Lithuanian Law on Banks governs the operation and control of local and foreign banks in Lithuania.
REPUBLIC OF LITHUANIA LAW ON BANKS
30 March 2004 No IX-2085
(As last amended on 22 December 2011 – No XI-1883)
Vilnius
CHAPTER ONE
GENERAL PROVISIONS
Article 1. Purpose of the Law
1. The purpose of this Law shall be to regulate the procedure for setting up, licensing, pursuing of business, terminating and restructuring as well as supervising of banks as well as foreign banks operating in the Republic of Lithuania, including establishments thereof, in order to ensure a stable, sound, efficient and safe banking system.
2. This Law shall implement the legal acts of the European Union listed in the Annex to this Law.
Article 2. Definitions
1. Bank shall mean a credit institution set up in the Republic of Lithuania which is authorised to engage in receiving of deposits and other repayable funds from non-professional participants of the market and in lending thereof and engages therein as well as assumes the risk and liability related thereto.
2. Banking licence (hereinafter referred to as “licence”) shall mean an authorisation issued according to the procedure set forth by this Law to engage in the provision of licensed financial services.
3. European Banking Authority shall mean an institution established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ 2010 L 331, p. 12).
4. European Systemic Risk Board shall mean an institution established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (OJ 2010 L 331, p. 1).
5. Participation in management of the capital shall mean a direct or indirect management of 20 per cent or more of an undertaking’s authorised capital and/or voting rights, also another real possibility to exercise influence over decisions on the activities of the undertaking both being a participant of the undertaking and holding other rights related to the capital.
6. Financial services shall mean the services referred to in paragraph 1 of Article 3 of the Law on Financial Institutions.
7. Heads of a legal person shall mean members of bodies of legal persons with the exception of the meeting of members.
8. Persons acting in concert shall mean two or more persons that, on the basis of a verbal or written agreement concluded explicitly between them or anticipated to be concluded, exercise or seek to exercise their rights granted by a qualifying holding in a bank’s authorised capital and/or voting rights.
9. Licensed financial services shall mean:
1) receipt of deposits or other repayable funds from non-professional participants of the market;
2) the payment services specified in Article 5 of the Law on Payments;
3) issuance of electronic money;
4) other financial services subject to a licence issued in accordance with other laws of the Republic of Lithuania.
10. Specialised bank shall mean a credit institution set up in the Republic of Lithuania which has been authorised to provide only the licensed financial service referred to in subparagraph 3 of paragraph 9 of this Article.
11. Foreign bank shall mean a credit institution set up in a foreign state which holds an authorisation or licence issued by the supervisory institution of the foreign state to engage in receiving of deposits and other repayable funds from non-professional participants of the market and lending thereof.
12. Other concepts used in this Law shall be interpreted as they are defined in the Law on Financial Institutions.
Article 3. Name, Legal Form and Registered Office of a Bank, Legal Acts Regulating Banking Activities
1. The word “bank” or other combinations or derivatives thereof may be used in the Republic of Lithuania only by the persons operating in accordance with this Law in their name or for advertising or other purposes, except where the use of this word is evidently unrelated to the provision of licensed financial services.
2. Paragraph 1 of this Article shall not be applied where the name of a legal person has been laid down by a law of the Republic of Lithuania regulating its activities.
3. The legal form taken by a bank as a legal person may only be a public limited liability company or a private limited liability company.
4. The registered office of a public limited liability company or a private limited liability company holding a licence issued according to the procedure set forth by this Law and registered in the Republic of Lithuania Register of Legal Persons must be in the Republic of Lithuania.
5. Banks shall act in compliance with the Constitution of the Republic of Lithuania, the Civil Code, this Law, legal acts adopted by supervisory institutions and their statutes (articles of association) (hereinafter referred to as “articles of association”). Banks shall also act in compliance with the Law on Financial Institutions, the Law on Companies and other legal acts, except where this Law provides otherwise.
Article 4. Financial Services Provided by a Bank and Other Activities
1. The right to engage in receiving of deposits or other repayable funds from non-professional participants of the market according to the procedure set forth by this Law shall only be vested in:
1) the banks holding a licence which grants such a right;
2) branches of foreign banks holding a licence which grants such a right;
3) foreign banks which are licensed in the Member States of the European Union and in the states of the European Economic Area (hereinafter referred to as “the Member States of the European Union”) and which have the right to engage in receiving of deposits or other repayable funds from non-professional participants of the market in the state concerned, have set up branches in the Republic of Lithuania according to the procedure set forth by this Law or provide financial services without setting up a branch.
2. A bank shall have the right to provide all financial services, including financial services in a foreign currency, except where this right is restricted by this Law and other laws.
3. In addition to the provision of financial services, a bank may pursue only such other activities as those in the absence of which financial services cannot be provided, which assist in the provision of the financial services or are otherwise directly related to the provision of the financial services.
4. Where a bank itself decides not to carry on a certain activity in the absence of which financial services cannot be provided, which assists in the provision of financial services or is otherwise directly related to the provision of financial services and to conclude transactions with other persons on the provision of respective services to the bank (hereinafter referred to as “the purchase of ancillary banking services”), the bank must notify thereof the supervisory institution and provide to it the information laid down by legal acts of the supervisory institution prior to concluding the said transactions. The legal acts of the supervisory institution may set the requirements for the purchase of the ancillary banking services.
5. (Repealed on 1 January 2012).
6. Prior to taking decisions which restrict a bank’s freedom to dispose of the funds in its account or which otherwise restrict the right of the bank to provide financial services to the bank’s clients, court of the Republic of Lithuania and other institutions or officials stipulated by laws must obtain a conclusion of the supervisory institution on the influence of these decisions on the stability and soundness of the whole system of banks.
Article 5. Articles of Association of a Bank
1. The articles of association of a bank being established and amendments to the articles of association of the bank shall become invalid where they are not submitted to the Register of Legal Persons within 12 months accordingly of the signing of the articles of association or of the taking of a decision on the amendment of the articles of association of the bank at the general meeting of the shareholders.
*2. Amendments to the articles of association of a bank may be registered in the Register of Legal Persons only upon obtaining an authorisation of the supervisory institution, where the provisions of the articles of association are amended in respect of:
1) the name of the bank;
2) the amount of the authorised (share) (hereinafter referred to as “authorised”) capital;
3) the number of shares and their number according to class, their nominal value and the rights attaching to them;
4) the powers of the bank’s bodies, procedure for electing and removing from office their members.
*3. An authorisation to register amendments to articles of association of a bank shall be granted by the supervisory institution according to the procedure set forth this Law and legal acts of the supervisory institution.
*4. In order to obtain an authorisation to register amendments to articles of association, a bank shall submit to the supervisory institution an application and other documents and data specified by legal acts of the supervisory institution.
*5. The supervisory institution must examine submitted documents and decide on the granting of an authorisation to register amendments to articles of association of a bank within 30 days of the receipt of the application or, where the amendments to the articles of association of the bank are related to the increase of the authorised capital of the bank by issuing new shares, within 2 months of the receipt of the application.
*6. (Repealed as of 4 April 2009)
*7. The supervisory institution may refuse to grant an authorisation to register amendments to articles of association of a bank, where:
1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) upon making the amendments, provisions of the articles of association of the bank will not ensure safe and sound activities of the bank or will not be in conformity with the relevant legal acts;
3) upon increasing the authorised capital by issuing new shares, the bank’s shares have not been fully paid-up in the prescribed manner or the bank’s shareholders, including those acquiring a qualifying holding in the bank’s authorised capital and/or voting rights, do not meet the requirements set.
*8. The supervisory institution shall give written notice to the Register of Legal Persons of the taking of a decision to grant or not to grant an authorisation to register amendments to articles of association of a bank within 5 working days of the taking of the decision.
*Note: Where the State acquires the shares of a bank or takes them for public needs, provisions of paragraphs 2-8 of Article 5, paragraph 1 of Article 23, Articles 24, 25 and paragraphs 4 and 8 of Article 41 of the Law on Banks shall not apply.
(a) CHAPTER TWO
ESTABLISHMENT AND LICENSING OF A BANK, FINANCIAL UNDERTAKINGS CONTROLLED BY A BANK, A BANK’S BRANCHES AND REPRESENTATIVE OFFICES
Article 6. Procedure for Establishing a Bank
1. A bank shall be established according to the procedure set forth by the Civil Code, the Law on Financial Institutions, this Law and, except where this Law provides otherwise, the Law on Companies.
2. A bank may only be established for an indefinite period of time.
3. A bank may be registered upon obtaining an authorisation of the supervisory institution to establish the bank.
4. Shares of a bank being established must be fully paid-up prior to the convening of the statutory meeting.
Article 7. Founders
1. A bank may be established by not less than ten founders.
2. Paragraph 1 of this Article shall not be applied where one of the founders of a bank is a Lithuanian or foreign financial institution or insurance undertaking and acquires more than 2/3 of the bank’s voting shares.
3. Each founder of a bank must acquire not less than 3 per cent of the bank’s voting shares.
4. The persons who may not be founders of a financial institution pursuant to the Law on Financial Institutions and the persons who may not be shareholders of a bank pursuant to this Law may not be founders of a bank.
Article 8. Authorisation to Establish a Bank
1. An authorisation to establish a bank shall be granted by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
2. In order to obtain an authorisation to establish a bank, founders of the bank shall submit to the supervisory institution an application and the documents and data specified by legal acts of the supervisory institution, including:
1) the memorandum of the bank;
2) articles of association of the bank;
3) minutes of the statutory meeting and list of participants of the meeting;
4) a framework for activities of the bank;
5) documents and data on the identities of the founders of the bank and the proportion of the bank’s authorised capital and/or voting rights being acquired by each one of them as well as the documents and data evidencing that the funds used for the acquisition of the proportion of the bank’s authorised capital and/or voting rights have been obtained legitimately;
6) the documents required to asses the suitability of the founders of the bank acquiring a qualifying holding in the bank’s authorised capital and/or voting rights;
7) the documents proving that shares of the bank have been fully paid-up;
8) a list of heads of the bank elected by the statutory meeting whose election or appointment is subject to an authorisation of the supervisory institution;
9) au authorisation of a foreign supervisory institution to establish a controlled bank in the Republic of Lithuania or the information that this institution does not oppose the establishment of the bank (the information shall be provided in the case of establishment of a controlled bank by a foreign bank).
3. A bank’s founder acquiring a qualifying holding in the bank’s authorised capital and/or voting rights may only be a person:
1) who meets the requirements set by this Law for a bank’s shareholders and the requirements set by Article 7 of the Law on Financial Institutions;
2) who is of good repute. When a qualifying holding in a bank’s authorised capital and/or voting rights is held by a legal person, heads of the legal person must also be of good repute;
3) whose financial situation is sound and stable.
4. The supervisory institution shall refer for advice to the supervisory institution of another Member State of the European Union which is responsible for supervision of foreign banks, financial brokerage firms or insurance undertakings where a bank will be:
1) an undertaking controlled by a foreign bank, a financial brokerage firm or an insurance undertaking licensed in another Member State of the European Union;
2) an undertaking controlled by the parent undertaking of a foreign bank, a financial brokerage firm or an insurance undertaking licensed in another Member State of the European Union;
3) controlled by the same persons who control a foreign bank or a financial institution or an insurance undertaking licensed in another Member State of the European Union.
5. Prior to granting an authorisation to establish a bank and while exercising supervision of the bank, a supervisory institution shall refer for advice to the institutions indicated in paragraph 4 of this Article and, when evaluating the suitability of the persons acquiring a qualifying holding in the bank’s authorised capital and/or voting rights and the repute, qualification and experience of the heads of the undertakings of the same group, shall provide the information on these issues to the institutions indicated in paragraph 4 of this Article.
6. The supervisory institution must examine the submitted documents and take a decision on the granting of an authorisation to establish a bank within three months of the receipt of an application.
7. The supervisory institution may refuse to grant an authorisation to establish a bank where:
1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) provisions of the articles of association of the bank do not ensure safe and sound activities of the bank or are not in conformity with the relevant legal acts;
3) the legal form, founders of the bank being established, heads of the bank, minimum capital of the bank do no meet the requirements set by laws.
8. The supervisory institution shall give written notice to the Register of Legal Persons of a decision to grant or not to grant an authorisation to establish a bank.
9. Upon granting an authorisation to establish a bank and until issuing to the bank a licence, a founder (shareholder) of the bank shall be prohibited from selling or otherwise transferring the shares acquired by him and set out in the memorandum, and the bank shall be prohibited from issuing new shares or otherwise changing the size of the authorised capital or composition of founders provided for by the memorandum.
10. The supervisory institution shall withdraw an authorisation to establish a bank prior to the establishment of the bank where:
1) the authorisation has been obtained by fraud or otherwise violating laws;
2) upon the expiry of the time limit laid down in paragraph 1 of Article 5 of this Law, articles of association of the bank being established become invalid.
11. The supervisory institution shall give written notice to founders and the Register of Legal Persons of a decision to withdraw an authorisation to establish a bank within three working days.
Article 9. Licence
1. When issuing a licence, the supervisory institution may restrict the right of a bank to provide one or several licensed financial services where this is requested by the bank or where it is not prepared to provide all licensed financial services. Restrictions on the provision of licensed financial services shall be removed where the bank submits an application and the documents and data evidencing that the bank is prepared to provide all licensed financial services.
2. A licence shall be issued for an indefinite period of time.
3. A bank shall be prohibited from transferring the rights granted by a licence or otherwise permit another person to provide licensed financial services not on behalf of the bank and not for the benefit of the bank.
4. A licence shall be issued to a bank registered in the Register of Legal Persons by the supervisory institution in accordance with the procedure set forth by laws and legal acts of the supervisory institution.
5. In order to obtain a licence, a bank shall submit to the supervisory institution an application, the documents and data specified by legal acts of the supervisory institution, including:
1) the registered articles of association of the bank;
2) documents proving that the bank has the minimum capital of a bank laid down by this Law;
3) a list of shareholders of the bank specifying the proportion of the bank’s authorised capital and/or voting rights acquired by each one of them;
4) upon the establishment of the bank, a list of elected (appointed) heads of the bank whose election or appointment is subject to an authorisation of the supervisory institution;
5) an operating plan of the bank for the first three years;
6) a description of the management and organisational structure;
7) a draft of the accounting policy and a detailed description of the accounting organisation;
8) documents and information evidencing that the bank has in place the following ensuring safe and sound activities of the bank: internal control system, personnel, technical, information and technological security means, premises and insurance of property;
9) conclusions, authorisations or other documents issued by other State institutions on the preparedness to provide licensed financial services where this is required by other laws.
6. The supervisory institution shall have the right to carry out on-the-spot verification of the preparedness of a bank applying for the issuance of a licence to provide financial services.
7. Upon the request of the supervisory institution, State and municipal institutions as well as other persons must forthwith supply available information on founders, shareholders and heads of a bank, their financial situation, activities, discovered infringements of laws and other legal acts, conclusions of conducted verifications and examinations as well as other information required by the supervisory institution for the taking of a decision on the issuance of a licence.
8. The supervisory institution must examine submitted documents and take a decision on the issuance of a licence within three months of the receipt of the application. Where the supervisory institution requests additional documents or data, the decision must be taken within three months of the receipt of the additional documents and data. A decision on the issuance of a licence shall, in any case, be taken within 12 months of the receipt of the application.
9. Articles of association, an operating plan, management and organisational structure, risk management system, remuneration policy and practice, accounting organisation, internal control system, technical, information and technological security means, premises, insurance of property of a bank applying for a licence must ensure safe and sound activities of the bank and comply with the relevant legal acts. The bank must also meet the requirements set by this Law, including the requirements set for the legal form, minimum capital of the bank, requirements for the registered office, shareholders of the bank, including the shareholders who have acquired a qualifying holding in the bank’s authorised capital and/or voting rights, heads of the bank, and must be prepared to safely and soundly provide financial services.
10. The supervisory institution may refuse to issue a licence where:
1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) a bank does not meet the requirements set in paragraph 9 of this Article;
3) close links exist between the bank and other person, which would prevent the supervisory institution from effectively exercising the supervision of the bank;
4) close links exist between the bank and a person from a state other than a Member State of the European Union whose legal acts governing the activities of this person or difficulties in ensuring compliance with the said legal acts may prevent the supervisory institution from effectively exercising the supervision of the bank.
11. Close links shall be considered to exist between two or more persons where they are linked by:
1) direct or indirect ownership (by way of control of a proportion of the authorised capital and/or voting rights granting the right to control the activities and management of an undertaking) of 20 per cent or more of the undertaking’s authorised capital and/or voting rights or other real possibility to exercise influence over decisions on the activities of the undertaking; or
2) ownership of a proportion of the authorised capital and/or voting rights granting the right to control the activities of an undertaking; or
3) one and the same third party controlling their proportions of the authorised capital and/or voting rights granting the right to control the activities of an undertaking.
12. A decision taken to issue or not to issue a licence shall be notified to the Register of Legal Persons in accordance with the provisions of this Register and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
13. A bank shall have the right to commence the provision of financial services only upon the issuance of a licence.
14. A bank holding a licence must always meet with the requirements set to obtain the licence. In the cases and according to the procedure set forth in this Law and legal acts of the supervisory institution, the bank must notify the supervisory institution of any changes in the data submitted to obtain the licence.
Article 10. Withdrawal of a Licence
1. The grounds for the withdrawal of a licence shall be laid down by the Law on Financial Institutions. In addition to the grounds laid down in paragraph 2 of Article 10 of the Law on Financial Institutions, a licence may be withdrawn by a decision of the supervisory institution where:
1) a bank does not meet the requirements set for the granting of an authorisation to establish a bank or for the issuance of a licence;
2) a bank ceases to exist due to reorganisation or a decision is taken on liquidation thereof;
3) a bank does not pay in the first (advance) insurance premium in accordance with the Law on Insurance of Deposits and Liabilities to Investors where it must pay it or where insurance is terminated.
2. Withdrawal of a licence or suspension of validity thereof shall be notified to the bank and the Register of Legal Persons in the manner prescribed by provisions of this Register and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
3. Reasons must be given for a decision of the supervisory institution on the withdrawal of a licence.
4. A licence may also be withdrawn or validity thereof suspended on the grounds and according to the procedure set forth in Chapter Ten of this Law.
5. Upon the withdrawal of a licence, a bank shall not have the right to provide financial services, except to the extent that it is necessary to settle with the bank’s creditors, and if the bank’s assets, rights, transactions and liabilities are transferred in compliance of Article 761 of this Law – to the extent that it is necessary to enable the bank taking over the bank’s assets, rights, transactions and liabilities to provide in due manner the financial services related with such assets, rights, transactions and liabilities taken over, and a decision must be taken on the winding up of the bank or opening of bankruptcy proceedings according to the procedure set forth in Chapter Eleven and Chapter Twelve of this Law.
Article 11. Branches and Other Establishments of a Bank in the Republic of Lithuania
1. Articles of association of a bank, management and organisational structure, accounting organisation, security means, premises and insurance of property of a branch and other establishments of the bank providing financial services must ensure safe and sound activities of the bank and be in compliance with the relevant legal acts.
2. All establishments of a bank providing financial services must have communication facilities to transmit information on the operations carried out to the registered office of the bank in real time.
3. Upon the setting up of a branch or another establishment providing financial services, a bank must, within 15 days of its establishment, notify thereof the supervisory institution and submit to the supervisory institution the information and documents specified by legal acts. In the event of a change in any of the particulars communicated, the bank must, within 15 days from the day of the change, notify thereof the supervisory institution and submit to the supervisory institution the information and documents established by legal acts.
Article 12. Representative Office of a Bank
1. A bank shall have the right to establish a representative office in the Republic of Lithuania and in foreign states.
2. A representative office of a bank shall not have the right to provide financial services.
3. Upon the establishment of a representative office, a bank must, not later than within 15 days of its establishment, notify thereof the supervisory institution and submit to the supervisory institution the information and documents specified by legal acts. In the event of a change in any of the particulars communicated, the bank must, within 15 days from the day of the change, notify thereof the supervisory institution and submit to the supervisory institution the information and documents established by legal acts.
Article 13. Banks and Branches Thereof in Foreign States
1. A bank shall have the right to establish a bank in a foreign country, acquire a qualifying holding in the authorised capital and/or voting rights of a foreign bank or increase it so that the foreign bank would become controlled by it or establish a branch in a foreign state only upon obtaining an authorisation of the supervisory institution.
2. An authorisation to establish a bank in a foreign country, acquire a qualifying holding in the authorised capital and/or voting rights of a foreign bank or increase it so that the foreign bank would become controlled by it or establish a branch in the foreign country shall be issued by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
3. For an authorisation to be granted to establish a bank in a foreign country, acquire a qualifying holding of the authorised capital and/or voting rights of a foreign bank or increase it so that the foreign bank would become controlled by it, an application and the documents and data specified by legal acts of the supervisory institution as well as data on the founders (members) of a bank being established or of a bank whose part of the authorised capital and/or voting rights is acquired who hold a qualifying holding in the foreign bank’s authorised capital and/or voting rights, the financial situation, operating plan, organisational and management structure and heads of the bank shall be submitted.
4. For an authorisation to be granted to establish a branch in a foreign country, an application and the documents and data specified by legal acts of the supervisory institution as well as the documents and data evidencing that the branch meets the requirements set in paragraph 1 of Article 11 of this Law shall be submitted.
5. Upon the receipt of an application referred to in paragraphs 3 and 4 of this Article, the supervisory institution shall request the supervisory institution of the foreign state wherein a bank is being established or under whose jurisdiction a bank falls, where a proportion of the bank’s authorised capital and/or voting rights is being acquired, or wherein a branch of the bank is being established to provide information on the procedure for supervising banks and the requirements set for banks in that state as well as capabilities of the supervisory institution of the Republic of Lithuania to exercise its supervisory functions and obtain the required information, including the information required for the exercise of supervision on a consolidated basis.
