeting, despite the fact that
the person has been informed of the pending meeting.
3. The representatives of the person shall have the right to get
familiar with the material proving the violation, provide explanations,
present evidence, and hire a lawyer.
4. Having analysed the material concerning the suspected violation,
the Securities Commission shall be have the right to:
1) impose a pecuniary penalty specified under this Law;
2) discontinue the investigation due to the absence of a violation or a
statutory basis to impose a penalty;
3) continue the investigation.
5. The Securities Commission shall fix the amount of the penalty
taking into consideration the following:
1) the amount of the loss suffered due to the violation;
2) the time-span of the violation;
3) the amount of illegal proceeds the person gained from the
violation;
4) aggravating and attenuating circumstances.
6. Actions of the suspect taken of his own free will in order to prevent
the detrimental effects of the violation, to assist the Securities Commission in
49
carrying out the investigation, to compensate for the losses or to undo the
damage shall be considered attenuating circumstances. The Securities
Commission may decide to deem other circumstances as attenuating as well.
7. Actions by which the suspect impedes the investigation, conceals
the violation, continues illegal acts in spite of an order to discontinue them
and repeats a violation for which a penalty prescribed in this Law has been
imposed shall be considered aggravating circumstances.
8. A decision of the Securities Commission shall be sent within three
working days by registered mail to the person whose actions are subject to an
investigation or shall be delivered to his representatives, who shall
acknowledge the receipt by signing.
Article 63. Collection of Pecuniary Penalties
1. Pecuniary penalties shall be paid into the State Budget not later than
within one month from the day when the person received the decision of the
Securities Commission concerning the imposition of a penalty. If a person
fails to pay the penalty of his own free will, execution shall be levied to it in
the manner prescribed under the Civil Code without litigation.
CHAPTER 9
FINAL PROVISIONS
Article 64. Coming of the Law into Force
1. This Law shall come into force on 1 April 2002, with the exception of
Article 23.
2. Article 23 shall come into force upon Lithuania’s accession to the
European Union.
Article 65. Transitional Period
1. As of the day of the enactment of this Law, no new licences for the
activity of investment management and consulting firms shall be issued,
while currently operating investment management and consulting firms shall
be subject to all the requirements set for financial brokerage firms of a
relevant category.
2. The Central Depository and stock exchanges registered prior to the
entry into force of this Law must not later than within one year adopt
amendments to their Statutes and the rules pursuant to this Law. Persons who
were shareholders of the Central Depository on the day of the enactment of
this Law may exercise all the rights of shareholders but may not sell or
transfer in any other way shares to persons who may not be shareholders of
these companies.
3. Issuers who manage themselves personal accounts of securities
issued by them must entrust management of these accounts to intermediaries
by 1 January 2004. This requirement shall not apply to issuers under
liquidation or those in respect of which the bankruptcy proceedings have
been initiated.
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4. Those person who acting independently or in concert with other
person held on the day of the enactment of this Law more than 40 but less
than 50 percent of the votes at the general meeting of shareholders of an
accountable issuer shall become obliged to announce a tender offer if they
acquire more than 50 percent of the votes.
5. Until Lithuania’s accession to the European Union, financial
brokerage firms licensed in the Member States of the European Union shall be
subject to the same requirements as those prescribed by this Law to firms
licensed in countries that are not members of the European Union.
6. Upon Lithuania’s accession to the European Union, the Securities
Commission shall:
1) indicate to the Commission of the European Communities under
which directives of the European Union the Securities Commission or a
stock exchange are considered accountable institutions;
2) indicate to the Commission of the European Communities which
institutions perform in the Republic of Lithuania the functions
specified under Article 57 (3) of this Law;
3) forward a list of regulated markets of the Republic of Lithuania
together with the relevant rules regulating their activity to the
Commission of the European Communities and the Member States of
the European Union and notify them of each change made to the
aforementioned list or rules.
7. Until 1 January 2003, the Securities Commission shall have the right
to impose on legal persons who have infringed the requirements specified
under Articles 9 and 10 of this Law fines in the amount of up to a three-fold
sum of the proceeds received illegally or up to 10 000 Lt.
ANNEX TO THE LAW ON SECURITIES MARKET OF THE REPUBLIC OF
LITHUANIA
THE IMPLEMENTED LEGAL ACTS OF THE EUROPEAN UNION
1. Council Directive 89/298/EEC of 17 April 1989 coordinating the
requirements for the drawing-up, scrutiny and distribution of the prospectus
to be published when transferable securities are offered to the public.
2. Council Directive 93/6/EEC of 15 March 1993 on the capital adequacy of
investments firms and credit institutions, as amended by Directive 98/31/EC
of the European Parliament and of the Council of 22 June 1998 amending
Council Directive 93/6/EEC on the capital adequacy of investment firms and
credit institutions, and by Directive 98/33/EC of the European Parliament
and of the Council of 22 June 1998 amending Article 12 of Council Directive
77/780/EEC on the taking up and pursuit of the business of credit
institutions, Articles 2, 5, 6, 7, 8 of and Annexes II and III to Council Directive
89/647/EEC on a solvency ratio for credit institutions and Article 2 of and
Annex II to Council Directive 93/6/EEC on the capital adequacy of
51
investment firms and credit institutions, and by Directive 2002/87/EC of the
European Parliament and of the Council of 16 December 2002 on the
supplementary supervision of credit institutions, insurance undertakings and
investment firms in a financial conglomerate and amending Council
Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC
and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European
Parliament and of the Council.
3. Council Directive 93/22/EEC of 10 May 1993 on investment services in the
securities field, as last amended by Directive 2002/87/EC of the European
Parliament and of the Council of 16 December 2002 on the supplementary
supervision of credit institutions, insurance undertakings and investment
firms in a financial conglomerate and amending Council Directives
73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and
93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European
Parliament and of the Council.
4. Directive 2001/34/EC of the European Parliament and of the Council of 28
May 2001 on the admission of securities to official stock exchange listing and
on information to be published on those securities.
5. Directive 2003/6/EC of the European Parliament and of the Council of 28
January 2003 on insider dealing and market manipulation (market abuse).
I promulgate this Law passed by the Seimas of the Republic of Lithuania.
PRESIDENT OF THE REPUBLIC
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