6. The supervisory institution must examine submitted documents and take a decision on the granting of an authorisation within three months of the receipt of the application.
7. The supervisory institution may refuse to grant the authorisation referred to in this Article where:
1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) a bank being established or a bank whose proportion of the authorised capital and/or voting rights is being acquired or a branch being established do not meet the requirements set by the supervisory institution or where such an establishment of the bank or of the branch or acquisition of the proportion of the bank’s authorised capital and/or voting rights may pose a threat to the safety and soundness of activities of the bank;
3) information requested according to paragraph 5 of this Article is not received from the supervisory institution of a foreign country or it is possible to draw a conclusion on the basis of the submitted information that legal acts of the foreign state do not provide for a sufficient supervision of banks or restrict rights of the supervisory institution when exercising its supervisory functions and obtaining the required information, including the information required for the exercise of supervision on a consolidated basis.
8. In the cases and according to the procedure set forth by this Law and legal acts of the supervisory institution, a bank must notify the supervisory institution of any changes in the data submitted to obtain the authorisations referred to in this Article.
9. Where the supervisory institution establishes that after the granting of the authorisations referred to in this Article, circumstances may arise which would preclude the granting of an authorisation, the supervisory institution shall have the right, according to the procedure set forth in Chapter Ten of this Law, to take a decision on the prohibition of the activities of a branch, obligation to sell or otherwise transfer a proportion of the authorised capital and/or voting rights of a foreign bank and imposition of other sanctions to the bank.
10. This Article shall not be applied where a bank establishes a controlled bank in a Member State of the European Union, acquires a proportion of the authorised capital and/or voting rights of a foreign bank falling under the jurisdiction of a Member State of the European Union, establishes a branch in a Member State of the European Union or provides services without establishing the branch.
Article 14. Right of a Bank to Provide Financial Services in the Members States of the European Union
1. A bank shall have the right to establish a branch in a Member State of the European Union according to the procedure set forth by this Article or provide financial services without establishing the branch.
2. Prior to establishing a branch in a Member State of the European Union, a bank shall notify thereof the supervisory institution by indicating the state in which it plans to establish a branch and submit the information specified by the supervisory institution on an operating plan of the branch to be established setting out, inter alia, the financial services to be provided, the organisational structure of the branch, the intended registered office (address) of the branch in the foreign state and the heads of the branch.
3. The supervisory institution must forward the information referred to in paragraph 2 of this Article and submitted by the bank as well as information on the bank’s equity capital and capital adequacy within three months to the supervisory institution of a foreign state. The supervisory institution shall have the right to refuse the forwarding of the information to the supervisory institution of the foreign state where the operating plan of a branch, organisational structure or heads thereof or the financial situation of the bank do not meet the requirements set by the supervisory institution to the activities envisaged. Reasons must be given for the refusal of the supervisory institution to forward the information, and a decision thereon must be taken within three months of the receipt of the information referred to paragraph 2 of this Article. The bank must be forthwith notified of the forwarding of the information or refusal to forward it to the supervisory institution of the foreign state.
4. Where a bank has already established at least one branch in a foreign state, the procedure set forth in this Article shall not be applied to the establishment of other branches thereof in that state.
5. In order to provide financial services in a foreign state without establishing a branch, a bank must notify thereof the supervisory institution. The notification shall set out the financial services to be provided. The supervisory institution must, within one month, forward or refuse to forward this information to the supervisory institution of a foreign country and notify thereof the bank.
6. In the event of a change in any of the particulars communicated to the supervisory institution when effecting the notification referred to paragraphs 2 or 5 of this Article, a bank must notify thereof the supervisory institution and the supervisory institution of a foreign country in advance, at least one month before making the change. The supervisory institution shall, within one month, forward the information on the planned changes to the supervisory institution of the foreign state or refuse to forward it where there are grounds referred to in paragraph 3 of this Law and notify thereof the bank. Upon the refusal of the supervisory institution to forward the information on the planned changes to the supervisory institution of the foreign state, the bank shall not have the right to effect these changes.
7. (Repealed as of 1 January 2012).
Article 15. Right of the Financial Undertakings Controlled by a Bank to Provide Financial Services in the Member States of the European Union
1. The right to establish a branch in a Member State of the European Union or provide financial services without establishing the branch according to the procedure set forth by Article 14 of this Law shall also be vested in a financial undertaking controlled by one or several banks and established in the Republic of Lithuania where according to legal acts of the Republic of Lithuania and establishment documents it has the right to engage in the provision of financial services and meets all of the following requirements:
1) the parent bank or banks of the financial undertaking hold a licence obtained according to the procedure set forth by this Law;
2) the financial undertaking is already engaged in the provision of the financial services in the Republic of Lithuania which are to be provided in the Member State of the European Union;
3) the parent bank or banks of the financial undertaking hold 90 per cent or more of the authorised capital and/or voting rights of the financial undertaking;
4) the parent bank or banks of the financial undertaking satisfy the supervisory institution regarding the prudent management of the controlled financial undertaking and have declared, with the consent of the supervisory institution, that the parent bank or banks of the financial undertaking jointly and severally guarantee the commitments entered into by the controlled financial undertaking;
5) the controlled financial undertaking is supervised by exercising the supervision of the parent bank or banks on a consolidated basis.
2. When effecting a notification pursuant to paragraph 3 of Article 14 of this Law, the supervisory institution shall indicate therein, inter alia, whether the controlled financial undertaking meets the requirements set in paragraph 1 of this Article and submit information on the equity capital of the financial undertaking and consolidated equity capital of the parent bank and of the entire financial group.
3. A financial undertaking which is the subject of a notification effected according to the procedure set forth by this Article must submit to the supervisory institution the information specified by legal acts thereof and required to supervise the compliance with terms and conditions set in this Article. After the effecting of the notification, the capital of the financial undertaking may not be reduced, and the undertaking must ensure adequate management and organisational structure, accounting organisation and internal control system. Moreover, the supervisory institution shall have the right to inspect the financial undertaking according to the procedure set forth by this Law and to impose to it administrative penalties in accordance with the Code of Administrative Offences. Where the controlled financial undertaking no longer meets at least one requirement set in paragraph 1 of this Article, the supervisory institution shall notify thereof the supervisory institution of a foreign state.
CHAPTER THREE
ACTIVITIES OF FOREIGN BANKS IN THE REPUBLIC OF LITHUANIA
Article 16. Activities of Foreign Banks in the Republic of Lithuania
1. Foreign banks may, according to the procedure set forth by this Law, establish banks in the Republic of Lithuania, acquire a proportion of the authorised capital and/or voting rights of the banks in operation and establish branches and representative offices; the foreign banks licensed in the Member States of the European Union shall also have the right to provide financial services without establishing a branch in the Republic of Lithuania pursuant to Article 20 of this Law.
2. A branch of a foreign bank may be established in the Republic of Lithuania according to the procedure set forth by this Law only upon obtaining an authorisation to establish the branch of the foreign bank. The branch of the foreign bank may commence the provision of financial services in the Republic of Lithuania only upon obtaining of a licence according to the procedure set forth by this Law.
3. Paragraph 2 of this Law shall not apply to the foreign banks licensed in the Member States of the European Union and establishing a branch in the Republic of Lithuania according to the procedure set forth by Article 20 of this Law.
4. A representative office of a foreign bank may be established in the Republic of Lithuania according to the procedure set forth by this Law only upon obtaining an authorisation to establish the representative office of the bank. This provision shall not be applied to the foreign banks licensed in the Member States of the European Union.
5. The requirements set for banks under this Law shall be applied to branches and representative offices of foreign banks and to activities, supervision, termination and restructuring thereof to the extent that they do not contradict the essence of a branch or representative office and this Law does not provide otherwise.
6. A branch of a foreign bank established in the Republic of Lithuania, when providing financial services in a place other than the registered office of the branch, need not establish the branch therein. Where the foreign bank establishes more than one branch in the Republic of Lithuania, it must specify one branch which would provide the supervisory institution with the information on all branches established in the Republic of Lithuania as specified in this Law and legal acts of the supervisory institution.
7. Where legal acts of a state other than a Member State of the European Union under whose jurisdiction falls a foreign bank establishing a bank in the Republic of Lithuania, acquiring a qualifying holding in the bank’s authorised capital and/or voting rights or establishing a branch or representative office provide for additional or stricter, as compared with this Law, requirements and terms set for Lithuanian banks wishing to pursue business in that state on the establishment of a bank, acquisition of a qualifying holding in the bank’s authorised capital and/or voting rights or the establishment of a branch or representative office, the supervisory institution shall have the right to require that the foreign bank wishing to pursue business in the Republic of Lithuania meet the same requirements and terms.
Article 17. Granting of an Authorisation to a Foreign Bank to Establish a Bank in the Republic of Lithuania and Issuance of a Licence to a Bank Established by the Foreign Bank
An authorisation to establish a bank in the Republic of Lithuania shall be granted to a foreign bank and a licence shall be issued to an established bank according to the procedure set forth by Articles 8 and 9 of this Law.
Article 18. Granting of an Authorisation to
Establish a Branch to a Foreign Bank
1. An authorisation to establish a branch of a foreign bank in the Republic of Lithuania shall be granted by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
2. In order to obtain an authorisation to establish a branch, a foreign bank shall submit an application and the documents and data specified by legal acts of the supervisory institution, including:
1) the establishment documents of the foreign bank, certificate of registration, licence or other documents granting the right to pursue the business of a credit institution;
2) decision of a body of the foreign bank to establish a branch in the Republic of Lithuania;
3) documents and data evidencing that the foreign bank meets the soundness criteria set by legal acts of the supervisory institution;
4) a framework for activities of the branch;
5) a written confirmation that the supervisory institution of a foreign state under whose jurisdiction the foreign bank falls does not object to the establishment of the branch in the Republic of Lithuania and information of this supervisory institution on the procedure for supervising foreign banks in that state, including branches thereof in foreign states, and the requirements set for banks as well as the obligation to exercise supervision of the branch established in the Republic of Lithuania and to provide information to the Lithuanian supervisory institution;
6) a list of heads of the branch and other persons whose election or appointment is subject to an authorisation of the supervisory institution.
3. The supervisory institution must examine submitted documents and take a decision on the granting of an authorisation to establish a branch within three months of the receipt of the application.
4. The supervisory institution may refuse to grant an authorisation to establish a branch where:
1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) a foreign bank establishing a branch does not meet the soundness criteria set by legal acts of the supervisory institution or heads of the branch of the foreign bank do not meet the requirements set by the legal acts;
3) the supervisory institution of a foreign state under whose jurisdiction a foreign bank falls objects to the establishment of a branch in the Republic of Lithuania or where the procedure for supervising foreign banks in that state and the requirements set for banks do not adequately ensure safe and sound activities of the branch or may prevent the Lithuanian supervisory institution from exercising its functions;
4) the supervisory institution of a foreign state under whose jurisdiction a foreign bank falls, where the foreign bank establishes a branch thereof in the Republic of Lithuania, does not undertake to supervise the activities of the branch of the foreign bank in the Republic of Lithuania and provide information to the Lithuanian supervisory institution under the terms acceptable to it.
5. The supervisory institution shall give written notice to the Register of Legal Persons of a decision taken to grant or not to grant an authorisation to establish a branch.
Article 19. Granting of a Licence to a Branch of a Foreign Bank
1. A licence issued to a branch of a foreign bank shall be subject to the provisions of paragraphs 1-3 of Article 9 of this Law.
2. A licence shall be issued to a branch of a foreign bank registered in the Register of Legal Persons of the Republic of Lithuania by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
3. For a licence to be issued, an application and the documents and data specified by legal acts of the supervisory institution shall be submitted, including:
1) articles of association of a branch and certificate of registration;
2) a list of the heads of the branch appointed after the establishment of the branch and of other persons whose election or appointment is subject to an authorisation of the supervisory institution;
3) an operating plan of the branch for the first three years;
4) documents and data on the branch specified by subparagraphs 6-9 of paragraph 5 of Article 9 of this Law.
4. The supervisory institution shall have the right to carry out on-the-spot verification of the preparedness of a branch to commence the provision of financial services.
5. The supervisory institution must examine submitted documents and take a decision on the issuance of a licence within three months of the receipt of the application.
6. Regulations of a branch of a foreign bank, heads, operating plan, management and organisational structure, accounting organisation, internal control system, security means, premises and insurance of property thereof must ensure safe and sound activities of the branch and be in compliance with the relevant legal acts. The branch must also comply with other requirements set by this Law and be prepared to provide financial services in a safe and sound manner.
7. The supervisory institution may refuse to issue a licence where:
1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) a branch does not meet the requirements set in paragraph 6 of this Article.
8. A decision taken to issue or not to issue a licence shall be notified to the Register of Legal Persons according to the procedure set forth by this Register and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
9. A foreign bank which has been issued a licence must, under any circumstances, meet the requirements set to obtain the licence. In the cases and according to the procedure set forth by this Law and legal acts of the supervisory institution, the bank must notify the supervisory institution of any changes in the particulars submitted to obtain the authorisation to establish a branch and to obtain the licence.
10. A licence shall be withdrawn by a decision of the supervisory institution on the grounds and according to the procedure set forth by Article 10 of this Law, also where the bank which has established a branch is being wound up or bankruptcy proceedings have been opened against it.
Article 20. Right of Foreign Banks Licensed in the Member States of the European Union to Establish a Branch in the Republic of Lithuania or to Provide Financial Services without Establishing the Branch
1. A foreign bank licensed in a Member State of the European Union may, according to the procedure set forth in this Article, establish a branch in the Republic of Lithuania or provide financial services without establishing the branch. The right to provide financial services without establishing a branch shall not entitle a foreign bank licensed in a Member State of the European Union to engage in the permanent provision of financial services in the Republic of Lithuania.
2. A foreign bank licensed in a Member State of the European Union may establish a branch in the Republic of Lithuania and provide the financial services which the foreign bank has the right to provide according to an authorisation granted or a licence issued to it by the supervisory institution of a foreign state where:
1) the supervisory institution has received from the supervisory institution of a foreign state under whose jurisdiction the foreign bank falls a notification containing information on an operating plan of the branch setting out, inter alia, the financial services to be provided, the organisational structure of the branch, the intended registered office (address) of the branch in the Republic of Lithuania; the heads of the branch; the equity capital and capital adequacy of the bank;
2) a notification has been received from the supervisory institution on the preparedness to exercise supervision and, where necessary, information on the requirements set by legal acts for the protection of public interests and binding on the branch which is engaged in the provision of financial services in the Republic of Lithuania.
3. A branch of a foreign bank licensed in a Member State of the European Union may be established and commence its activities upon the receipt by the foreign bank of a notification referred to in subparagraph 2 of paragraph 2 of this Article, and where no notification is received – two months from the receipt of the information referred to in subparagraph 1 of paragraph 2 of this Article by the Lithuanian supervisory institution from the supervisory institution of the foreign state.
4. Where a foreign bank referred to in paragraph 1 of this Article has already established at least one branch in the Republic of Lithuania, the procedure set forth by this Article shall not be applied to the establishment of other branches thereof.
5. A foreign bank licensed in a Member State of the European Union may commence the provision of financial services in the Republic of Lithuania without establishing a branch from the receipt of a notification setting out the financial services to be provided by the Lithuanian supervisory institution from the supervisory institution of a foreign state under whose jurisdiction the foreign bank falls.
6. In the event of a change in any of the particulars on the operating plan of a branch, the organisational structure of the branch, the office (address) of the branch in the Republic of Lithuania or the heads of the branch communicated to the supervisory institution pursuant to subparagraph 1 of paragraph 2 of this Article, a foreign bank must notify thereof the Lithuanian supervisory institution in advance, at least one month before making the change.
Article 21. Activities Carried on in the Republic of Lithuania by the Financial Undertakings which are Controlled by the Foreign Banks Licensed in the Member States of the European Union
1. A financial undertaking which is controlled by one or several foreign banks licensed in a Member State of the European Union shall have the right to establish a branch in the Republic of Lithuania or provide financial services without establishing a branch according to the procedure set forth by Article 20 of this Law, provided it has the right to engage in the provision of financial services in compliance with legal acts of the foreign state and its establishment documents and fulfils all of the following conditions:
1) the parent bank or banks of the financial undertaking have obtained an authorisation to pursue the business of a credit institution in a foreign state whose legal acts regulate the activities of an controlled financial undertaking;
2) the financial undertaking is already engaged in a Member State of the European Union in the provision of the financial services to be provided in the Republic of Lithuania;
3) the parent bank or banks of the financial undertaking hold 90 per cent or more of the authorised capital and/or voting rights of the financial undertaking;
4) the parent bank or banks of the financial undertaking satisfy the supervisory institution of a foreign state regarding the prudent management of the controlled financial undertaking and have declared, with the consent of the supervisory institution of the foreign state, that the parent bank or banks of the financial undertaking jointly and severally guarantee the commitments entered into by the controlled financial undertaking;
5) the controlled financial undertaking is supervised by exercising the supervision of the parent bank or banks on a consolidated basis.
2. A financial undertaking referred to paragraph 1 of this Article may establish a branch or provide financial services in the Republic of Lithuania without establishing a branch where the supervisory institution of a foreign state, when effecting a notification pursuant to subparagraph 1 of paragraph 2 of Article 20 of this Law, indicates, inter alia, whether the controlled financial undertaking meets the requirements set in paragraph 1 of this Article and provides information on the equity capital of the financial undertaking and the consolidated equity capital of the parent bank and the entire financial group.
3. Where the supervisory institution of a foreign state notifies the Lithuanian supervisory institution that a controlled financial undertaking no longer satisfies at least one of the conditions referred to in paragraph 1 of this Article, the financial undertaking shall thereupon be applied all requirements set by laws of the Republic of Lithuania for the persons providing such financial services.
4. Provisions of this Article shall apply mutatis mutandis to the financial undertakings controlled the financial undertakings controlled by the foreign banks licensed in the Member States of the European Union.
Article 22. Representative Office of a Foreign Bank in the Republic of Lithuania
1. A representative office of a foreign bank shall not have the right to provide financial services in the Republic of Lithuania.
2. An authorisation to establish a representative office of a foreign bank in the Republic of Lithuania shall be granted by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
3. In order to obtain an authorisation to establish a representative office, a foreign bank shall submit an application and the documents and data specified by legal acts of the supervisory institution, including:
1) the establishment documents of the foreign bank, certificate of registration, licence or other documents granting the right to pursue the business of a credit institution;
2) a decision of the management body of the foreign bank to establish a representative office in the Republic of Lithuania;
3) a written consent of the supervisory institution of a foreign state under whose jurisdiction the foreign bank falls to establish a representative office in the Republic of Lithuania.
4. The supervisory institution must examine submitted documents and take a decision on the granting of an authorisation to establish a representative office within three months of the receipt of the application.
5. The supervisory institution may refuse to grant an authorisation to establish a representative office where:
1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) a foreign bank establishing a representative office or the representative office does not meet the requirements set by legal acts of the supervisory institution;
3) the supervisory institution of a foreign state under whose jurisdiction the foreign bank falls objects to the establishment of a representative office in the Republic of Lithuania.
6. The supervisory institution shall give written notice to the Register of Legal Persons of the decision to grant or not to grant an authorisation to establish a representative office.
7. A representative office of a foreign bank, in the cases and according to the procedure set forth by legal acts of the supervisory institution, must give notice to the supervisory institution of the registration of the representative office in the Register of Legal Persons and of any changes in the particulars submitted to obtain an authorisation to establish the representative office.
CHAPTER FOUR
SHAREHOLDERS OF A BANK
Article 23. Shareholders of a Bank
*1. A bank must have at least ten shareholders.
2. Paragraph 1 of this Article shall not be applied where one of the founders of a bank is a Lithuanian or foreign financial institution or insurance undertaking and acquires more than 2/3 of the bank’s voting shares.
3. Shareholders of a bank may not be:
1) the legal persons financed from State or municipal budgets;
2) the persons who have not submitted, in the cases and according to the procedure set forth by legal acts, to the supervisory institution data on their identities, members, activities, financial situation, the heads of a legal person, the persons for whose benefit shares are acquired or the legitimacy of the acquisition of the funds used to acquire the bank’s shares or who have not proved the legitimacy of the acquisition of the funds used to acquire the bank’s shares;
3) the persons who object that the supervisory institution manages, in the cases and according to the procedure set forth by laws and other legal acts, their data required for the performance of the functions provided for under this Law, including their personal data and information on a person’s previous convictions and health.
4. A person who holds a qualifying holding in a bank’s authorised capital and/or voting rights must under any circumstances meet the requirements set forth in paragraph 3 of Article 8 of this Law.
5. A bank must manage the list of the bank’s members (shareholders) according to the procedure set forth by the Law on Financial Institutions. The bank must, not later than within five days, notify the supervisory institution of any case of acquisition, increase, transfer or reduction of a qualifying holding in the bank’s authorised capital and/or voting rights exceeding the thresholds specified in paragraph 1 of Article 24 of this Law. Moreover, the bank must submit particulars of the list of the bank’s members (shareholders) to the supervisory institution within ten days from the date of the annual general meeting of the shareholders or otherwise upon the request of the supervisory institution.
6. A bank’s shareholders must exercise their rights and perform their obligations in such a way as to ensure the stability and soundness of the bank’s activities.
*Note: Where the State acquires the shares of a bank or takes them for public needs, provisions of paragraphs 2-8 of Article 5, paragraph 1 of Article 23, Articles 24, 25 and paragraphs 4 and 8 of Article 41 of the Law on Banks shall not apply.
*Article 24. Qualifying Holding in a Bank’s Authorised Capital and/or Voting Rights
1. A person or the persons acting in concert (hereinafter referred to as the “acquirer”) who have taken a decision on the acquisition of a qualifying holding in a bank’s authorised capital and/or voting rights or to increase it so that the proportion of the bank’s authorised capital and/or voting rights held by him would reach or exceed 20 per cent, 30 per cent or 50 per cent of the holding or so that the bank would become controlled by him (hereinafter referred to as the “proposed acquisition”) must give a written notice thereof to the supervisory institution and indicate the size of the proportion of the qualifying holding in the bank’s authorised capital and/or voting rights to be acquired, also submit the documents and provide the data specified in a list indicated in paragraph 2 of Article 25 of this Law. A failure to comply with the requirement to obtain the decision of the supervisory institution not to oppose the proposed acquisition shall not invalidate a transaction, however it shall give rise to the consequences specified in paragraph 4 of this Article.
2. A person who has taken a decision on the transfer of a qualifying holding in a bank’s authorised capital and/or voting rights or to reduce it so that the proportion of the bank’s authorised capital and/or voting rights held by him would fall below 20 per cent, 30 per cent or 50 per cent of the holding or so that the bank would cease to be controlled by him must give a written notice thereof to the supervisory institution and indicate the size of the proportion of the qualifying holding in the bank’s authorised capital and/or voting rights to be transferred.
3. When determining a qualifying holding in the authorised capital and/or voting rights for the purposes indicated in this Article and in Article 23 of this Law, provisions of Articles 23 and 24 of the Law on Securities must be complied with. Moreover, when determining a qualifying holding in a bank’s authorised capital and/or voting rights, no account shall be taken of the voting rights or shares which financial brokerage firms or credit institutions may hold as a result of the rendered investment service of underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis, provided that those rights are not exercised or otherwise used to intervene in the management of the issuer and that they are disposed of within one year of acquisition.
4. Where a qualifying holding in a bank’s authorised capital and/or voting rights has been acquired or increased without giving a notice thereof to the supervisory institution in accordance with paragraph 1 of this Article or prior to the expiry of the time limit specified in paragraph 4 of Article 25 of this Law (with the exception of the case of receipt of a decision of the supervisory institution not to oppose the proposed acquisition prior to the expiry of the time limit specified in paragraph 4 of Article 25 of this Law) or in the event of the opposition of the supervisory institution to the proposed acquisition, also where the supervisory institution takes a decision on suspension of the right exercise the voting right, the entire proportion of the bank’s authorised capital and/or voting rights held by the acquirer at the general meeting of the bank’s shareholders shall be divested of the voting right. The voting right shall be re-acquired on the day of receipt of a decision by the supervisory institution not to oppose the proposed acquisition or where the supervisory institution does not declare its opposition to the proposed acquisition or when the supervisory institution takes a decision on revocation of the decision on suspension of the right to exercise the voting right at the general meeting of the shareholders in the case specified in paragraph 3 of Article 26 of this Law.
*Note: Where the State acquires the shares of a bank or takes them for public needs, provisions of paragraphs 2-8 of Article 5, paragraph 1 of Article 23, Articles 24, 25 and paragraphs 4 and 8 of Article 41 of the Law on Banks shall not apply.
*Article 25. Assessment of the Acquirer and the Proposed Acquisition
1. The acquirer shall submit a notification of the proposed acquisition, the documents and data necessary for performance of an assessment of the acquirer and the proposed acquisition in accordance with the procedure laid down by this Law and legal acts of the supervisory institution.
2. The supervisory institution shall establish a list of the documents and data submitted together with the notification of the proposed acquisition and required for the assessment of the acquirer and the proposed acquisition. The documents and data indicated in this list must be proportionate to and adjusted for the acquirer and the proposed acquisition. The list may not contain the documents and data which are not required for the assessment of the acquirer and the proposed acquisition according to the criteria established in paragraph 8 of this Article.
3. Upon the receipt of a notification of the proposed acquisition, the documents and data necessary for performance of an assessment of the acquirer and the proposed acquisition, also upon the subsequent receipt, in accordance with paragraph 6 of this Article, of additional documents and data, the supervisory institution shall immediately, within 2 working days, acknowledge in writing the receipt thereof to the acquirer.
4. The supervisory institution shall have a maximum of 60 working days for performance of an assessment of the acquirer and the proposed acquisition as from the date of the written acknowledgement of receipt of the notification of the proposed acquisition and all documents and data necessary to carry out the assessment of the acquirer and the proposed acquisition (hereinafter referred to as the “assessment period”). When acknowledging the receipt of a notification of the proposed acquisition and all the documents and data necessary for performance of an assessment of the acquirer and the proposed acquisition or of the additional documents and data submitted in accordance with paragraph 6 of this Article, the supervisory institution shall give a notice to the acquirer of the date of expiry of the assessment period.
5. The supervisory institution may, during the assessment period, if necessary, and no later than on the 50th working day of the assessment period, request the acquirer to submit additional documents and data that are required to complete the assessment of the acquirer and the proposed acquisition. Such a request shall be made in writing and shall specify the additional documents and data needed.
6. For the period between the date of filing a request by the supervisory institution to submit additional documents and data required to complete an assessment and the receipt of a response by the acquirer to the request of the supervisory institution, the assessment period shall be interrupted. The interruption of the assessment period may not exceed 20 working days. The supervisory institution may, at its own discretion, further request completion or clarification of the documents and data at its own discretion, but this may not result in an interruption of the assessment period.
7. The supervisory institution may extend the interruption of the assessment period as indicated in paragraph 6 of this Article for a period not exceeding 30 working days where the acquirer is:
1) situated or is regulated in a country other than European Union Member State, or
2) not subject to supervision under legal acts of the Republic of Lithuania or other Member States of the European Union regulating the activities of credit institutions, insurance undertakings, reinsurance undertakings, financial brokerage firms or management companies of harmonised collective investment undertakings.
8. In assessing the submitted notification of the proposed acquisition and the documents and data necessary for the assessment of the acquirer and the proposed acquisition as well as the submitted additional documents and data, the supervisory institution shall, in order to ensure the sound and prudential management of a bank in respect of which an acquisition is proposed, and having regard to the likely influence of the acquirer on the bank, appraise the suitability of the acquirer and the financial soundness of the proposed acquisition against all of the following criteria:
1) the good repute of the acquirer (paragraphs 12 and 13 of Article 34 of this Law);
2) the good repute and experience of the person who will be the head of the bank following the proposed acquisition (paragraph 2 of Article 34 of this Law);
3) the financial soundness of the acquirer, in particular in relation to the type of business pursued and envisaged in the bank in which the acquisition is proposed;
4) whether the bank will be able to comply at all times, following implementation of the proposed acquisition, with the prudential requirements as set forth by this Law and other legal acts, in particular, whether a group of which the bank will become a part has a structure that makes it possible to exercise effective supervision, effectively exchange information among supervisory institutions and determine the allocation of responsibilities among the supervisory institutions;
5) whether there is an appropriate ground to suspect that, in connection with the proposed acquisition, the activities of money laundering or terrorist financing as defined by the Law on Prevention of Money Laundering and Terrorist Financing are being or were carried out or attempted, or that the proposed acquisition could increase the risk thereof.
9. The supervisory institution shall have the right to oppose the proposed acquisition solely when, based on the criteria specified in paragraph 8 of this Article, there is an appropriate ground therefor or when the information as supplied by the acquirer is incomplete.
10. The supervisory institution may neither impose any prior conditions in respect of the size of a qualifying holding in a bank’s authorised capital and/or voting rights that must be acquired nor examine the proposed acquisition in terms of the economic needs of the market.
11. Where two or more proposed acquisitions have been notified to the supervisory institution regarding the same bank, the latter shall consider all the notifications received in accordance with the same procedure treating the acquirers in a non-discriminatory manner.
12. If the supervisory institution decides to oppose the proposed acquisition, it shall, within two working days and not exceeding the assessment period, inform the acquirer thereof in writing and provide the reasons for that decision. Moreover, the decision shall indicate all opinions or reservations received from other supervisory institutions following consultation according to paragraphs 15 and 16 of this Article. The supervisory institution shall have the right, at the request of the acquirer or at its own initiative, to publish information on the reasons for taking the decision to oppose the proposed acquisition.
13. Where the supervisory institution does not declare its opposition to the proposed acquisition during the assessment period, it shall be held that the supervisory institution does not oppose the proposed acquisition. If the supervisory institution takes a decision not to oppose the proposed acquisition prior to expiry of the assessment period, it must notify the acquirer thereof in writing within two working days.
14. When taking a decision not to oppose the proposed acquisition, the supervisory institution shall have the right to lay down a maximum time limit for implementing the proposed acquisition. Where necessary, this time limit may be extended.
15. The supervisory institution shall refer for advice to appropriate supervisory institutions of other Member States of the European Union where the acquirer is:
1) a foreign bank, insurance undertaking, reinsurance undertaking, financial brokerage firm or management company of harmonised collective investment undertakings licensed in another Member State of the European Union, or
2) the parent company of a foreign bank, insurance undertaking, reinsurance undertaking, financial brokerage firm or management company of harmonised collective investment undertakings licensed in another Member State of the European Union, or
3) a person controlling a foreign bank, insurance undertaking, reinsurance undertaking, financial brokerage firm or management company of harmonised collective investment undertakings licensed in another Member State of the European Union.
16. The supervisory institution shall, in consultation according to paragraph 15 of this Article, request other appropriate supervisory institutions to provide all information which is relevant for the assessment of suitability of the acquirer and the financial soundness of the proposed acquisition and shall communicate without delay to other supervisory institutions upon their request the information relevant for the assessment being conducted and shall communicate on its own initiative all information essential for the assessment being conducted.
17. Where it is suspected that the activities of money laundering or terrorist financing may be carried out or were carried out or attempted during the proposed acquisition or that the proposed acquisition could increase the risk thereof, the supervisory institution shall refer to the state institutions responsible for prevention of money laundering and/or terrorist financing with a request to provide available data and conclusions. Upon the request of the supervisory institution, the state institutions responsible for prevention of money laundering and/or terrorist financing, other state and municipal institutions, also other persons must forthwith supply available information on the acquirer, members and heads thereof, their financial situation, activities, discovered infringements of laws and other legal acts, conclusions of conducted verifications and examinations as well as other information required by the supervisory institution to perform an assessment of the acquirer and the proposed acquisition.
*Note: Where the State acquires the shares of a bank or takes them for public needs, provisions of paragraphs 2-8 of Article 5, paragraph 1 of Article 23, Articles 24, 25 and paragraphs 4 and 8 of Article 41 of the Law on Banks shall not apply.
Article 26. Suspension of the Right to Exercise the Voting Right
1. The supervisory institution shall have the right to take a decision on the suspension of the right of a person holding a qualifying holding in a bank’s authorised capital and/or voting rights to exercise his voting right at the general meeting of the shareholders where:
1) a notification as specified in paragraph 1 of Article 24 of this Law, the documents and data required for the assessment of the acquirer and the proposed acquisition or additional documents and data were provided by supplying incorrect information or by otherwise violating laws;
2) the person does not meet the requirements set in this Law.
2. A decision taken on the suspension of the right of a person to exercise his voting right at the general meeting of the shareholders shall be notified to this person and a bank whose qualifying holding in the authorised capital and/or voting rights is held within five working days of the taking of the decision.
3. A decision on the suspension of the right of a person to exercise his voting right at the general meeting of the shareholders as taken on the grounds specified in subparagraph 2 of paragraph 1 of this Article may be revoked in the event of submission of the documents and data evidencing the absence of the circumstances which provided a basis for the taking of such a decision. The supervisory institution shall take a decision on the revocation of the decision on the suspension of the right to exercise the voting right at the general meeting of the shareholders within 30 days of the receipt of an application and the required documents.
4. A decision on the suspension of the right of a person to exercise his voting right must be substantiated and taken at the general meeting of shareholders in accordance with the provisions of paragraph 2 of Article 73 of this Law.
Article 27. Forced Sale of a Bank’s Shares
1. The supervisory institution shall have the right to apply to the courts requesting the forced sale of a bank’s shares owned by a shareholder of the bank who fails to meet the requirements set by this Law or is exerting an influence which operates to the detriment of the sound management of the bank to a person or persons indicated by the supervisory institution by granting the pre-emption right to other shareholders of the bank.
2. Where in the cases specified by this Law the general meeting of a bank’s shareholders does not take decisions on the restoration of the minimum amount of the capital of the bank or where within the fixed time limit the capital is not restored, the supervisory institution shall have the right to apply to the courts requesting the forced sale of the shares owned by all shareholders of the bank to a person or persons indicated by the supervisory institution and meeting the requirements set by this Law.
3. The forced sale of a bank’s shares shall be carried out according to the procedure set forth in Chapter IX of Part II of Book Two of the Civil Code of the Republic of Lithuania. Work of the experts appointed by the courts and their other expenses shall be borne by the bank.
Article 28. Repealed as of 18 November 2011.
Article 29. Repealed as of 18 November 2011.
CHAPTER FIVE
MANAGEMENT OF A BANK
Article 30. Bodies of a Bank
1. A bank must have the following bodies: the general meeting of the shareholders, the supervisory board, the board and the head of the administration.
2. The management bodies of a bank’s shall be the bank’s board and the head of the administration. The bank’s articles of association must clearly establish and define the powers and functions of the bank’s board and the head of administration.
3. The general meeting of shareholders and the supervisory board as well as meetings of the board, in addition to other statutory grounds, may also be convened upon the instruction of the supervisory institution.
4. A bank’s articles of association, the Civil Code, this Law, the Law on Financial Institutions and the Law on Companies shall set forth the procedure for the formation and operation of the bodies of the bank and specify powers, functions and liability thereof, except where this Law provides otherwise.
Article 31. Supervisory Board of a Bank
1. The supervisory board of a bank shall:
1) approve operating plans of the bank;
2) lay down the procedure for lending, which may be carried out only upon the approval of the bank’s supervisory board;
3) ensure that the bank has efficient internal control system;
4) consider or decide on the issues which must be considered or decide on by the bank’s supervisory board under this Law and other laws or the bank’s articles of association.
2. Minutes must be taken of all meetings of a bank’s supervisory board. The minutes of a meeting must:
1) specify the venue and time of the meeting, members of the supervisory board attending the meeting, the chairperson of the meeting, information on whether the meeting has a quorum, the agenda of the meeting;
2) present the substance of every issue considered at the meeting, specify the documents and information on the basis whereof every issue is considered, submit a report on speeches of the persons attending the meeting and on proposals made on every issue considered at the meeting, a record of the results of voting and decisions taken and attach the individual opinions and protests of the persons attending the meeting.
3. The documents submitted when considering issues on the agenda a meeting as well as the documents referred to in paragraph 4 of this Article must be attached to the minutes of the meeting.
4. All members of a bank’s supervisory board, including those who did not attend a meeting of a bank’s supervisory board, must be granted access to the minutes of the meeting of the bank’s supervisory board within five days or, where this is impossible, as soon as the circumstances permit. A member of the bank’s supervisory board must confirm in writing that he has been granted access to the minutes of the meeting of the bank’s supervisory board and, where he does not agree with the decisions taken at the meeting, forthwith declare his protest in writing to the supervisory board.
5. Every member of a bank’s supervisory board must take all possible measures to ensure that the supervisory board decides on the issues within the limits of its powers and that the decisions meet the requirements set in legal acts. A member of the bank’s supervisory board shall be held liable for nonfeasance or misfeasance of this duty or other duties set forth by legal acts in the same manner as members of the management bodies of the bank under laws, the bank’s articles of association and agreements concluded with the bank.
6. A member of the bank’s supervisory board may also be a member of the board of the parent undertaking of a bank.
Article 32. Board of a Bank
1. The board of a bank shall be a collegial management body of the bank.
2. The board of a bank shall:
1) elect (appoint) and remove from office the head of the administration and his deputy;
2) consider or decide on the issues which must be considered or decided on by the bank’s board under this Law and other laws or the bank’s articles of association.
3. Minutes must be taken of all meetings of a bank’s board. The minutes of a meeting must:
1) the specified venue and time of the meeting, members of the board attending the meeting, the chairperson of the meeting, information on whether the meeting has a quorum, the agenda of the meeting;
2) present the substance of every issue considered at the meeting, specify the documents and information on the basis whereof every issue is considered, submit a report on speeches of the persons attending the meeting and on proposals made on every issue considered at the meeting, a record of the results of voting and decisions taken and attach the individual opinions and protests of the persons attending the meeting.
4. The documents submitted when considering issues on the agenda a meeting as well as the documents referred to in paragraph 5 of this Article must be attached to the minutes of the meeting.
5. All members of a bank’s board, including those who did not attend a meeting of a bank’s board, must be granted access to the minutes of the meeting of the bank’s board within 5 days or, where this is impossible, as soon as the circumstances permit. A member of the bank’s board must confirm in writing that he has been granted access to the minutes of the meeting of the bank’s board and, where he does not agree with the decisions taken at the meeting, forthwith declare his protest in writing to the board.
6. Every member of a bank’s board must take all possible measures to ensure that the board deciders on the issues within the limits of its powers and that the decisions meet the requirements set in legal acts. A member of the bank’s supervisory board shall be held liable for nonfeasance or misfeasance of this duty or other duties set forth by legal acts in the same manner as members of the management bodies of the bank under laws, the bank’s articles of association and agreements concluded with the bank.
Article 33. Head of the Administration of a Bank and his Deputy
1. A bank must have the head of the administration and his deputy (hereinafter referred to as “the heads of the administration).
2. The chairperson of the board of a bank must be the head of the administration or his deputy.
3. The heads of the administration of a bank shall be held liable for nonfeasance or misfeasance of the obligations set forth by legal acts or the bank’s articles of association under laws, the bank’s articles of association and the agreements concluded with the bank.
4. Provisions of paragraphs 1 and 3 of this Article shall also be applied to a branch of a foreign bank.
Article 34. Heads and Employees of a Bank
1. Heads of a Bank shall be:
1) members of the bank’s supervisory board;
2) members of the bank’s board;
3) heads of the administration;
4) the head of the internal audit service;
5) heads of the branches and representative offices of bank as well as other employees of the bank and other persons who, in accordance with the bank’s articles of association, resolutions of the board, the rules of procedure of the administration or by a decision of the heads of the administration, have been authorised to independently take decisions on the provision of financial services and to conclude, on behalf of the bank, the transactions meeting the criteria set by legal acts of the supervisory institution and having risk characteristics.
2. Heads of a bank must be of good repute (paragraphs 12 and 13 of this Article) and have qualifications and experience allowing them to properly exercise their functions. Requirements for the qualifications and experience of the heads of the bank shall be set by legal acts of the supervisory institution. The persons who object that the supervisory institution manages, in the cases and according to the procedure set forth by laws and other legal acts, their data required for the issuance of the licences and granting of the authorisations and consents provided for under this Law, including their personal data and information on a person’s previous convictions and health cannot be heads of the bank.
3. At least one head of a bank’s administration must speak the Lithuanian language and permanently reside in the Republic of Lithuania.
4. Only the persons holding an authorisation of the supervisory institution may be heads of a bank. Legal acts of the supervisory institution may provide for the cases where the requirement for the authorisation of the supervisory institution may be waived.
5. A bank (prior the establishment of the bank – founders thereof) must, at least 30 days prior to the election or appointment of a person head of the bank, notify thereof the supervisory institution and submit the documents and data specified by legal acts of the supervisory institution and evidencing that the person meets the requirements set by the legal acts.
6. Where a bank does not receive a request of the supervisory institution to submit additional information or is not notified of a decision not to grant an authorisation to elect or appoint the head of the bank within 30 days of the receipt of submitted documents and data by the supervisory institution, the authorisation shall be considered to have been granted. Where additional information is requested, the time limit of 30 days shall be counted from the receipt of additional information.
7. The supervisory institution may refuse to grant an authorisation to elect or appoint the head of a bank where:
1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) in the opinion of the supervisory institution, the heads of the bank do not meet the requirements referred to in paragraphs 2 or 3 of this Article;
3) a person whose election or appointment is subject to an authorisation is prohibited from holding this position under other laws.
8. The supervisory institution shall withdraw an authorisation to elect or appoint the head of a bank where:
1) the authorisation has been obtained by fraud or otherwise violating laws;
2) the authorisation has been granted to elect or appoint a person who no longer meets the requirements set by this Law or other laws for the granting of an authorisation.
9. A bank shall be notified of a decision taken on the withdrawal of an authorisation to elect or appoint the head of a bank. Upon taking by the supervisory institution of a decision on the withdrawal of the authorisation and upon the request of the supervisory institution, the bank must, according to the procedure set forth by laws, forthwith remove the head from office and/or terminate the contract concluded therewith.
10. Requirements for the employees of a bank may be set by legal acts of the supervisory institution.
11. Provisions of this Article shall also be applied to a branch and a representative office of a foreign bank. The heads of the branch and the representative office of the foreign bank must meet the requirements set by this Law and legal acts of the supervisory institution for the heads of the administration of the bank. The provisions of paragraphs 4-9 of this Article shall not be applicable to the heads of a branch and a representative office established in the Republic of Lithuania by a foreign bank licensed in a Member State of the European Union.
12. A person may not be regarded to be of good repute where he:
1) has been convicted of a serious or particularly serious crime provided for in the Criminal Code of the Republic of Lithuania or of a crime against property, property rights and property interests, economy and business practice, the financial system or of corresponding criminal acts under criminal laws of foreign states, irrespective of whether the conviction has expired;
2) has been imposed administrative, disciplinary penalties or other sanctions provided for in laws where these penalties or sanctions have been imposed for infringement of the provisions of laws or other legal acts regulating the provision of financial services and pursuit of the activities of financial institutions and where he has been penalised more than once per year;
3) abuses psychotropic, narcotic, toxic substances or alcohol.
13. A supervisory institution shall also have the right to recognise that a person is not of good repute by taking into consideration:
1) his conviction of a crime or a criminal offence, with the exception of the crimes referred to in subparagraph 1 of paragraph 12 of this Article or of corresponding criminal acts under laws of foreign states;
2) acquisition of a qualifying holding in the bank’s authorised capital and/or voting rights, increased, transferred or reduced it without giving a notice thereof to the supervisory institution, where this was required;
3) the imposition of the sanctions provided for by laws on a legal person whose qualifying holding in the authorised capital and/or voting rights he holds or held or whose head he is or was or the winding up of the said legal person by reason of bankruptcy or by a court’s decision or judgement on other statutory grounds related to inappropriate activities or infringements of legal acts;
4) the suspension, while holding a qualifying holding in a financial institution’s authorised capital and/or voting rights, of his right to exercise the voting right at the general meeting of the financial institution’s members according to the procedure set forth by laws;
5) other important reasons why the person may not be regarded to be of good repute.
Article 35. Internal Control of Activities of a Bank
Requirements for the internal control of the activities of a bank shall be set by the Law on Financial Institutions and legal acts of the supervisory institution.
Article 36. Committees of a Bank
1. A bank must have standing credit, internal audit and risk management committees. The bank’s supervisory board shall form the internal audit committee and control activities thereof.
2. A bank shall also have the right to have other committees provided for by the articles of association of the bank.
3. A bank’s articles of association and other documents adopted by the bodies of the bank shall set forth the procedure for the formation and operation of the committees of the bank and specify powers thereof. Requirements for the procedure for the formation and operation of the committees of the bank and powers thereof may also be set by legal acts of the supervisory institution.
CHAPTER SIX
(b) CAPITAL OF A BANK AND APPROPRIATION OF PROFIT
Article 37. Capital of a Bank
The capital of a bank shall consist of the equity and loan capital.
Article 38. Equity Capital
1. The equity capital of a bank shall consist of:
1) authorised capital (reduced by the value of bought-up own shares) excluding the value of preference shares;
2) reserve capital;
3) capital reserves (share premium) excluding the amount related with the issue of preference shares;
4) mandatory reserve or reserve capital;
5) retained earnings or loss;
6) tangible fixed assets revaluation reserve;
7) financial assets revaluation reserve;
8) special undistributed reserve;
9) preference shares and the amount of capital reserves (share premium) related with the issue thereof;
10) other reserves.
2. A bank may build-up and use the financial assets revaluation reserve where such a reserve has been provided for by its articles of association and accounting policy.
Article 39. Loan Capital
The loan capital of a bank shall be made up of the funds which the bank has acquired by the right of ownership under an agreement on subordinated loan or by issuing non-equity securities having all characteristics of a subordinated loan.
Article 40. Minimum Capital of a Bank
1. The sum total, expressed in the euro in accordance with the official rate of the litas and the euro set by the Bank of Lithuania, of the constituent parts of a bank’s equity capital listed in subparagraphs 1, 2, 3, 4 and 5 of paragraph 1 of Article 38 of this Law (upon deducting the amount of interim retained earnings of the current year or retained earnings of the last previous year whereon no decision has been passed yet by the annual general meeting of shareholders, provided that an audit firm has not yet performed the audit of the set of financial statements of the respective period and the supervisory institution has not been provided with the data evidencing that the amount of the profit is correct and is net of all expected taxes or dividends) may not be less than EUR 5 million.
2. (Repealed as of 1 January 2012).
3. Where it transpires that a bank’s capital has fallen below the minimum capital of the bank, the board of the bank must forthwith notify thereof the supervisory institution and immediately convene an extraordinary general meeting of the shareholders. The general meeting of the bank’s shareholders must take decisions which would allow to restore the bank’s capital to the minimum amount of the bank’s capital as quickly as possible. The board of the bank shall notify the supervisory institution of the decisions taken at the general meeting of the shareholders on the restoration of the capital within three working days.
Article 41. Authorised Capital of a Bank and Shares of the Bank
1. The authorised capital of a bank shall be formed, increased and reduced according to the procedure set forth by the Republic of Lithuania Law on Companies, except where this Law provides otherwise.
2. A bank shall be prohibited from issuing bearer shares and employee shares.
3. Shares of a bank being established may be paid in money’s worth only.
*4. When increasing the authorised capital of a bank by additional contributions, new shares of the bank may be paid only in money’s worth or by the rights of claim according to the bank’s payment obligations, except when the bank’s authorised capital is increased in the course of the reorganisation of the bank. A person subscribing for the shares must fully pay-up for the bank’s shares not later than until the day when the bank applies to the supervisory institution for the granting of an authorisation to register amendments to the bank’s articles of association related to the increase of the bank’s authorised capital.
5. A decision of the general meeting of a bank’s shareholders on the increase of the authorised capital, with the exception of a decision on the issuance of convertible debentures, shall be deemed to be void where amended articles of association of the bank have not been submitted to the Register of Legal Persons within 12 months of the general meeting of the shareholders which took a decision on the increase of the authorised capital.
6. Retained earnings, capital reserves (share premium), reserve capital and other reserves may be used to increase the authorised capital of a bank by a decision of the general meeting of the shareholders, except for the reserves referred to in paragraph 7 of this Article, by issuing new shares which are sold free of charge to the shareholders or by increasing the nominal value of the shares issued previously.
7. The mandatory reserve or the reserve capital, the special undistributed reserve, the tangible fixed assets revaluation reserve, the financial assets revaluation reserve may not be used to increase the authorised capital of a bank.
*8. The funds paid for a bank’s shares shall be accumulated in an account opened for this purpose in a credit institution entitled to provide financial services in the Republic of Lithuania. The bank shall have the right to use the accumulated funds only upon the establishment of the bank or upon the registration of amendments to the articles of association related to the increase of the authorised capital.
9. A bank shall have the right to acquire its shares according to the procedure set forth by the Law on Financial Institutions and the Law on Companies.
*Note: Where the State acquires the shares of a bank or takes them for public needs, provisions of paragraphs 2-8 of Article 5, paragraph 1 of Article 23, Articles 24, 25 and paragraphs 4 and 8 of Article 41 of the Law on Banks shall not apply.
Article 42. Reduction of the Authorised Capital of a Bank
1. A bank shall have the right to reduce the authorised capital only upon obtaining an authorisation from the supervisory institution.
2. An authorisation to reduce the authorised capital of a bank shall be granted by the supervisory institution according to the procedure set forth by this Law and legal acts of the supervisory institution. An authorisation to reduce the authorised capital shall be granted where the supervisory institution makes sure that the reduced authorised capital of the bank will not fall below the minimum capital of a bank established by this Law and will be sufficient to ensure safe and sound activities of the bank.
Article 43. Adjusted Capital of a Bank
Adjusted capital of a bank shall be the sum total of the bank’s equity and loan capital reduced by the amount and according to the procedure set forth by legal acts of the supervisory institution.
Article 44. Capitals and Reserves of a Bank
1. The reserve capital of a bank shall be formed by the additional contributions of the bank’s shareholders or deductions from the bank’s earnings. The purpose of the bank’s reserve capital shall be to guarantee the financial stability of the bank. The annual general meeting of the shareholders may also take a decision on the use of the reserve capital of the bank to cover losses of activities of the bank in the case referred to in subparagraph 6 of Article 41 of this Law.
2. The capital reserves (share premium) of a bank shall be formed from a difference in the earnings obtained after selling new shares at issue price above their par value or from other cash contributions by the bank’s owners to obtain the right to the bank’s shares.
3. At the close of the financial year, the annual general meeting of a bank’s shareholders may take a decision on the use of the capital reserves (share premium) to cover the losses incurred by the operations related to the sale of own issued shares and on inclusion thereof in the profit available for appropriation or on use thereof to increase the bank’s authorised capital.
4. The tangible fixed assets revaluation reserve shall be the amount of the increase in the value of tangible fixed assets resulting after the revaluation of the assets. The tangible fixed assets revaluation reserve shall be reduced in the event the revaluated assets are written off, depreciated, written down or transferred into the ownership of third parties. A part of the reserve which is left unused after the writing off, depreciating or transferring into the ownership of third parties of the tangible fixed assets may be included in the profit available for appropriation at the close of the financial year. The tangible fixed assets revaluation reserve may not be directly used to cover losses of the activities of a bank.
5. The financial assets revaluation reserve shall be changes in the value of a bank’s available-for-sale financial assets which have been appreciated and revaluated at their fair value.
6. The mandatory reserve or reserve capital shall be formed from a bank’s profit deductions. Allocations to the mandatory reserve or reserve capital shall be compulsory and may not be less than 1/20 of the profit available for appropriation. The mandatory reserve or the reserve capital may, by a decision of the annual or extraordinary general meeting of the bank’s shareholders, be used only to cover losses of the activities of the bank.
7. Other reserves of a bank shall be the reserves whose formation and use has been provided for in the articles of association of the bank.
Article 45. Retained Earnings (Loss)
The procedure for using retained earnings (loss) shall be set forth by the Law on Financial Institutions.
Article 46. Profit and Appropriation Thereof
1. The profit of a bank and appropriation thereof shall be managed according to the procedure set forth by the Law on Financial Institutions.
2. The profit of a bank which is net of compulsory deductions from profit and transfers to the reserve capital and other reserves and capitals provided for by the bank’s articles of association may not be allocated for the payment of dividends and for other purposes where after taking a decision of the general meeting of the shareholders, the adequacy of capital or the minimum capital of the bank falls below the amounts set by this Law and legal acts of the supervisory institution.
CHAPTER SEVEN
A BANK’S OPERATIONAL RISK AND PRUDENTIAL TREATMENT THEREOF, PROTECTION OF THE INTERESTS OF THE BANK’S CLIENTS
Article 47. Taking of Operational Risk and Prudential Treatment Thereof
1. Requirements for the taking of a bank’s operational risk and prudential treatment thereof shall be set by the Law on Financial Institutions.
2. A bank must make provisions to reduce its operational risk on the basis of legal acts of the supervisory institution and taking account of the risk of every transaction it concludes on the provision of financial services, the financial and economic condition of a client, the performance of the obligations related to the transactions on the provision of financial services, the available means of ensuring the performance of these obligations as well as other circumstances influencing the value of the bank’s assets.
Article 48. Prudential Requirements for Banking Activities
1. The following prudential requirements shall be set for banks:
1) capital adequacy;
2) liquidity;
3) maximum open position in foreign currency and precious metals;
4) maximum exposure to a single borrower;
5) (Repealed as of 3 May 2011);
6) other requirements set by legal acts of the supervisory institution.
2. The specific ratios and methodology for calculation thereof shall be laid down by legal acts of the supervisory institution. The supervisory institution shall also have the right to set individual ratios for a bank.
Article 49. Limits on Investment
1. A bank may not hold a holding in the authorised capital of a legal person and/or voting rights where the on-balance-sheet value of the holding exceeds 15 per cent of the bank’s adjusted capital.
2. The sum total of the on-balance-sheet values of the holdings in legal persons’ authorised capital and/or voting rights belonging to the bank may not exceed 60 per cent of the bank’s adjusted capital.
3. The provisions of paragraphs 1 and 2 of this Article shall not be applied to investments in the legal persons which are financial institutions, insurance undertakings, reinsurance undertakings or the undertakings pursuing the activities in the absence of which a bank could not provide financial services, which assist the bank in the provision of the financial services or which are otherwise directly related to the financial services provided by the bank.
4. The provisions of paragraphs 1 and 2 of this Article shall not be applied in the cases where holdings in a legal person’s authorised capital and/or voting rights are acquired temporarily (for a time period not exceeding one year) during the winding up, restructuring or reorganisation of a client or where they have been acquired for distribution purposes, acquired in the bank’s own name, but on behalf of other persons or acquired not for the purpose of exercising the rights granted by them.
5. The provisions of paragraphs 1 and 2 of this Article shall not be applied where the amount by which a bank exceeds the above-mentioned limits is net of the bank’s adjusted capital. Where the bank exceeds both limits referred to in paragraphs 1 and 2 of this Article, a larger part exceeding the limits shall be deducted from the bank’s adjusted capital.
6. (Repealed as of 1 January 2012).
Article 50. Limits on Investment in Land and Other Immovable Property
1. A bank’s investments in land and other immovable property may not exceed 5 per cent of the bank’s adjusted capital.
2. Paragraph 1 of this Article shall not be applied where:
1) land and other immovable property has been acquired to ensure direct activities of a bank (buildings wherein the registered office of the bank is located or wherein financial services are provided, etc.);
2) immovable property has been acquired to provide the service of financial lease (leasing);
3) land and other immovable property has been acquired to cut the losses incurred by a financial service provided to a client, where the bank holds such a property by the right of ownership for a time period not exceeding one year from the day of its acquisition.
Article 51. Lending
1. In Articles 52-54 of this Law, lending shall be considered to be the conclusion of transactions wherefrom a monetary claim of a bank or irrevocable monetary commitment of the bank arises.
2. The following limits on lending shall be applied to a bank:
1) internal lending;
2) lending to the persons related to the bank;
3) lending to acquire holdings in the authorised capital and/or voting rights of a legal person.
Article 52. Limits on Internal Lending
1. Lending to the heads of a bank and to the persons related to the heads of the bank by blood as well as by marriage may not exceed the amounts set by the bank’s supervisory board. The terms of and the procedure for lending must be approved by the bank’s supervisory board. Decisions on the lending must be taken by the bank’s board. The person related to the lending may not participate in the taking of such a decision.
2. The terms of lending set for the persons referred to in paragraph 1 of this Article may not be more favourable than the terms of lending set for other clients of a bank.
Article 53. Limits on Lending to the Persons Related to a Bank
1. The persons related to a bank shall be:
1) the persons holding a qualifying holding in the bank’s authorised capital and/or voting rights;
2) the legal persons whose qualifying holding in the authorised capital and/or voting rights is held by the bank;
3) the heads of the legal persons referred to in subparagraphs 1 and 2 of paragraph 1 of this Article and the persons related thereto by blood as well as by marriage;
4) the natural persons related by blood as well as by marriage to the natural persons referred to in subparagraph 1 of paragraph 1 of this Article;
5) the undertakings controlled by the persons referred in subparagraph 1 of paragraph 1 of this Article.
2. (Repealed)
3. (Repealed)
4. The terms of and the procedure for lending to the persons related to a bank must be approved by the bank’s supervisory board. A decision to lend to a person related to the bank must be taken by the board of the bank by at least 2/3 of votes of the members of the bank’s board attending the board’s meeting.
Article 54. Limits on Lending to Form a Bank’s Capital
A bank shall not have the right to lend for the purposes of the acquisition of holdings in its authorised capital and/or voting rights, granting of a subordinated loan to itself and the acquisition of the non-equity securities issued by the bank and having all characteristics of a subordinated loan.
Article 55. Secret of a Bank
1. The secret of a bank shall be all data and information known to the bank on:
1) accounts held in the bank by the bank’s client, the balance of funds in these accounts, the client’s operations performed with the funds in his account, the terms of the contracts on the opening of the accounts by the client;
2) liabilities of the bank’s client to the bank and terms of the contracts wherefrom these liabilities have arisen;
3) other financial services provided to the bank’s client and terms of the contracts on the provision of the financial services;
4) the financial situation and assets of the bank’s client, activities, operating plan, liabilities to third parties or transactions concluded with the third parties, commercial (industrial) or professional secrecy of the client.
2. A bank, the bank’s employees and any third parties being in the possession of the information which is considered a secret of the bank’s may not divulge such information for an indefinite period of time, except in the cases referred to in paragraphs 3-5 of this Article, paragraph 2 of Article 58 of this Law and in other laws.
3. The information which is considered a secret of a bank may be divulged only to the bank’s client whereto the information which is considered a secret of the bank is related or upon his written request specifying to whom and what information must be divulged.
4. A bank shall have the right to divulge the information which is considered a secret of the bank to courts or third parties where this is necessary to protect the legitimate interests of the bank and only to the extent this is necessary to protect the bank’s interests.
5. A bank shall provide the information which is considered a secret of the bank to the institutions referred to in the Law on the Prevention of Money Laundering, also to third parties according to the procedure set forth by laws where, according to the laws, the bank must provide such information thereto.
Article 56. Protection of the Interests of Clients
1. At the places where a bank provides financial services to clients, the bank’s name and the financial services which the bank has the right to provide must be indicated, in an easily accessible place, to every prospective client; conditions must also be provided for public access to the information referred to in paragraph 2 of this Article.
2. Prior to concluding a contract on the provision of financial services, a bank must provide a client with detailed information on the terms of the provision of the financial services, price of the services, duration of the provision of the services, possible consequences thereof and other information which may influence the client’s decision to enter into the contract.
3. A bank must provide to each current or prospective client, upon his request, its sets of annual financial statements and an auditor’s report, which, under legal acts, the bank must provide to the public.
4. The clients’ applications (claims) concerning the performance of credit agreements concluded with the bank or actions of the bank whereby the latter could violate the terms and conditions of the credit agreement concluded with a client or the requirements of legal acts shall be examined by the bank. The bank must examine written applications (claims) of the client and respond to the client in writing not later than within 30 calendar days of the receipt thereof. If a case is complicated, the bank must allow the client to participate in the hearing, notify the client in writing about the extended time limit for examination, however the time limit may not exceed 45 calendar days of the receipt of an application (claim). If the client’s application (claim) is not related with the credit agreement of the client, the bank must respond to the client not later than within 30 calendar days of the receipt of the application (claim), unless laws establish otherwise. The bank shall examine the applications (claims) of clients free of charge.
CHAPTER EIGHT
SUPERVISION OF FINANCIAL GROUPS ON A CONSOLIDATED BASIS
Article 57. Scope of Supervision on a Consolidated Basis
1. Supervision on a consolidated basis shall be exercised in respect of a financial group which consists of a parent bank or a parent financial holding company (hereinafter referred to in this Chapter as a “parent institution of the group”) and the financial institutions which are controlled by the parent institution of the group or in which the parent institution of the group participates in management of the capital.
2. Legal acts of the supervisory institution may establish the cases when supervision on a consolidated basis shall not be exercised in respect of the financial institutions belonging to a financial group, also establish the cases when supervision on a consolidated basis of a financial group shall be exercised also in respect of the undertakings not belonging to the financial group.
Article 58. Drawing up of Sets of Consolidated Financial Statements for Supervision Purposes
1. A bank which is the parent institution of a group or a bank belonging to a financial group (where the parent institution of the group is a financial holding company) must prepare and submit to the supervisory institution consolidated financial statements and the statements meant for supervision of the whole financial group. These statements must be submitted quarterly within the time limits set by the supervisory institution.
2. The undertakings subject to supervision on a consolidated basis, the mixed-activity holding companies and the undertakings controlled by them, also the undertakings controlled by the parent institutions of a group not subject to supervision on a consolidated basis must submit to the bank indicated in paragraph 1 of this Article the reports, data and information required for the drawing up of sets of consolidated financial statements and the exercise of supervision on a consolidated basis.
Article 59. Supervision on a Consolidated Basis
1. The supervisory institution specified in Article 64 of this Law shall exercise supervision of the whole financial group on a consolidated basis, except in the cases referred to in paragraphs 2 and 3 of this Article.
2. Where a bank holding the licence issued by the supervisory institution belongs to a financial group consisting of at least one foreign bank licensed in another Member State of the European Union, the institution exercising supervision of the whole financial group on a consolidated basis shall be determined by the agreements concluded with the supervisory institutions of other Member States of the European Union or the criteria set by legal acts of the supervisory institution.
3. Where a bank holding the licence issued by the supervisory institution belongs to a financial group wherein the parent undertaking of the group falls under the jurisdiction of a state other than a Member State of the European Union, the supervisory institution specified in Article 64 of this Law shall supervise on a consolidated basis only the part of the financial group wherein the bank holding the issued licence is the parent undertaking of the group.
4. The supervisory institution exercising supervision of a financial group on a consolidated basis may, for the purposes of consolidated supervision and by addressing directly or via the bank under supervision, request that the persons indicated in paragraph 2 of Article 58 of this Law submit, and they must submit, the reports, data or information necessary for the supervisory institution. The financial reports submitted upon the request of the supervisory institution must be approved by an auditor. The supervisory institution shall enjoy the same right to obtain information also in the case when it does not exercise supervision of the financial group on a consolidated basis itself, but the information is requested by the supervisory institution of another Member State of the European Union exercising supervision of the financial group on a consolidated basis. The right to obtain information as specified in this paragraph shall not mean that the supervisory institution exercises supervision of activities of the persons which are indicated in paragraph 2 of Article 58 of this Law and which are not banks.
5. Prudential requirements set for a bank by Articles 48 and 49 of this Law shall, on a consolidated basis, be applied to the whole financial group.
6. A financial group which is subject to supervision on a consolidated basis must have a risk management and internal control system, including sound procedures for keeping of accounts and drawing up of accounts, which would ensure access to all reports, data and information of members of that financial group which are relevant for the drawing up of sets of consolidated financial statements and for the exercise of supervision on a consolidated basis.
7. Where the parent undertaking of a bank is a mixed-activity holding company, the supervisory institution shall have the right to exercise the supervision of the transactions concluded between the bank and the mixed-activity holding company as well as between the bank and other undertakings whose parent undertaking is the company by assessing their risk management and the internal control system.
8. If a bank holding a license issued by the supervisory institution belongs to a financial group subject to supervision on a consolidated basis, the supervisory institution must closely co-operate and exchange the information required for performing the supervisory function with the supervisory institutions of Lithuania and other Member States of the European Union exercising supervision of the activities of the undertakings which are subject to supervision on a consolidated basis. Where the supervisory institution is responsible for supervision, on a consolidated basis, of a financial group including the foreign banks licensed in other Member States of the European Union, it shall form a college of supervisory institutions for the purpose of ensuring co-operation and exchange of information among supervisory institutions of the Republic of Lithuania and other Member States of the European Union and the European Banking Authority and, where appropriate, other foreign supervisory institutions. Moreover, in the case of an emergency situation in the Republic of Lithuania, including the case provided for in Article 18 of Regulation (EU) No 1093/2010 or adverse developments in financial markets which may seriously jeopardise the liquidity of the market and the stability of the financial system in any other Member State of the European Union where licensed entities belonging to a financial group operate or branches recognised as significant by virtue of Article 701 of this Law are established, the supervisory institution exercising supervision of the financial group on a consolidated basis shall inform without delay, having regard to provisions of Article 65 of this Law, the European Banking Authority, the European Systemic Risk Board, central banks of the European System of Central Banks and the Ministry of Finance of the Republic of Lithuania as well as the central government bodies of another Member State which participate in the drafting of legal acts related with the supervision of credit institutions, financial institutions, investment and insurance undertakings, and shall provide the entire information relevant for the performance of their functions. Co-operation with the supervisory institutions of other Member States of the European Union, formation of colleges of supervisory institutions and the activities thereof as well as other additional tasks shall be regulated by legal acts of the supervisory institution.
9. Articles of association, an operating plan, management and organisational structure, risk management system, remuneration policy and practice, accounting organisation, internal control system, technical, information and technological security means, premises, insurance of property of a bank applying for a licence must ensure safe and sound activities of the bank and comply with the relevant legal acts. The bank must also meet the requirements set by this Law, including the requirements set for the legal form, minimum capital of the bank, requirements for the registered office, shareholders of the bank, including the shareholders who have acquired a qualifying holding in the bank’s authorised capital and/or voting rights, heads of the bank, and must be prepared to safely and soundly provide financial services.
CHAPTER NINE
ACCOUNTING, SETS OF FINANCIAL STATEMENTS AND AUDIT OF A BANK
Article 60. Accounting
1. A bank must keep accounts in compliance with laws of the Republic of Lithuania and other legal acts as well as the accounting policy selected by the bank, which is implemented by taking account of specific circumstances, the nature of the business pursued and in conformity with the international accounting standards.
2. Accounting policy must cover general accounting principles, accounting methods and regulations designed to keep the accounts of a bank and to draw up and submit sets of financial statements. Where supervision on a consolidated basis is exercised of a financial group, the bank must ensure that the common accounting policy of the financial group is formulated.
3. The accounting organisation of a bank must such that:
1) sets of financial statements reflect the actual financial situation and results of the activity of the bank;
2) it provides conditions for the heads of the bank to safely and soundly use and manage the bank’s assets and to dispose thereof;
3) it provides conditions for shareholders of the bank and the institutions authorised by law to carry out verifications and to control the activities and financial situation of the bank, heads and other employees thereof having the right to take decisions which give rise to the bank’s obligations to other persons.
4. Repealed as of 3 May 2011.
Article 61. Sets of Financial Statements
1. A bank and a financial group shall draw up sets of interim financial statements and sets of annual financial statements.
2. A set of interim financial statements shall be a set of financial statements drawn up after summarising the data of a time period shorter than the financial year. The composition and periodicity of submitting of interim financial statements to the supervisory institution shall be established by legal acts of the supervisory institution.
3. A set of annual financial statements shall consist of:
1) the balance sheet;
2) profit and loss account;
3) cash flow statement;
4) statement of changes in equity capital;
5) explanatory note.
4. At the close of the financial year, a bank must:
1) within three months of the close of the financial year, but not later than five days prior to the annual general meeting of the shareholders, submit to the supervisory institution the set of annual financial statements checked by an audit firm, a draft decision on the appropriation of profit and the auditor’s report;
2) within three months of the close of the financial year, but not later than ten days prior to the annual general meeting of the shareholders, provide access for the shareholders of the bank to the set of annual financial statements checked by an audit firm, a draft decision on the appropriation of profit and the auditor’s report;
3) within three months of the close of the financial year, approve the set of annual financial statements by a decision of the general meeting of the bank’s shareholders and take a decision on the appropriation of profit;
4) within three days of the taking of a decision by the general meeting of the bank’s shareholders on the approval of the set of annual financial statements, submit to the supervisory institution the set of annual financial statements approved by the meeting and a decision on the appropriation of profit;
5) within four months of the close of the financial year, provide to the public the set of annual financial statements and an auditor’s report;
6) within four months of the close of the financial year, the parent bank of other financial institutions and insurance undertakings belonging to a financial group must publish a set of consolidated annual financial statements.
5. The general meeting of a bank’s shareholders may not consider and approve a set of annual financial statements which has not been audited.
6. The general meeting of a bank’s shareholders may not take a decision on the appropriation of profit where a set of annual financial statements has not been audited.
7. The procedure for applying the provisions of this Article to the branches of foreign banks shall be set forth by legal acts of the supervisory institution.
Article 62. Audit
1. An audit firm must audit a bank’s annual financial statements and consolidated financial statements (where they must be drawn up) and, on the basis of the audit, provide an auditor’s opinion on these statements and an auditor’s report. In an auditor’s report, an auditor must present information as to whether a bank and a financial group:
1) has accurately and in a qualified manner valued the assets;
2) has made mandatory adjustments of the value of the assets and performed write-offs;
3) has formed mandatory and required capitals, reserves and provisions to reduce the operational risk;
4) comply with capital requirements set by this Law and legal acts of the supervisory institution;
5) efficiently and soundly manage assets and ensure safe and sound activities of the bank;
6) has in place adequate internal control and information systems.
2. The general meeting of a bank’s participants shall select an audit firm to perform audit of annual financial reports. An auditor, also another person participating together with the auditor in the performance of audit may not perform the audit of the same bank for more than three successive financial years.
3. A bank must, until the end of the first half of the current financial year, conclude an agreement with the audit firm selected at the general meeting of the bank’s shareholders on carrying out of the audit of annual financial reports and submit it to the supervisory institution.
Article 63. Requirements for an Auditor and an Audit Firm, Duties and Liability Thereof
The requirements set for an auditor and an audit firm, duties and liability thereof shall be set by the Law on Financial Institutions.
CHAPTER TEN
SUPERVISION OF BANKS
Article 64. Supervisory Institution
1. The Bank of Lithuania shall be the supervisory institution.
2. The supervisory institution shall exercise supervision of the banks holding a licence issued according to the procedure set forth by this Law, including establishments thereof in the Republic of Lithuania and in foreign states, as well as of the branches of the foreign banks holding a licence issued according to the procedure set forth by this Law. Where a bank holding a licence issued according to the procedure set forth by this Law is controlled by a foreign bank licensed in a Member State of the European Union, the supervisory institution shall have the right, under a bilateral agreement and in compliance with Article 28 of Regulation (EU) No 1093/2010, to transfer powers to exercise supervision of such a bank to the supervisory institution of the Member State of the European Union which has issued to the parent foreign bank an authorisation to pursue business and which exercises supervision of the parent foreign bank in such a manner that responsibility is assumed for supervision of the bank holding the licence issued according to the procedure set forth by this Law.
3. The supervision of the branches of banks in foreign states and of the branches established in the Republic of Lithuania by the foreign banks licensed in a state other than a Member State of the European Union shall be exercised under the agreements concluded with the supervisory institution of the relevant foreign state.
4. The supervision of the foreign banks licensed in the Member States of the European Union and providing services in the Republic of Lithuania without establishing a branch as well as of the branches established in the Republic of Lithuania by the foreign banks licensed in the Member States of the European Union shall be exercised in compliance with the provisions of Article 70 of this Law.
5. For the purpose of performing the functions of supervision, the supervisory authority shall:
1) on the basis of the information available during the respective period, have regard, in particular in emergency situations, to the likely impact of its decisions on the stability of the financial system in other Member States of the European Union;
2) take account of the convergence between the Member States of the European Union as regards the measures and practice of supervision in applying laws and other legal acts adopted in implementing Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (OJ 2006 L 177, p. 1). To that end, the supervisory institution shall participate in the activities of the European Banking Authority and act in observance of guidelines and recommendations of the European Banking Authority or provide to the parties concerned the motives of non-observance of such guidelines and recommendations.
6. Supervision shall be exercised in compliance with this Law, the Law on Financial Institutions, the Law on the Bank of Lithuania and legal acts of the supervisory institution.
Article 65. Protection of the Information Obtained for Supervision Purposes
1. Information obtained for supervision purposes may not be publicly announced, divulged or made otherwise accessible, except in the cases specified by in this Law.
2. The supervisory institution, current or former employees thereof, the auditors acting on behalf thereof or third parties as well as any other persons whereto the information obtained for supervision purposes has been communicated must comply with the requirement set in paragraph 1 of this Article.
3. Paragraph 1 of this Article shall not be applied to the information which has already been publicly announced or made accessible or on the basis whereof data on specific persons cannot be directly or indirectly established.
4. The supervisory institution shall have the right to use the information obtained for supervision purposes, including the information obtained from the supervisory institutions of foreign states, for the purpose of exercising supervisory functions, including the imposition of sanctions, also where, according to the procedure set forth by laws, a decision of the supervisory institution has been appealed against or an action of the supervisory institution on the forced sale of a bank’s shares is being considered in court.
5. The information obtained for supervision purposes may be communicated:
1) on the grounds laid down in the Code on Criminal Proceedings, where it is required to conduct a pre-trial investigation or to hear a criminal case in court, also in the cases and according to the procedure set forth in the Law on the Prevention of Money Laundering and Terrorist Financing;
2) to courts, where it is required in the course of bank’s bankruptcy proceedings or proceedings for the compulsory winding up of a bank;
3) (Repealed as of 1 January 2012);
4) to the institutions exercising the supervision of the provision of services of the credit institutions of foreign states and other financial services, insurance activities and the financial markets, where it is required for the exercise of the supervisory function;
5) to the State undertaking “Deposit and Investment Insurance”, where it is required for the exercise of functions thereof;
6) to the auditors of a bank or the undertakings of the financial group whereto the bank belongs, where it is required for the exercise of functions thereof;
7) to the central banks of the European System of Central Banks as well as to other institutions performing similar functions, where it is required for the performance of functions thereof stipulated in legal acts, including the implementation of monetary policy and ensuring of liquidity, supervision of payment, clearing and settlement systems and securing the stability of the financial system;
8) to other State institutions, where such information is required for the performance of functions thereof and where this is necessary for credit institutions’ supervision purposes;
9) in emergency situations, as specified in paragraph 8 of Article 59 and paragraph 3 of Article 701 of this Law, to the Ministry of Finance of the Republic of Lithuania and to central government bodies of other Member States of the European Union which participate in the drafting of legal acts related with the supervision of credit institutions, financial institutions, investment and insurance undertakings, where this information is relevant for the performance of their functions;
10) to the European Banking Authority, as specified in this Law and Regulation (EU) No 1093/2010;
11) to the European Systemic Risk Board, where such information is relevant for the performance of its functions under Regulation (EU) No 1092/2010.
6. The information obtained for supervision purposes may be communicated to the institutions referred to in subparagraphs 3-8 of paragraph 5 of this Article where the requirements set for them on the protection of the information are not lower than provided for under this Law.
7. Pursuant to subparagraph 4 of paragraph 5 of this Article, information may be communicated to the supervisory institution of a foreign state which is not a Member State of the European Union where an agreement has been concluded therewith providing for the exchange of the information obtained for supervision purposes and where under the laws of that state, the requirements set for the supervisory institution of the foreign state on the protection of the information are not lower than provided for under this Law.
8. The information obtained for supervision purposes by an institution exercising the supervision of the provision of financial services, insurance activities and the financial markets from the supervisory institution of a foreign state which is a Member State of the European Union or the information obtained in another Member State of the European Union during an inspection (verification) may be communicated pursuant to subparagraphs 8 and 9 of paragraph 5 of this Article or paragraph 7 of this Article upon the receipt of a consent of the institution which has submitted the information or of the supervisory institution of the Member State of the European Union in which the inspection (verification) has been carried out and solely for the purpose for which the consent has been granted.
Article 66. Consideration of Applications for the Issuance of a Licence, Granting of an Authorisation, Consent or for Carrying out of Other Actions and Decisions of the Supervisory Institution
1. Detailed terms of and the procedure for submitting and examining applications for the issuance of the licences, granting of the authorisations, consents provided for under this Law or for carrying out of other actions (hereinafter referred to is this Article as “authorisations”) and issuing authorisations as well as detailed requirements for the submitted documents shall be set by legal acts of the supervisory institution.
2. An application for the granting of an authorisation shall be examined and a decision thereon shall be taken within the time limits laid down in this Law or, where the time limits have not been laid down in this Law, within the time limits laid down by legal acts of the supervisory institution. The supervisory institution shall have the right to request additional documents and information required to take the decision. Where the supervisory institution requests additional documents and information or where they are provided on a voluntary basis by a person applying for the application, the time limit for the examination of the application and taking of the decision shall be counted from the receipt of the additionally requested documents and information, unless otherwise provided for by this Law.
3. A supervisory institution shall have the right to refuse the granting of an authorisation where there is a sufficient ground to believe that the granting of the authorisation will violate the property interests of a bank’s depositors and other creditors of the bank or will pose a threat to the stability and soundness of the bank or the entire banking system, also in the presence of other grounds for refusing the granting of an authorisation as specified by laws.
4. The supervisory institution shall notify applicants of a decision taken on the granting of an authorisation within five working days of the taking of the decision, unless otherwise provided for by this Law. Reasons must be given whenever the supervisory institution refuses to grant an authorisation.
Article 67. Duties and Rights of the Supervisory Institution
1. In addition to other duties and rights laid down in this Law and other legal acts, the supervisory institution shall have the right:
1) to provide to a bank the instructions specified in paragraph 2 of this Article, and the bank must implement them within the time limit laid down by the supervisory institution and forthwith give written notice thereof to the supervisory institution;
2) where the decisions taken by bodies of a bank pose a threat to the stability and soundness of activities of the bank, to apply to the courts, according to the procedure set forth by laws, to declare them void on the statutory grounds;
3) to conclude agreements on the verification of a bank with audit firms, property appraisers or other persons holding appropriate qualifications in order to determine the value of the bank’s assets, financial situation of the bank, to assess the risks taken or verify other areas of the bank’s activities. The bank shall pay for the work of these persons and cover other expenses related thereto. The persons acting in accordance with the agreements concluded with the supervisory institution and referred to in this subparagraph shall have the rights referred to in paragraphs 2 and 3 of Article 69 of this Law;
4) to demand that an audit firm auditing a bank’s sets of financial statements is changed, where it or the auditor does not meet (comply with) the requirements set forth by laws.
2. The supervisory institution, upon discovering infringements of legal acts or shortcomings in activities of a bank or where activities of the bank pose a threat to the stability and soundness of activities of the bank, shall have the right to provide in writing to the bank the following instructions:
1) to eliminate the infringements of the legal acts or shortcomings in the activities of the bank within the time limit laid down by the supervisory institution;
2) not to conclude certain transactions or to reduce the scope of such transactions, including transactions on the purchase ancillary banking services, acquisition of holdings in other legal persons’ authorised capital and/or voting rights or real estate, or to sell or otherwise transfer to third parties the holding held in other legal persons’ authorised capital and/or voting rights or real estate;
3) to carry out an audit of a set of interim financial statements of the bank within the time limit laid down by the supervisory institution;
4) to prepare and implement, within the time limit laid down by the supervisory institution, an acceptable action plan for the restructuring of activities of the bank and/or the elimination of discovered infringements and/or shortcomings;
5) to convene the general meeting of the bank’s shareholders or a meeting of the bank’s supervisory board or the board and to discuss at it the issues proposed by the supervisory institution;
6) for the heads of the bank to appear before the supervisory institution and provide clarifications. The supervisory institution shall have the right to publicly announce its instruction for the heads of the bank to appear before the supervisory institution;
7) to carry out other actions or not to carry out certain actions in order to bring infringements of legal acts to an end or to eliminate shortcomings in activities of the bank or to ensure the stability and soundness of the activities of the bank.
3. The supervisory institution, upon discovering infringements of legal acts or shortcomings in activities of a bank or where activities of the bank pose a threat to the stability and soundness of activities of the bank, shall have the right to temporarily set for the bank individual prudential ratios or additional prudential requirements.
4. The instructions referred to in paragraphs 2 and 3 of this Article may also be given by simultaneously imposing sanctions.
5. The employees of the supervisory institution shall have the right, according to the procedure set forth by the supervisory institution, to participate in the work of bodies of a bank and committees of the bank – to attend meetings or sittings in the capacity of observers or otherwise observe activities of the bodies, committees and heads of the bank.
6. The supervisory institution, according to the procedure set forth by it and in compliance with the legal acts regulating the protection of personal data, shall have the right to store and otherwise process data on debtors of banks. Banks must provide to the supervisory institution data on debtors of a bank and shall have the right to use these data according to the procedure set forth by legal acts of the supervisory institution.
7. The supervisory institution shall also have the rights referred to in this Article in respect of a branch of a foreign bank holding a licence issued according to the procedure set forth by this Law.
Article 68. Appeal against Decisions, Acts (Omissions) of the Supervisory Institution
1. The persons whose rights or interests protected under the law have been violated shall have the right to file an appeal to court against decisions, acts (omissions) of the supervisory institution according to the procedure set forth by laws.
2. Filing of an appeal to court shall not have suspensory effect on a decision or an action appealed against until its resolution.
Article 69. Inspection (Verification) of a Bank
1. A bank shall be inspected (verified) by the employees of the supervisory institution. The supervisory institution, when inspecting (verifying) the bank, shall also have the right to engage third parties.
2. A bank must provide the following facilities to carry out an inspection (verification):
1) to supply to inspecting (verifying) persons all information and documents requested by them;
2) to provide an opportunity for the inspecting (verifying) persons to use data of the information systems of the bank;
3) to provide the inspecting (verifying) persons with separate premises equipped with a telephone network.
3. Inspecting (verifying) persons shall have the right:
1) to have unimpeded access to the premises of a bank and establishments thereof during the office hours of the bank under inspection (verification);
2) to request and obtain the information and documents (originals or certified copies thereof) required to carry out an inspection (verification), oral or written clarifications of the heads and other employees of a bank;
3) to request copies of submitted documents or to make copies thereof themselves at the expense of the bank;
4) to have other rights laid down by legal acts.
4. After carrying out an inspection (verification) of a bank, its results shall be provided to the bank in writing. Members of the bank’s supervisory board and the board, the head of the administration must familiarise themselves with the results of the inspection (verification) by affixing their signature thereto.
5. Legal acts of the supervisory institution shall set forth a detailed procedure for inspecting (verifying) and recording results thereof.
6. According to the procedure set forth by this Article, the supervisory institution shall also have the right to inspect (verify) the establishments set up in the Republic of Lithuania by a foreign bank and for the purposes of supervision on a consolidated basis – the persons referred to in paragraph 2 of Article 58 of this Law as well as a mixed-activity holding company and the undertakings controlled by it. Where, for the purposes of supervision on a consolidated basis, it is required to verify the persons referred to in paragraph 2 of Article 58 of this Law as well as a mixed-activity holding company and the undertakings controlled by it falling under the jurisdiction of another Member State of the European Union, the supervisory institution shall request that the verification be carried out by the supervisory institution of this Member State of the European Union or, subject to a consent of this supervisory institution, the verification shall be carried out by the Lithuanian supervisory institution or by the persons referred to in paragraph 9 of this Article.
7. The supervisory institution of a foreign state which is a Member State of the European Union or the auditors or experts specified by it shall have the right to inspect (verify) an establishment set up in the Republic of Lithuania by a foreign bank falling under the jurisdiction of the said state upon giving prior notice to the Lithuanian supervisory institution. Where, for the purposes of supervision on a consolidated basis, the supervisory institution of another Member State of the European Union needs to verify the persons referred to in paragraph 2 of Article 58 of this Law as well as a mixed-activity holding company and the undertakings controlled by it falling under the jurisdiction of the Republic of Lithuania, the said verification shall, upon its request, be carried out by the supervisory institution of the Republic of Lithuania or, subject to a consent of the Lithuanian supervisory institution, by the requesting supervisory institution of another Member State of the European Union or the auditors or experts specified by it. Where, upon the request of the supervisory institution of another Member State of the European Union, the verification is carried out by the Lithuanian supervisory institution, the requesting supervisory institution of another Member State of the European Union shall have the right to participate in the carrying out of the said verification.
8. The supervisory institution of a foreign state other than a Member State of the European Union shall have the right to inspect (verify) the establishments set up in the Republic of Lithuania by a foreign bank and the persons referred to in paragraph 2 of Article 58 of this Law as well as a mixed-activity holding company and the undertakings controlled by it falling under the jurisdiction of the Republic of Lithuania where an agreement has been concluded between it and the Lithuanian supervisory institution providing for such a right and regulating the procedure for organising inspection (verification).
9. The supervisory institution shall have the right to conclude agreements on the verification or audit of a bank and other persons referred to in paragraph 6 of this Article with audit firms or other persons holding appropriate qualifications. Where verification or an audit is carried out by the said persons, the provisions of paragraphs 2 and 3 of this Article shall be applied.
Article 70. Supervision of the Foreign Banks Licensed in the Member States of the European Union and Providing Services in the Republic of Lithuania without Establishing a Branch and of the Branches Established in the Republic of Lithuania by the Foreign Banks Licensed in the Member States of the European Union
1. The supervision of the foreign banks licensed in the Member States of the European Union and providing services in the Republic of Lithuania without establishing a branch and of the branches established in the Republic of Lithuania by the foreign banks licensed in the Member States of the European Union shall be exercised by the supervisory institution of the Member State of the European Union under whose jurisdiction a foreign bank falls. However, the rights of the Lithuanian supervisory institution to exercise supervision thereof in accordance with the provisions of this Article shall not be thereby restricted.
2. Where the supervisory institution discovers that a foreign bank licensed in a Member State of the European Union and providing financial services in the Republic of Lithuania without establishing a branch or a branch established in the Republic of Lithuania by a foreign bank licensed in a Member State of the European Union does not comply with this Law, legal acts of the supervisory institution or other legal acts regulating the provision of financial services, the supervisory institution shall in writing instruct the foreign bank and/or the branch of the foreign bank to bring the infringements of legal acts to an end within the time limit laid down by the supervisory institution.
3. Where the instructions issued pursuant to paragraph 2 of this Article are ignored, the supervisory institution shall notify thereof the supervisory institution of a foreign state under whose jurisdiction a foreign bank falls requesting to take all possible measures to bring the infringements to an end.
4. Where, disregarding actions of the supervisory institution of a foreign state, a foreign bank or a branch of the foreign bank persists in failing to comply with the requirements of legal acts of the Republic of Lithuania referred to in paragraph 2 of this Article, the supervisory institution, upon giving prior notice thereof the supervisory institution of the foreign state, shall have the right to impose the sanctions provided for by this Law.
5. In cases of urgency, the supervisory institution shall have the right to impose sanctions disregarding the provisions of paragraphs 2-4 of this Article.
Article 701. Provision of Information and Co-operation with Institutions of Other Member States of the European Union for the Purposes of Supervision of Significant Branches
1. The supervisory institution may apply to the supervisory institution responsible for supervision of a financial group on a consolidated basis, if a foreign bank which is licensed in the European Union Member State and has established a branch in the Republic of Lithuania belongs to such a financial group, or the supervisory institution of a Member State of the European Union in which a foreign bank which has established a branch in the Republic of Lithuania is licensed for recognition as significant of the branch established in the Republic of Lithuania by a foreign bank licensed in the Member State of the European Union. Such a request shall specify the reasons why the branch established in the Republic of Lithuania by the foreign bank licensed in the Member State of the European Union should be considered significant, primarily having regard to:
1) whether deposits kept with the branch account for more than 2 per cent of all deposits of the Lithuanian banking system;
2) potential effects of the suspension or termination of activities of the foreign bank licensed in the Member State of the European Union which has established the branch on the liquidity, payment, clearing and settlement systems of the banking system of Lithuania;
3) the size of the branch of the foreign bank licensed in the Member State of the European Union and its relevance according to the number of customers in the banking system or the financial system of Lithuania
2. The supervisory institution shall also decide on recognition as significant of a branch established in another Member State of the European Union by a bank licensed in the Republic of Lithuania upon receipt of an appropriate request of the supervisory institution of another Member State of the European Union wherein the bank has established the branch. When taking a decision on this issue, the supervisory institution shall have regard to the same circumstances as indicated in paragraph 1 of this Article.
3. Having recognised as significant the branch established in another Member State of the European Union by a bank licensed in the Republic of Lithuania, the supervisory institution shall provide information and co-operate with the supervisory institution of another Member State of the European Union wherein the bank has established the branch recognised as significant, form the college of supervisory institutions (if it has not been formed for the entire financial group including the bank which has established the branch recognised as significant) and perform other additional tasks. Having found out about an emergency situation related with a bank licensed by the supervisory institution the branch of which established in another Member State of the European Union has been recognised as significant, where the emergency situation may jeopardise the liquidity of the market and the stability of the financial system in that Member State of the European Union, the supervisory institution shall inform without undue delay, having regard to the provisions of Article 65 of this Law, the European Banking Authority, the European Systemic Risk Board, central banks of the European System of Central Banks, the Ministry of Finance of the Republic of Lithuania and central government bodies of another Member State of the European Union wherein the bank has established the branch recognised as significant which participate in drafting of legal acts related with the supervision of credit institutions, financial institutions, investment and insurance undertakings, and shall provide the entire information relevant for the performance of their functions.
4. The procedure for filing and examining a request for recognition of a branch as significant shall be laid down by legal acts of the supervisory institution.
5. Upon recognising a branch as significant, supervision thereof shall be exercised in compliance with the provisions of this Law and other legal acts concerning supervision of branches.
Article 71. Co-operation with the European Commission, the European Banking Authority and the Supervisory Institutions of the Member States of the European Union
1. The supervisory institution shall notify the European Banking Authority of the licences issued according to the procedure set forth by this Law, the European Commission and the European Banking Authority – of the licences withdrawn and provide them and the supervisory institutions of the Member States of the European Union with other information. The cases of and procedure for providing notifications and information shall be set forth by legal acts of the supervisory institution.
2. In performing its functions established by this Law, the supervisory institution shall co-operate with the European Banking Authority and provide the latter with the entire information necessary for the performance of its functions under Regulation (EU) No 1093/2010.
Article 72. Sanctions
1. The supervisory institution shall have the right to impose the following sanctions on a licensed bank or a branch of a foreign bank:
1) to warn of infringement of this Law and other legal acts regulating safe and sound activities or of nonfeasance of instructions of the supervisory institution;
2) to impose penalties provided for under this Law;
3) to temporarily remove from office a member (members) of the bank’s supervisory board, a member (members) of the bank’s board, head (heads) of the bank’s administration, head (heads) of the branch of the foreign bank or to remove from office a member (members) of the bank’s supervisory board, a member (members) of the bank’s board, head (heads) of the bank’s administration, head (heads) of the branch of the foreign bank and to require that they be removed from office and/or a contract concluded therewith be terminated or they be divested of their powers;
4) to temporarily prohibit the provision of one or several financial services;
5) to temporarily or permanently prohibit activities of one or several branches of the bank or other establishments of the bank or the foreign bank. Where the supervisory institution takes a decision on the temporary prohibition of activities of a branch or other establishment, the branch or other establishment shall not have the right to provide financial services, and where a decision is taken to permanently prohibit activities of a branch or other establishment, a bank must additionally forthwith take a decision on the termination of the activities of the branch or other establishment;
6) to announce a restriction (moratorium) on activities of a bank or a branch of a foreign bank;
7) to temporarily restrict the right to dispose of the funds in accounts in the Bank of Lithuania and in other credit institutions and of other assets;
8) to withdraw the issued licence or to temporarily suspend validity thereof until the grounds for the suspension of the licence exist; when the grounds for license suspension cease to exist, the supervisory institution shall without delay, and in no case later than within five business days of satisfying itself about the cessation of the grounds restore the validity of the licence.
2. The supervisory institution shall have the right to impose the following sanctions on the representative office of a foreign bank;
1) to warn the representative office of infringement of this Law and legal acts of the supervisory institution;
2) to prohibit activities of the representative office in the Republic of Lithuania. Upon imposing this sanction, a decision must be taken forthwith on the termination of the activities of the representative office.
3. The supervisory institution shall have the right to impose the following sanctions on a foreign bank licensed in a Member State of the European Union and providing financial services in the Republic of Lithuania without establishing a branch or on a branch established in the Republic of Lithuania by a foreign bank licensed in a Member State of the European Union:
1) to warn of infringement of this Law and other legal acts regulating safe and sound activities of banks or shortcomings in the activities;
2) to temporarily restrict the right of a branch of a foreign bank to dispose of the funds in accounts in the Bank of Lithuania and in other credit institutions and of other assets;
3) to temporarily or permanently prohibit the provision of financial activities in the Republic of Lithuania.
4. The supervisory institution must take a decision on the imposition of the sanctions referred to in subparagraphs 2 and 3 of paragraph 3 of this Article on a foreign bank licensed in a Member State of the European Union providing financial services in the Republic of Lithuania without establishing a branch or on a branch established in the Republic of Lithuania by a foreign bank licensed in a Member State of the European Union where this is requested by the supervisory institution of the said Member State of the European Union.
5. The supervisory institution shall have the right to impose one or several sanctions.
6. The supervisory institution, when taking a decision on the imposition of sanctions and selecting a specific sanction (sanctions), shall take account of the content, scope, recurrence of discovered infringements and shortcomings in activities, influence thereof on the interests of depositors and other creditors, the financial situation of a person whereon the sanction is imposed, the preparedness and possibilities of a founder, shareholders and heads to bring the infringements to an end and to eliminate the shortcomings, consequences of the discovered infringements and shortcomings in the activities as well as of the sanction (sanctions) to be imposed for the stability and soundness of a person whereon the sanction is imposed and the banking system.
7. A decision of the supervisory institution on the imposition of a sanction (sanctions) on a bank shall come into force on the day following that of taking of the decision, except where this Law or the decision provides otherwise.
8. A decision of the supervisory institution on the imposition of a sanction (sanctions) must be substantiated and may be, according to the procedure set forth by laws, appealed against to court. An appeal against the decision, with the exception of a decision on the imposition of the penalties provided for under this Law, shall not have suspensory effect on the decision. A court shall not give its opinion on and resolve a dispute over the selection of the type of a sanction and expedience of imposition thereof.
9. In cases involving examination of claims (requests) concerning the decision of the Bank of Lithuania to impose sanctions specified in subparagraphs 6, 7 and 8 of paragraph 1 and subparagraphs 2 and 3 of paragraph 3 of this Article, the measures securing the claim as provided for in subparagraphs 1 and 3 of paragraph 3 of Article 71 of the Law of the Republic of Lithuania on Administrative Proceedings may not apply.
10. Having examined the claim (request) concerning the decision of the Bank of Lithuania to impose sanctions specified in subparagraphs 6, 7 and 8 of paragraph 1 and subparagraphs 2 and 3 of paragraph 3 of this Article, the court shall have the right, provided that the conditions set forth in this Law exist, to award damages, but in satisfying the claim (request) may not cancel the contested decision, may not impose on the Bank of Lithuania the obligation to carry out any action as a result of which the validity of the contested decision would be suspended or terminated or the condition which existed before the adoption of the decision would be otherwise restored.
11. Temporarily imposed sanctions shall remain in force until the expiry of the time limit referred to in a decision of the supervisory institution on the imposition of the sanctions. This time limit may be defined by a specific date, period or related to the rise of certain circumstances (disappearance of circumstances), except where the supervisory institution takes a decision on the lifting of the sanctions before the expiry of the fixed time limit.
Article 73. Basic Principles of and Procedure for Imposing Sanctions
1. The supervisory institution shall have the right to impose the sanctions provided for by this Law, with the exception of the penalties specified in this Law, in the presence of any of the following grounds:
1) the information defined or requested by this Law or legal acts of the supervisory institution and required to exercise supervision is not supplied within the fixed time limits or incorrect information is supplied;
2) the instructions given by the supervisory institution in compliance with this Law are not carried out in the prescribed manner;
3) the requirements set for the granting of an authorisation to establish a bank or a branch of a foreign bank or for the issuance of a licence are no longer met;
4) the requirements of the laws regulating safe and credible activities of banks as well as of legal acts of the supervisory institution are violated or activities or the financial situation of a bank or a branch of a foreign bank pose a threat to public interests and/or interests of clients or the functioning of the banking system of the Republic of Lithuania.
2. The supervisory institution, prior to considering the imposition of a sanction, shall give notice, within a reasonable time limit, to a person subject to the sanction of the venue and time of the consideration of the issue and supply him with information on the discovered facts forming the basis for the imposition of the sanction or grant access with the said facts to the heads of a person subject to the sanction. The person who has received the notification shall have the right to provide written clarifications prior to the consideration of the issue. The issue of the imposition of the sanction shall be considered in the presence of the heads of a person who is subject to the sanction. Failure to appear or to provide clarifications shall not preclude the consideration of the imposition of the sanction. In cases of urgency, the supervisory institution shall have the right to resolve the issue on the imposition of the sanction disregarding the provisions of this paragraph. Where after imposition thereof a person who is subject to the sanction submits in writing motivated clarifications that there was no basis for the imposition of the sanctions, the supervisory institution shall consider the lifting of the sanction.
3. Sanctions may be imposed after the lapse of not more than 2 years from the day of the commission of an infringement, in the event of a continuous infringement – from the day of the commission of the last acts of the continuous infringement or from the day of the termination of the continuous infringement.
4. A decision to impose a sanction shall be communicated to a person who is subject to the sanction. Information on the sanction imposed shall be announced in accordance with the procedure set forth by legal acts of the supervisory institution, however, the supervisory institution may take a decision not to announce such information publicly, where announcing thereof publicly may have a detrimental effect on the stability and soundness of a bank, a branch of a foreign bank or the banking system of the Republic of Lithuania.
5. The supervisory institution shall adopt a decision on imposition of a sanction which, according to the Law on Insurance of Deposits and Liabilities to Investors, is considered to be an insured event, not later than within five working days from the day when it establishes that a bank holding a licence issued by the supervisory institution or a branch of the foreign bank is unable to settle a reasonable claim to return a deposit and there is a basis to believe that it will not be able to settle it soon.
Article 74. Fines
1. The supervisory institution shall have the right to impose the following penalties on a bank or a branch of a foreign bank:
1) for a failure to supply the information or documents specified or requested by this Law or legal acts of the supervisory institution within the fixed time limit or for the supply of incorrect information – up to 0.5 per cent of annual gross income;
2) for a failure to carry out the instructions given by the supervisory institution in accordance with this Law or for improper carrying out thereof – up to 1 per cent of annual gross income or up to LTL 5000 for each day of non-implementation of an instruction or improper carrying out thereof;
3) for carrying out of the actions which it has the right to carry out only upon obtaining an authorisation of the supervisory institution without the authorisation of the supervisory institution – up to 1.5 per cent of annual gross income;
4) for the actions or activities prohibited by this Law or for the provision of financial services where such a right has been restricted under this Law – up to 2 per cent of annual gross income;
5) for other infringements of legal acts regulating safe and sound activities of a bank or a branch of a foreign bank – up to 0.1 per cent of annual gross income.
2. The specific amount of a penalty to be imposed shall be determined by taking account of the nature of an infringement, duration thereof, previously imposed sanctions and other important circumstances.
3. Penalties shall be paid into the State budget within one month of the receipt of a decision of the supervisory institution on the imposition of a penalty. A penalty imposed in accordance with subparagraph 2 of paragraph 1 of this Article shall be paid into the State budget daily for each day of nonfeasance or misfeasance of an instruction. Where the penalty is not paid within the fixed time limits or, where the decision of the supervisory institution has been appealed against to court, within ten days from entering into force of the decision, it shall be recover, upon a decision of the supervisory institution, without suit (without an instruction, by a person who is subject to the penalty, to debit funds) from the funds held in credit institutions by the person who is subject to the sanction, or the decision of the supervisory institution shall be implemented according to the procedure set forth by the Code of Civil Procedure.
Article 75. Removal from Office of a Member (Members) of a Bank’s Supervisory Board, a Member (Members) of the Bank’s Board, Head (Heads) of the Bank’s Administration, Head (Heads) of a Branch of a Foreign Bank
1. As of the day of the delivery to a bank of a decision by the supervisory institution to temporarily remove from office a member (members) of the bank’s supervisory board, a member (members) of the bank’s board, head (heads) of the bank’s administration, head (heads) of a branch of a foreign bank, the person removed from office shall not have the right to exercise his functions and all decisions taken by him after entering into force of the said decision shall be void.
2. Where the supervisory institution takes a decision to remove from office of a member (members) of a bank’s supervisory board, a member (members) of the bank’s board, head (heads) of the bank’s administration, head (heads) of a branch of a foreign bank and to require that they be removed from office and/or a contract concluded therewith be terminated or they be divested of their powers, a body of the bank which has such a right or the foreign bank which has established the branch must, within the time limit laid down in the decision of the supervisory institution, remove the person from office and/or terminate the contract concluded therewith or divest him of his powers.
3. A decision taken to remove a member (members) of a bank’s supervisory board, a member (members) of the bank’s board, head (heads) of the bank’s administration, head (heads) of a branch of a foreign bank shall be communicated to the bank and to the Register of Legal Persons and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
Article 76. Moratorium on Activities of a Bank
1. A moratorium on activities of a bank shall be a temporary partial restriction on the activities of the bank. Restrictions on the activities of the bank shall be set by this Law and a decision of the supervisory institution on the announcement of a moratorium on the activities of the bank.
2. In addition to other grounds laid down in Article 73 of this Law, the supervisory institution shall have the right to announce a moratorium on activities of a bank where the bank fails, within 5 working days, to settle at least one reasonable financial claim of a creditor (due to a deficit of funds in the bank’s accounts, it fails to process a client’s payment order, to return deposits or other borrowed funds or to perform other financial obligations, etc.) or there is a reasonable basis to believe that it will not be able to settle it soon.
3. The time limit for a moratorium on activities of a bank shall be laid down by the supervisory institution. This time limit may not exceed six months. Where the supervisory institution approves the conclusions and proposals submitted by a temporary administrator on the restoration of the stability and soundness of the activities of the bank, the time limit for the moratorium on the activities of the bank may be extended for a period of up to 6 months by a decision of the supervisory institution.
4. The supervisory institution, when taking a decision on the announcement of a moratorium on activities of a bank, shall appoint the temporary administrator of the bank (hereinafter referred to as the “temporary administrator”). The conditions of activities of the temporary administrator shall be defined in the temporary administrator’s agreement concluded between the supervisory institution and the temporary administrator. Such agreement may establish obligations of the supervisory institution concerning the indemnification of damage inflicted on third parties by actions of the temporary administrator to the extent that it does not contradict the provisions of the Civil Code. The temporary administrator shall have the right to resign subject to giving a written notice thereof to the supervisory institution within a reasonable time limit. If the temporary administrator resigns, the supervisory institution must decide on the appointment of a new temporary administrator without delay.
5. A legal or natural person may be appointed a temporary administrator. Where a natural person is appointed a temporary administrator, one or several assistants of the temporary administrator may be appointed. The temporary administrator shall have the right to engage at his discretion the service providers (including legal, accounting, audit and management consultants) necessary for the purpose of due performance of his functions. The salary and other expenses (including expenses for the service providers) of the temporary administrator and assistants thereof shall be determined in an agreement concluded between the supervisory institution and the temporary administrator taking account of the scope of activities, qualifications and duration of the activities of the temporary administrator. The salary and other expenses (including expenses for the service providers) shall be paid from the funds of a bank before any other payments of the bank. If bankruptcy proceedings are opened against a bank subject to administration, payments to the administrator shall be made before any other payments of the bank. If the bank fails to timely pay to the temporary administrator, the temporary administrator must be paid by the supervisory institution, which at that time has the right to claim the disbursed amounts from the bank. An employee of the supervisory institution may not be appointed the temporary administrator of a bank.
6. A decision taken on the announcement of a moratorium on activities of a bank and the appointment of the temporary administrator of the bank shall, not later than on the working day following that of taking of the decision, be communicated to the bank and to the Register of Legal Persons and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
7. As of the day of submission to a bank of a decision on the announcement of a moratorium on activities of the bank and the appointment of the temporary administrator of the bank:
1) powers of the bank’s supervisory board, the bank’s board and heads of the administration shall be suspended. The temporary administrator shall exercise the powers of the bank’s supervisory board, the bank’s board and heads of the administration to the extent necessary. All decisions of the bodies of the bank referred to in this subparagraph and taken after the entry into force of the decision to announce a moratorium on the activities of the bank and to appoint the temporary administrator shall be void and unenforceable;
2) decisions of the general meeting of the bank’s shareholders shall enter into force only after agreeing them with the temporary administrator of the bank and the supervisory institution. They shall present their opinion on a decision of the general meeting of the shareholders submitted for agreement within 15 days of receipt of the decision of the general meeting of the shareholders;
3) the bank shall be prohibited from performing payment obligations or transfer assets of the bank where these obligations result from the transactions concluded or other legal facts arising prior to the announcement of the moratorium on the activities of the bank, except for the payments necessary to ensure activities of the bank during the moratorium. During the moratorium on the activities of the bank, penalties for nonfeasance or misfeasance of an obligation of the bank shall not be calculated and paid. Interest on the bank’s obligations shall be calculated, but shall be paid only after the expiry of the time limit for the moratorium on the activities of the bank;
4) it shall be prohibited to set off any claims of the bank and clients thereof;
5) cases pending in court in which material claims have been filed to the bank, also execution cases or recoveries made otherwise where the bank is the debtor, shall be suspended.
8. The prohibitions referred to in subparagraphs 3 and 4 of paragraph 7 of this Article shall not be applied where laws of the Republic of Lithuania regulating the functioning of the payment and securities settlement systems as well as other laws establish that a bank must perform obligations also when its activities are restricted.
9. The temporary administrator shall act in compliance of this Law and instructions of the supervisory institution. The temporary administrator, inter alia:
1) shall be in charge of the bank according to the instructions of the supervisory institution and shall seek to ensure sound and prudential management of the bank, contribute to resolution of the bank’s problems addressing the matters attributed to his competence independently or proposing to the general meeting of the shareholders of the bank to adopt the decisions necessary for that purpose;
2) must, within the time limit laid down by the supervisory institution, examine and assess the financial situation of the bank, possible means of restoration of the stability and soundness of activities of the bank and other solutions of the bank’s problems and present to the supervisory institution a conclusion and proposals together with interim financial statements drawn up on the basis of the performed assessment of the financial situation and other data indicated by the supervisory institution. The conclusion and proposals of the temporary administrator must, inter alia, provide for a comparative probability of the successful implementation of the possible means of restoration of the stability and soundness of activities of the bank and other solutions of the bank’s problems, the time limits of the implementation thereof, possible costs and benefit, also the need to extend the time limit for a moratorium on the activities of the bank and/or to take other decisions allowing to implement the means of restoration of the stability and soundness of activities of the bank and other solutions of the bank’s problems. Where there are no real possibilities to restore the stability and soundness of activities of the bank and to apply the means of resolution of the bank’s problems specified in Article 761 of this Law and other solutions of the bank’s problems, the temporary administrator may propose in his conclusion and proposals to consider the bank’s winding up or opening of bankruptcy proceedings;
3) shall have the right to terminate, without warning, the contracts concluded with members of the bank’s board and the heads of the administration. Severance pay shall not be granted to the said persons;
4) must provide information on the process of administration to the supervisory institution according to the procedure set forth by the supervisory institution and to the general meeting of the bank’s shareholders according to the procedure set forth by the general meeting;
5) shall act in observance of other instructions of the supervisory institution.
10. The temporary administrator shall have then right to apply to the supervisory institution for provision of instructions on certain issues pertaining to the bank and the activities of the temporary administrator. The supervisory institution must provide such instructions without delay. Where there is an appropriate ground therefor, the temporary administrator shall have the right to suspend his activities related with the issues raised until clear instructions are received from the supervisory institution.
11. The temporary administrator must perform his functions prudently and in good faith. The temporary administrator may not exercise the rights granted to him for his personal needs or those of third parties. The temporary administrator shall be held liable for inflicted damage under law, unless the agreement concluded between the supervisory institution and the temporary administrator establishes otherwise. In any case, the temporary administrator shall not be held liable for damage resulting from actions carried out in observance of instructions of the supervisory institution. In such a case, liability for damage inflicted under the conditions established by law shall be assumed by the supervisory institution.
12. The supervisory institution, taking account of proposals of the temporary administrator, shall take one of the following decisions prior to the expiry of the time limit for a moratorium on activities of the bank:
1) lift the moratorium on the activities of the bank, where the bank meets the requirements set by legal acts and can operate in a stable and sound manner;
2) extend the time limit for the moratorium on the activities of the bank, where the supervisory institution approves the conclusions and proposals presented by the temporary administrator on the restoration of the stability and soundness of activities of the bank or application of other solutions of the bank’s problems;
3) withdraw a licence if there are no real possibilities to restore the stability and soundness of activities of the bank, apply the solutions of the bank’s problems provided for in Article 761 of this Law or other solutions, or if the transfer of the bank’s assets, rights, transactions and liabilities performed in observance of provisions of Article 761 of this Law is completed.
13. A sanction referred to in this Article may also be imposed on a branch of a foreign bank holding a licence.
Article 761. Transfer of Assets, Rights, Transactions and Liabilities of a Bank
1. The assets, rights, transactions and liabilities of a bank whose activities are subject to a moratorium and to which a temporary administrator is appointed according to Article 76 of this Law (hereinafter referred to in this Article as the “bank subject to administration”) may be transferred to another bank if:
1) there is a real threat that the net value of assets of the bank subject to administration will fall below the bank’s liabilities or that the bank will meet other conditions established by legal acts adopted by the supervisory institution under paragraph 1 of Article 84 of this Law for recognising the bank as insolvent, or it is established that the bank already meets the conditions for recognising the bank as insolvent, and
2) the transfer of assets, rights, transactions and liabilities of the bank subject to administration to another bank would allow to maintain the trust of depositors in the stability and soundness of the banking system and otherwise protect public interest, while liquidation of the bank subject to administration due to bankruptcy would not protect such interest to the same extent.
2. The transfer of assets, rights, transactions and liabilities of a bank subject to administration upon approval of the supervisory institution and in observance of its instructions shall be organised and performed by the temporary administrator.
3. If the supervisory institution approves the transfer of assets, rights, transactions and liabilities of a bank subject to administration, the temporary administrator shall, acting in observance of instructions of the supervisory institution, organise and hold negotiations on the takeover of assets, rights, transactions and liabilities of the bank subject to administration with banks authorised to render financial services related with the assets, rights, transactions and liabilities of the bank subject to administration. Banks participating in the negotiations shall have the right to familiarise with the information about the financial situation of the bank subject to administration which, in the temporary administrator’s opinion, is necessary for the adoption of a decision on the takeover of assets, rights, transactions and liabilities of the bank subject to administration. Protection of such information shall be governed mutatis mutandis by provisions of Article 55 of this Law.
4. Having regard to the need to address the matter of transfer of assets, rights, transactions and liabilities of a bank subject to administration with particular urgency and effectiveness, also relying on the information available to the supervisory institution at the moment of taking the decision about the capability of banks authorised to render financial services in the Republic of Lithuania to take over the assets, rights, transactions and liabilities of the bank subject to administration or believing, due to other reasons, that the organisation and holding of negotiations according to the provisions of paragraph 3 of this Article would be inappropriate, the supervisory institution shall have the right to instruct the temporary administrator to organise and hold the negotiations only with certain banks authorised to render financial services related with assets, rights, transactions and liabilities of the bank subject to administration, or with one of such banks, or to instruct not to organise and hold the negotiations at all, and to prepare for the transfer of or transfer the assets, rights, transactions and liabilities of the bank subject to administration to the provisional bank to be established or established according to the provisions of Article 71 of the Law of the Republic of Lithuania on Financial Sustainability.
5. The transfer of assets, rights, transactions and liabilities of a bank subject to administration may involve the transfer of all or part of assets, rights (property and non-property) and transactions and all or part of liabilities of the bank subject to administration, however:
1) liabilities of the bank subject to administration to the depositors and investors specified in the Law of the Republic of Lithuania on Insurance of Deposits and Liabilities to Investors who, upon occurrence of an insured event, would receive insurance compensations within the limits of the amount payable to them by the State undertaking “Deposit and Investment Insurance”, and liabilities of the bank to state institutions and agencies arising from transactions concluded after the announcement of the moratorium on activities of the bank must be transferred in all instances;
2) liabilities of the bank subject to administration to the creditors whose claims in the event of the bank’s bankruptcy according to the provisions of Article 87 of this Law are to be satisfied fifth, sixth and seventh shall not be transferred;
3) it must be ensured that the creditors of the bank subject to administration who have been excluded from subparagraphs 1 and 2 of this paragraph and whose claims in the event of the bank’s bankruptcy would be satisfied in accordance with the same priority as specified in Article 87 of this Law be treated equally and not incur greater losses than if bankruptcy proceedings would have been opened at the same time against the bank subject to administration instead of the transfer of its assets, rights, transactions and liabilities to another bank.
6. The assets, rights, transactions and liabilities of a bank subject to administration may be transferred only after the performance of their assessment by an audit firm and/or property appraisal company engaged by the temporary administrator. The costs of the assessment shall be borne by the bank subject to administration. When it is necessary to address the matter of the transfer of assets, rights, transactions and liabilities of the bank subject to administration particularly urgently, the assets, rights, transactions and liabilities of the bank subject to administration may be transferred only after their preliminary assessment is carried out by the temporary administrator and its conclusions are approved by the supervisory institution, with the assessment by the audit firm and/or property appraisal company performed already after the transfer of the assets, rights, transactions and liabilities. The value of the bank’s assets, rights, transactions and liabilities must be established having regard to the conclusion issued by the supervisory institution as to the existence of grounds for withdrawal of the licence of the bank subject to administration and to the licence withdrawal consequences specified in Article 10 of this Law, however not having regard to measures enhancing financial stability which are already applied or could be potentially applied to the bank according to the Law of the Republic of Lithuania on Financial Sustainability.
7. If the value of the transferred liabilities of a bank subject to administration exceeds the value of concurrently transferred assets, rights, transactions and liabilities of the bank subject to administration, the transfer of the assets, rights, transactions and liabilities of the bank subject to administration shall be performed in observance of provisions of Article 121 of the Law of the Republic of Lithuania on Insurance of Deposits and Liabilities to Investors, or by covering the difference in values from other sources. If upon assessment carried out by an audit firm and/or property appraisal company according to paragraph 6 of this Article it transpires that the value of the transferred liabilities of the bank subject to administration is lower than the value of concurrently transferred assets, rights, transactions and liabilities of the bank subject to administration, the bank taking over the assets, rights, transactions and liabilities of the bank subject to administration shall pay to the bank subject to administration a monetary compensation for the difference in values.
8. When transferring the assets, rights, transactions and liabilities of a bank subject to administration to another bank:
1) the assets, rights, transactions and liabilities of the bank subject to administration to be transferred may be transferred in their entirety, or in part;
2) the already transferred assets, rights, transactions and liabilities may be returned to the bank subject to administration under the terms and conditions provided for in the documents on the transfer of assets, rights, transactions and liabilities, where necessary by appropriately adjusting the amount covering the difference in values paid according to paragraph 7 of this Article, where such a possibility is explicitly specified in such documents or the circumstances indicating that the transferred assets, rights, transactions and liabilities had not been intended for the transfer transpire;
3) when assets, rights, transactions and liabilities being transferred are governed by foreign law, and such a transfer is not recognised under the foreign jurisdiction, the bank subject to administration must transfer such assets, rights, transactions and liabilities by the right of trust to the bank taking over the assets, rights, transactions and liabilities. The bank subject to administration and the bank taking over the assets, rights, transactions and liabilities must take all necessary steps to ensure legal enforcement of such transfer of assets, rights, transactions and liabilities.
9. When transferring the assets, rights, transactions and liabilities of a bank subject to administration:
1) the provisions of the Republic of Lithuania Civil Code, other laws and legal acts or transactions concluded by the bank stipulating the requirement to notify in advance creditors, borrowers or other persons about the actions performed for the purposes of the transfer of assets, rights, transactions and liabilities, the requirement to obtain permits or consents of other persons for the performance of such actions, including the consent of the creditor to transfer the debt to another person, or otherwise limiting the performance of the transfer of assets, rights, transactions and liabilities shall not apply;
2) the transfer of assets, rights, transactions and liabilities shall not be considered as a violation of the transaction and/or a valid ground for creditors, borrowers or other persons to terminate a transaction concluded with the bank subject to administration. If the creditors, borrowers or other persons terminate a transaction disregarding this provision, such a transaction may be returned to the bank subject to administration.
10. The transfer of assets, rights, transactions and liabilities shall be announced by the temporary administrator without delay on the website of a bank subject to administration and, no later than within five working days of the transfer of assets, rights, transactions and liabilities – at least in two national newspapers of the Republic of Lithuania.
11. Upon completion of the transfer of assets, rights, transactions and liabilities, the supervisory institution shall, if there is information showing that the bank subject to administration is insolvent, refer to court for the opening of bankruptcy proceedings against the bank subject to administration. The powers of the temporary administrator shall terminate after the court issues a ruling on the opening of bankruptcy proceedings against the bank subject to administration and appoints the administrator. The court shall also have the right to appoint the temporary administrator to the position of the bank’s administrator. Where the court appoints the temporary administrator to the position of the bank’s administrator, the requirements established by the Enterprise Bankruptcy Law of the Republic of Lithuania concerning the obligation to acquire the right to provide enterprise bankruptcy administration services in observance of the procedure established by the Enterprise Bankruptcy Law of the Republic of Lithuania and legal acts related to implementation thereof shall not apply.
12. During and after the transfer of assets, rights, transactions and liabilities of a bank subject to administration the latter, even if the bankruptcy proceedings are open against it, must co-operate with the bank taking over its assets, rights, transactions and liabilities granting thereto temporary access at the arm’s length price to its information and accounting systems, documents, provide information and services necessary for the bank taking over the assets, rights, transactions and liabilities to duly provide the financial service related with the assets, rights, transactions and liabilities taken over.
13. The duty to co-operate and render services to the bank taking over the assets, rights, transactions and liabilities of a bank subject to administration as specified in paragraph 12 of this Article shall also apply to persons providing services to the bank subject to administration during the moratorium on activities of the bank.
14. When examining in court the claims or complaints (requests) concerning actions (acts) of the Bank of Lithuania, the temporary administrator, other entities related with the organisation and implementation of the transfer (return) of the bank’s assets, rights, transactions and liabilities, the provisions of Article 13 1 of the Law of the Republic of Lithuania on Financial Sustainability shall apply mutatis mutandis.
15. Upon taking over the assets, rights, transactions and liabilities of a bank subject to administration, the bank shall not be liable to creditors of the bank subject to administration whose claims have not been transferred thereto.
Article 77. Temporary Restriction on the Right to Dispose of Funds and Other Assets
1. Upon the imposition by the supervisory institution of a sanction referred to in subparagraph 7 of paragraph 1 or in subparagraph 2 of paragraph 3 of Article 72 of this Law, a person who is subject to the sanction shall not have the right to dispose of funds in his accounts in the Bank of Lithuania and in other credit institutions and of other assets specified in the decision of the supervisory institution.
2. The supervisory institution may temporarily restrict the right to dispose of all funds in accounts in the Bank of Lithuania and in other credit institutions and of all other assets or of part of the funds and other assets.
3. A decision of the supervisory institution to temporarily restrict the right to dispose of funds in accounts in the Bank of Lithuania and in other credit institutions established in the Republic of Lithuania and of other assets in the territory of the Republic of Lithuania shall be considered a property seizure act. In the cases and according to the procedure set forth by legal acts, it shall be registered in the Register of Property Seizure Acts. The decision of the supervisory institution must include the data required to register the decision of the supervisory institution in the Register of Property Seizure Acts. In the cases specified by the legal acts regulating the Register of Property Seizure Acts, the decision of the supervisory institution may be temporarily registered in the Register of Property Seizure Acts.
CHAPTER ELEVEN
TERMINATION OF A BANK
Article 78. Legal Regulation of Procedure for the Reorganisation, Restructuring and Winding up of a Bank
1. A bank shall be reorganised, restructured and wound up according to the procedure set forth by the Civil Code, this Law, the Law on Financial Institutions and, except where this Law provides otherwise, the Law on Companies.
2. The provisions of this Chapter, unless they contradict the essence of a branch of a foreign bank and except where this Law provides otherwise, shall also be applied to terminate activities of a branch of a foreign bank established in the Republic of Lithuania.
Article 79. Reorganisation of a Bank
1. When reorganising a bank by way of merger, another entity participating in the reorganisation or undergoing reorganisation may only be a bank or another financial institution.
2. When reorganising a bank by way of division, at least one of the legal persons whereto a bank’s rights and obligations are transferred or who are established must be a bank.
3. Where a new bank is established as a result of the reorganisation of a bank, the new bank must obtain a licence according to the procedure set forth by this Law. In such a case, an application for the issuance of the licence, the documents and data required to issue the licence shall be submitted to the supervisory institution together with the application for the granting of an authorisation to reorganise the bank. Alongside a decision on the granting of an authorisation to reorganise the bank, a decision on the issuance of the licence shall be taken.
4. The banks participating in a reorganisation or undergoing reorganisation must, in the cases specified by this Law, obtain the consent of the supervisory institution to reorganise and an authorisation of the supervisory institution to reorganise a bank.
Article 80. Consent to Reorganise a Bank
1. Where a bank is to be reorganised by way of merger, the supervisory institution must be notified of the planned reorganisation, and its consent to reorganise the bank must be obtained.
2. In order to obtain a consent to reorganise a bank, the banks participating in the reorganisation or undergoing reorganisation must submit to the supervisory institution an application and the documents specified by legal acts of this institution. A consent to reorganise a bank shall be granted by the supervisory institution according to the procedure set forth by this Law and legal acts of the supervisory institution. A decision on the granting of a consent shall be taken by taking account of criteria for the assessment of the systemic risk level laid down by legal acts of the supervisory institution.
3. The supervisory institution shall take a decision on the granting of a consent within 1 month of the receipt of an application for the granting of the consent.
Article 81. Authorisation to Reorganise a Bank
1. The reorganisation of a bank may be completed only upon obtaining an authorisation of the supervisory institution to reorganise the bank.
2. An authorisation to reorganise a bank shall be granted by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
3. Upon taking a decision on the reorganisation of a bank, the bank participating in the reorganisation or undergoing reorganisation, in order to obtain an authorisation to reorganise the bank, shall submit to the supervisory institution an application and the documents and data specified by legal acts of the supervisory institution, including:
1) terms of the reorganisation (a reorganisation project);
2) a report of the bank’s board;
3) assessment of the terms of the reorganisation (the reorganisation project);
4) a decision of a body of the bank on the reorganisation of the bank;
5) the documents and data evidencing that the bank meets the requirements set for obtaining of an authorisation to establish the bank where a new bank is to be established as a result of the reorganisation;
6) the documents and data evidencing that the bank meets the requirements set for obtaining a licence where the bank is to continue its activities after the reorganisation.
4. The supervisory institution must examine submitted documents and take a decision on the granting of an authorisation to reorganise a bank within three months of the receipt of an application.
5. The supervisory institution may refuse to grant an authorisation to reorganise a bank where:
1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) there are the grounds referred to in paragraphs 5 of Article 8 of this Law, where a new bank is established as a result of the reorganisation,;
3) there are the grounds referred to in paragraphs 10 of Article 9 of this Law where a bank continues its activities after the reorganisation.
6. The supervisory institution shall give written notice to the Register of Legal Persons of a decision taken to grant or not to grant an authorisation to reorganise a bank.
Article 82. Winding up of a Bank
1. A bank may be wound up by a decision of shareholders or on other statutory grounds.
2. The general meeting of a bank’s shareholders may take a decision on the termination of activities and winding up of the bank only upon obtaining an authorisation of the supervisory institution to wind up the bank.
3. An authorisation to wind up a bank shall be granted by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
4. In order to obtain an authorisation to wind up a bank, the bank shall submit to the supervisory institution an application and the documents and data specified by legal acts of the supervisory institution as well as a plan prepared by the bank’s board and agreed with the bank’s supervisory board on the winding up of the bank and settlement with creditors and setting out, inter alia, the time limits and sources of settlement with the creditors as well as conclusions of experts on the value of the bank’s assets. An application to withdraw a licence must be attached thereto.
5. The supervisory institution must examine submitted documents and take a decision on the granting of an authorisation to wind up a bank within three months of the receipt of a relevant application.
6. A bank may be wound up by a decision of the general meeting of the bank’s shareholders only where it is able to fully settle with its creditors.
7. The supervisory institution may refuse to grant an authorisation to wind up a bank where:
1) submitted documents do not meet the requirements set by this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;
2) a conclusion may be made that the bank is unable to fully settle with creditors (the bank’s assets are insufficient to satisfy all claims of the creditors).
8. The supervisory institution shall give written notice to the Register of Legal Persons of a decision taken to grant or not to grant an authorisation to wind up a bank.
9. A bank must, within three working days, notify the supervisory institution of a decision taken at the general meeting of the bank’s shareholders on the wind up of the bank and the appointment of the liquidator of the bank.
10. Where a licence is withdrawn by a decision of the supervisory institution, the general meeting of a bank’s shareholders must take a decision on the termination of activities of the bank. In this case, paragraph 2 of this Article shall not apply.
11. A bank shall be wound up upon a decision of court, where the bank’s licence is withdrawn and the general meeting of shareholders thereof does not take a decision on the termination of activities of the bank within the time limit laid down by the supervisory institution. The right to apply to the courts on the winding up of a bank shall be vested in the supervisory institution, the supervisory board, the board or a shareholder of the bank. The court must take a decision on the winding up of a bank within 15 days of the receipt of an application.
12. Prior to taking a decision on the winding up of a bank on the grounds other than those referred to in paragraph 11, a court must notify thereof the supervisory institution and obtain its conclusion on the winding up of the bank.
13. In all cases, a court, upon taking a decision on the winding up of a bank, must notify thereof the supervisory institution within 3 working days of the taking of the decision.
CHAPTER TWELVE
BANKRUPTCY OF A BANK
Article 83. Legal Regulation of the Bank Bankruptcy Procedure
Bank bankruptcy procedures shall be regulated by this Law, the Law on Financial Institutions and the Enterprise Bankruptcy Law, except where this Law and the Law on Financial Institutions provide otherwise.
Article 84. Conditions for the Recognition of a Bank Insolvent
1. The conditions under which a bank may be recognised as insolvent as well as the procedure for calculating and assessing the insolvency of the bank shall be set forth by legal acts of the supervisory institution.
2. Bank bankruptcy proceedings shall be opened by the court only where there is a conclusion of the supervisory institution on the insolvency of the bank.
(i) Article 85. Bank Bankruptcy Proceedings
1. Upon the handing down of a ruling on the opening of a bank’s bankruptcy proceedings, creditors of the bank shall be forthwith notified thereof in the manner prescribed in the court’s ruling, and the court hearing the bankruptcy case, case number, requisites of a bank in bankruptcy and time limits for the acceptance of creditors’ claims shall be published in the two daily national newspapers with the largest circulation. The court or a judge may authorise the bank’s administrator to carry out the actions referred to in this paragraph.
2. The time limit laid down by court for the lodging of claims by a bank’s creditors shall not exceed three months of the entering into force of the court’s ruling on the opening of bankruptcy proceedings.
3. Upon the handing down of a ruling on the opening of bank bankruptcy proceedings:
1) the administrator shall commence the exercise of his functions, and powers of bodies of the bank shall be suspended. Where a court of appeals reverses the ruling on the opening of the bank bankruptcy proceedings, the bodies of the bank shall continue to exercise their functions;
2) performance of all financial obligations not performed prior to the opening of bankruptcy proceedings, including the payment of interest, penalties, taxes and other mandatory payments as well as recovery of debts from the bank in bankruptcy through court or without suit shall be prohibited;
3) calculation of penalties and interest on all obligations of the bank, including on a default in payments related to employment relationship, shall be terminated. Judgment mortgage may not be imposed.
4. The prohibitions referred to in subparagraph 2 of paragraph 3 of this Article shall not be applied in the cases specified by the laws regulating the functioning of the payment and securities settlement systems and by other laws where a bank has been directly instructed to perform its obligations after the institution of bankruptcy proceedings. In the course of the bank’s bankruptcy proceedings, it shall neither be prohibited to set off the claim of the depositor or the investor (as defined in paragraphs 3 and 11 of Article 2 of the Law on Insurance of Deposits and Liabilities to Investors) who is concurrently the bank’s borrower, where no insurance compensation is paid to the depositor or investor in observance of subparagraph 4 of paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors against the bank’s claim to the depositor or the investor concerning the outstanding loan, but the amount set off (and where the depositor or the investor has been paid the insurance compensation – the amount set off together with the insurance compensation) may not exceed the amounts of insurance compensations for depositors or investors established in paragraph 3 of Article 9 of the Law on Insurance of Deposits and Liabilities to Investors.
5. The administrator of a bank must, within five days of the handing down of a court’s ruling to open bank bankruptcy proceedings, submit to the court for approval the amount of the bank’s funds which the administrator shall have the right to use to cover administration expenses pending the approval of an estimate of administration costs.
6. Where the number of creditors of a bank against which bankruptcy proceedings have been opened, according to the list approved by court, exceeds 50, the creditors’ committee shall alone enjoy all the rights granted by the Enterprise Bankruptcy Law to the creditors’ meeting, with the exception of the right to form and change the composition of the creditors’ committee. The creditors’ committee shall have not more than 15 members. The State undertaking “Deposit and Investment Insurance” must be one of the members of the creditors’ committee.
7. The administrator must regularly provide the supervisory institution, according to the procedure and within the time limits laid down by it, with information on the progress of a bank’s bankruptcy proceedings.
8. Upon the opening of a bank’s bankruptcy proceedings, a composition may not be concluded.
9. Upon the opening of a bank’s bankruptcy proceedings, where the bank has transferred the bank’s assets, rights, transactions and liabilities to another bank in compliance with the provisions of Article 761 of this Law, the administrator shall not have the right to inspect the transactions concluded when transferring the bank’s assets, rights, transactions and liabilities in compliance with the provisions of Article 761 of this Law and bring actions in court for invalidation of such transactions.
Article 86. Winding up of a Bankrupt Bank
1. Court shall declare a bank bankrupt and hand down a ruling on the winding up of the bank within three months of the entering into force of a ruling to satisfy creditors’ claims.
2. A bank’s rights of claim not sold in the prescribed manner and not taken over by creditors shall be gratuitously transferred to the institution specified by the Government.
3. Prior to each settlement with creditors, the administrator of a bank shall submit to court for approval a plan of settlement with the creditors. The plan shall indicate the dates when a payment is due, amounts to be paid and the scope of the satisfaction of the creditors’ claims in respect of transferring to the creditors assets, including rights of claim.
4. Claims of a bank’s creditors in a foreign currency shall be satisfied in the national currency of the Republic of Lithuania according to the official exchange rate of the national currency and the foreign currency on the day of handing down of a ruling by court on the opening of the bank’s bankruptcy proceedings.
Article 87. Order of Satisfaction of Creditors’ Claims
1. The claims of employees related to employment relationship, the claims to compensate for damage done due to mutilation or other bodily injury, contraction of an occupational disease or death as a result of an accident at work shall be satisfied first.
2. The claims of the State undertaking “Deposit and Investment Insurance” on the expenses related to the payment of insurance benefits to the depositors or investors of a bank referred in the Law on Insurance of Deposits and Liabilities to Investors shall be satisfied second.
3. The claims related to the payment of taxes and making other payments to the budget and benefits of compulsory State social insurance and compulsory health insurance as well as to the granted loans received on behalf of the State and with the guarantee of the State shall be satisfied third.
4. Other claims of a bank’s creditors, with the exception of the claims referred to in paragraphs 1, 2, 3, 5, 6 and 7 of this Article, shall be satisfied fourth.
5. The claims of creditors related to subordinated loans granted to the bank and non-equity securities issued by the bank which have all characteristics of a subordinated loan, excluding claims specified in paragraph 6 of this Article, shall be satisfied fifth.
6. The claims of creditors related to non-equity securities issued by the bank which have all characteristics of a subordinated loan and whose acquisition transactions provide that claims in respect of them shall be satisfied only after the claims of other bank creditors, including claims over subordinated loans granted to the bank and other non-equity securities issued by the bank which have all characteristics of a subordinated loan, shall be satisfied sixth.
7. The claims of a bank’s shareholders holding a qualifying holding in the bank’s authorised capital and/or voting rights, members of the bank’s supervisory board, members of the bank’s board and the heads of the administration shall be satisfied seventh.
CHAPTER THIRTEEN
ADDITIONAL PROVISIONS ON MEASURES RESTRICTING ACTIVITIES OF A BANK AND WINDING-UP PROCEEDINGS
Article 88. Measures Restricting Activities of a Bank and Winding-up Proceedings
1. In this Chapter, restrictions on the activities of a bank or a foreign bank adopted by institutions of the Republic of Lithuania or another Member State of the European Union as well as by its courts shall be considered the measures restricting activities of a bank where the aim is to preserve or to restore the stability and soundness of a branch of a bank established in that state or of a foreign bank, including branches thereof in the Republic of Lithuania or other Member States of the European Union, or of a branch of a bank of another foreign state established in that Member State of the European Union and where these restrictions may influence the exercise of the rights of third parties, with the exception of shareholders of the bank and the heads of the bank, held before the adoption of a measure restricting their activities.
2. In this Chapter, the compulsory winding up or bankruptcy of a bank or a foreign bank established in the Republic of Lithuania or another Member State of the European Union, including branches thereof in the Republic of Lithuania or in other Member States of the European Union, or a compulsory termination of activities of a branch of a bank of another foreign state established in the Republic of Lithuania or another Member State of the European Union shall be considered winding-up proceedings.
Article 89. Application of Provisions of Chapter Thirteen
1. The provisions of this Chapter shall be applied in the cases where the measures restricting activities of a bank are adopted or winding-up proceedings are opened against a bank established in the Republic of Lithuania which in another Member State of the European Union operates without establishing a branch or has established a branch in the said state (hereinafter referred to in this Chapter as the host Member State of the European Union). Article 93 of this Law shall also be applied in the cases where the measures restricting activities of a bank are adopted or winding-up proceedings are opened against a bank established in the Republic of Lithuania which does not operate in another Member State of the European Union without establishing a branch or has not established a branch in the said state.
2. The provisions of this Chapter shall also be applied in the cases where the measures restricting activities of a bank are adopted or winding-up proceedings are opened against a foreign bank established in another Member State of the European Union which operates without establishing a branch or has established a branch in the Republic of Lithuania or against a branch of the said foreign bank established in the Republic of Lithuania and subject to the measures restricting activities of the bank adopted in another Member State of the European Union.
3. The provisions of paragraphs 1 and 2 of Article 91 and paragraphs 1 and 2 of Article 92 of this Chapter shall also be applied in the cases where measures restricting activities of a bank are adopted or winding-up proceedings are opened against a branch established in the Republic of Lithuania by a foreign bank not licensed in a Member State of the European Union where a branch of the said foreign bank has not been established only in the Republic of Lithuania, but also in at least one more Member State of the European Union. Moreover, in such cases a court of the Republic of Lithuania, the supervisory institution, the liquidator (if any has been appointed), where this is required and where this is possible, shall co-ordinate actions related to the adoption of the measures restricting activities of a bank or to the winding-up proceedings, with the relevant institutions or the liquidator of other host Member States of the European Union.
Article 90. Decision on the Adoption of the Measures Restricting Activities of a Bank or the Opening of Winding-up Proceedings and Governing Law
1. A court of the Republic of Lithuania and the supervisory institution shall alone be empowered to decide on the adoption of the measures restricting activities of a bank or on the opening of winding-up proceedings in respect of a bank established in the Republic of Lithuania, including branches thereof in the Member States of the European Union.
2. Pursuant to paragraph 1 of this Article, the measures restricting activities of a bank as specified by a decision of a court of the Republic of Lithuania or the supervisory institution shall be applied and the winding-up proceedings opened by a decision of a court of the Republic of Lithuania shall be carried out in compliance with law of the Republic of Lithuania, unless otherwise provided for by paragraph 6 of this Article.
3. The decisions taken by institutions of another Member State of the European Union on the adoption of the measures restricting activities of a bank or on the opening of winding-up proceedings against a bank established in that Member State of the European Union and against branches thereof in the Republic of Lithuania shall be recognised in the Republic of Lithuania without any further formalities as of the entering into force of the adopted measures restricting activities of the bank or of a court decision in that Member State of the European Union. The said measures restricting activities of a bank shall be adopted and the instituted winding-up proceedings be carried out in compliance with law of that other Member State of the European Union, unless otherwise provided for by paragraph 6 of this Article.
4. The provisions of paragraph 3 of this Article shall not restrict the right of the Lithuanian supervisory institution, in the cases and according to the procedure set forth in this Law, to impose sanctions on a branch established in the Republic of Lithuania by a foreign bank licensed in a Member State of the European Union.
5. Where it is provided for by legal acts of the Republic of Lithuania or other Member State of the European Union, a decision on the adoption of the measures restricting activities of a bank or a decision on the opening of winding-up proceedings must be registered in the public register of the relevant state.
6. Irrespective of the institutions of which Member State of the European Union, including the Republic of Lithuania, have taken a decision on the adoption of the measures restricting activities of a bank or a decision on the opening of winding-up proceedings:
1) employment relationships shall be governed by the law of the Member State of the European Union applicable to an employment contract concluded;
2) a contract conferring the right to make use of or acquire an immovable shall be governed by the law of the Member State of the European Union within the territory of which the immovable is situated;
3) rights in respect of an immovable, a ship or an aircraft subject to registration in a public register shall be governed by the law of the Member State of the European Union under the authority of which the public register is kept;
4) the enforcement of the proprietary and other rights in the financial instruments specified in Section C of Annex I of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC the transfer or acquisition of which presupposes their being recorded in a public register, an account or a depository of securities shall be governed by the law of the Member State of the European Union where the public register, account or depository of securities is held or located;
5) set-off agreements shall be governed by the law of the contract which regulates such agreements;
6) without prejudice to provisions of subparagraph 4 of paragraph 6 of this Article, repurchase agreements as well as transactions carried out in the context of a regulated market shall be governed by the law of the contract which regulates such transactions;
7) where, after the taking of a decision on the adoption of the measures restricting activities of a bank or a decision on the opening of winding-up proceedings, the bank transfers, for consideration, an immovable, a ship or an aircraft subject to registration in a public register, or the financial instruments specified in Section C of Annex I of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC, or rights in the financial instruments (financial instruments or rights in such instruments) which are subject to registration in a public register, an account or a depository of securities, the validity of such a transaction shall be governed by the law of the Member State of the European Union within the territory of which the immovable is situated or under the authority of which the public register, account or depository of securities is kept;
8) the effects of a decision on the adoption of the measures restricting activities of a bank or a decision on the opening of winding-up proceedings on a lawsuit pending in respect of the bank’s assets or right of claim shall be governed by the law of the Member State of the European Union in the lawsuit is pending.
Article 91. Notification of Measures Restricting Activities of a Bank
1. A court of the Republic of Lithuania must notify the supervisory institution of the planned adoption of the measures restricting activities of a bank before taking a decision on the adoption thereof or, if not possible, notify immediately the supervisory institution of a decision already taken on the adoption of the measures restricting activities of the bank.
2. The supervisory institution must notify the supervisory institutions of other host Member States of the European Union of the planned adoption of the measures restricting activities of a bank by a court or the supervisory institution or, if not possible, notify immediately of the measures already adopted and specify possible effects of the adoption of the said measures on the natural and legal persons of the host Member State of the European Union.
3. Where the measures restricting activities of a bank are likely to affect the exercise of the rights of third parties in another host Member State of the European Union and where an appeal may be filed against a decision on the adoption of the measures restricting activities of the bank according to the procedure set forth by laws of the Republic of Lithuania, the institution which takes the decision on the adoption of the measures restricting activities shall publish information on the decision taken in the official gazette of the European Union and in two national newspapers in each other host Member State of the European Union.
4. The information published pursuant to paragraph 3 of this Article shall specify, in the official language (languages) of the host Member State of the European Union, the purpose and legal basis of a decision, the time limits for filing appeals and the address of the court competent to hear an appeal.
5. The measures restricting activities of a bank shall apply and be effective irrespective of whether the information thereof has been published according to the procedure set forth by this Article.
Article 92. Notification of Winding-up Proceedings
1. A court of the Republic of Lithuania, prior to taking a decision on the opening of winding-up proceedings, must notify thereof the supervisory institution or, if not possible, notify immediately the supervisory institution of a decision already taken on the opening of the winding-up proceedings.
2. The supervisory institution must notify the supervisory institutions of other host Member States of the European Union of a decision planned to be taken by a court on the opening of winding-up proceedings or, if not possible, notify immediately of a decision already taken on the opening of the winding-up proceedings and specify possible effects of the taking of the said decision on the natural and legal persons of the host Member State of the European Union.
3. A court, upon taking a decision on the opening of winding-up proceedings, or, by its assignment, the liquidator (administrator) of a bank shall publish information on the decision taken in the official gazette of the European Union and in two national newspapers in each other host Member State of the European Union.
4. Where laws of the Republic of Lithuania provide for an obligation of the institution which opened winding-up proceedings or the liquidator (administrator) of a bank to notify creditors of the bank of a decision on the opening of the winding-up proceedings, the creditors of the bank in other host Member States of the European Union must also be notified thereof. A notification of the decision on the opening of the winding-up proceedings shall specify the time limits for the lodging of claims, consequences of a failure to lodge a claim or delayed lodgement of the claim, the institution whereto the claim must be lodged and other important circumstances. Information on a decision on the opening of winding-up proceedings shall be provided in the Lithuanian language. The document providing such information must be entitled “Proposal to Lodge a Claim. Terms of Lodgement” in all official languages of the European Union.
5. Requirements set in paragraph 4 of this Article for the language and title of provided information shall also be applied to the provision of information referred to in paragraph 3 of this Article.
6. A creditor of a bank who has his domicile or office in a host Member State of the European Union shall have the right to lodge claims in the official language or one of the official languages of that state, however, a translation into the Lithuanian language must be attached. In addition to lodging a claim, a creditor must also submit copies of the documents substantiating the claim (if any), specify the nature of the claim, date of arising thereof, amount and information on enforcement measures.
7. The liquidator (administrator) of a bank must timely and in an appropriate manner notify the bank’s creditors of the process of the winding up of the bank.
Article 93. Rights of Third Parties
1. A decision taken in the Republic of Lithuania or in another Member State of the European Union on the adoption of the measures restricting activities of a bank or a decision on the opening of winding-up proceedings shall not restrict the rights in rem of the bank’s creditors or third parties to the assets belonging to the bank by the right of ownership and situated, at the time of taking the mentioned decisions, in a Member State of the European Union other than the state in which the mentioned decisions have been taken. The right of third persons registered in the public register to acquire the right in rem referred to in paragraph 1 of this Article shall also be held the right in rem.
2. A decision taken in the Republic of Lithuania or in another Member State of the European Union on the adoption of the measures restricting activities of a bank or a decision on the opening of winding-up proceedings shall not restrict the rights of ownership of the seller of assets in respect of a bank purchasing assets where at the time of taking the mentioned decisions the assets were situated in a Member State of the European Union other than the state in which the said decisions have been taken.
3. A decision taken in the Republic of Lithuania or in another Member State of the European Union on the adoption of the measures restricting activities of a bank or a decision on the opening of winding-up proceedings may not be a basis for a bank selling its assets to terminate the contract of sale of the assets or not to comply with it and shall not restrict the rights of a purchaser of the assets to acquire the assets where at the time of taking the mentioned decisions the assets were situated in another Member State of the European Union other than the state in which the mentioned decisions have been taken.
4. A decision taken in the Republic of Lithuania or in another Member State of the European Union on the adoption of the measures restricting activities of a bank or a decision on the opening of winding-up proceedings shall not restrict the right of the bank’s creditors to set off their claims against the claims of the bank, where such a set-off is permitted by the laws regulating the bank’s claim.
5. The provisions of paragraphs 1-4 of this Article shall not restrict the right, according to the procedure set forth by laws of the Republic of Lithuania, to resolve through court issues on the voidness, voidability or unenforceability of the transactions violating the interests of a bank’s creditors.
6. The transactions referred to in paragraph 5 of this Article may not be considered void, recognised as voidable and unenforceable where the person concerned presents evidence that:
1) the law of another Member State of the European Union rather than that of the Republic of Lithuania is applicable to the said transaction, and
2) the law applicable to the said transaction does not provide for a possibility to dispute the said transaction in the case pending in court.
Article 94. Appointment of the Liquidator (Administrator)
1. A court of the Republic of Lithuania, upon appointing the liquidator (administrator) of a bank, must issue to him a copy of a decision on his appointment. A decision issued by an institution of another Member State of the European Union on the appointment of the liquidator (administrator) shall also be valid in the Republic of Lithuania, however, a translation of the decision into the Lithuanian language must be attached thereto. This translation need not be legalised.
2. The liquidator (administrator) of a bank appointed by a court of the Republic of Lithuania shall have the right to exercise the powers granted to him by laws of the Republic of Lithuania in all other Member States of the European Union. The liquidator (administrator) appointed by an institution of another Member State of the European Union shall have the right to exercise the powers granted to him by laws of the said Member State of the European Union in the Republic of Lithuania. The liquidators (administrators) referred to in this paragraph shall have the right to authorise other persons to exercise their functions in other Member States of the European Union.
3. The liquidator (administrator) of a bank appointed by a court of the Republic of Lithuania, when exercising his powers in another Member State of the European Union, and the liquidator (administrator) appointed by an institution of another Member State of the European Union, when exercising his powers in the Republic of Lithuania, must comply with the legal acts of the state wherein he exercises his powers, in particular the legal acts setting forth the procedure for the sale of assets and notification of the employees.
CHAPTER FOURTEEN
FINAL PROVISIONS
Article 95. Entry into Force of the Law
This Law shall enter into force on 1 May 2004.
Article 96. Application of the Law to Banks in Operation and Establishments of Foreign Banks
1. Where this Law sets stricter or additional requirements for banks in operation or for establishments of foreign banks compared with the legal acts in force prior to the entering into force of this Law and where, on the basis of these requirements, activities of a bank or an establishment of a foreign bank must be restructured, these requirements must be complied with within one year of the entering into force of this Law. Until activities of the bank are restructured in accordance with all requirements of this Law, the bank shall not have the right, according to the procedure set forth by this Law, to establish a branch or to provide financial services without establishing a branch in another Member State of the European Union.
2. The provisions of this Law regulating the reorganisation, restructuring, winding up and bankruptcy of banks shall be applied to the proceedings opened after the entering into force of this Law. The Law on Commercial Banks in force prior to the entering into force of this Law shall be applied to bank reorganisation, winding up and bankruptcy procedures where decisions on the reorganisation, winding up or bankruptcy of a bank were taken prior to the entering into force of this Law.
3. Where prior to the entering into force of this Law the supervisory institution has received applications for the granting of authorisations, they shall be examined and decisions shall be taken according to the procedure set forth by the legal acts in force at the time of submitting of an application.
4. Upon entering into force of this Law, it shall be held that the banks holding a bank licence and branches of the foreign banks licensed in states other than the Member States of the European Union, where the branches hold an authorisation granted by the Bank of Lithuania to operate in the Republic of Lithuania, shall have the right to provide all financial services, unless this right is restricted by the issued bank licence or authorisation to operate or unless this right is otherwise restricted prior to the entering into force of this Law. Upon entering into force of this Law, a licence or authorisation held by the banks holding a bank licence and branches of the foreign banks licensed in states other than the Member States of the European Union, where the branches hold an authorisation granted by the Bank of Lithuania to operate in the Republic of Lithuania, shall be replaced by a licence of a new format according to the procedure set forth and the time limits laid down by the supervisory institution without requiring additional documents.
5. Upon entering into force of this Law, branches of the foreign banks licensed in the Member States of the European Union, where the branches hold an authorisation granted by the Bank of Lithuania to operate in the Republic of Lithuania, shall have the right to provide financial services and shall be supervised in the same manner as the branches of foreign banks established pursuant to Article 20 of this Law, and the authorisation granted by the Bank of Lithuania to operate in the Republic of Lithuania shall become invalid. Where, taking account of the decisions taken by institutions of the European Union, legal acts of the supervisory institution do not provide otherwise, such a foreign bank licensed in a Member State of the European Union must, within six6 months of the entering into force of this Law, carry out the actions to ensure compliance with the provisions of paragraph 2 of Article 20 of this Law.
Article 97. Repealed Laws
Upon the entry into force of this Law, the following laws shall be repealed:
1) Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 2-33, 1995);
2) Law of the Republic of Lithuania Supplementing the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 107-2411, 1995);
3) Law Amending and Supplementing Article 34 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 19-495, 1996);
4) Law Amending Articles 40 and 47 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 41-989, 1996);
5) Law Amending and Supplementing Articles 2, 6, 7, 10, 11 and 14 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 57-1337, 1996);
6) Law Amending and Supplementing Articles 34 and 40 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 65-1535, 1996);
7) Law Amending and Supplementing Article 37 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 105-2397, 1996);
8) Law Amending and Supplementing Article 30 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 33-811, 1997);
9) Law Amending Article 31 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 64-1504, 1997);
10) Law Supplementing the Law of the Republic of Lithuania on Commercial Banks with Article 53(1) and Amending Articles 17, 37, 39, 40, 53 and 54 of the Law (Official Gazette, No 66-1595, 1997);
11) Law Amending Article 6 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 84-2092, 1997);
12) Law Amending Article 28 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 117-3004, 1997);
13) Law Amending and Supplementing Articles 6, 53 and 54 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 66-2119, 1999);
14) Law Amending Article 6 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 28-768, 2000);
15) Law Supplementing Articles 6 and 26 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 29-804, 2000);
16) Law Amending Articles 6, 7, 8 and 34 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 61-1836, 2000);
17) Law Amending Articles 2, 6, 7, 14, 18, 24, 27, 33 and 34 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 16-492, 2001);
18) Law Amending Articles 40 and 47 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 21-695, 2001);
19) Law Amending Article 53 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 23-761, 2001);
20) Law Amending Articles 6 and 8 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 28-896, 2001);
21) Law Amending Articles 10 and 11 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 39-1354, 2001);
22) Law Amending Articles 44, 46, 47, 53 and 53(1) of the Law of the Republic of Lithuania on Commercial Banks and Repealing Articles 50, 51 and 52 (Official Gazette, No 60-2140, 2001);
23) Law Amending Article 54 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 13-476, 2002);
24) Law Amending Article 31 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 33-1253, 2002);
25) Law Amending Article 1 of the Law Amending Article 54 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 65-2637, 2002);
26) Law Amending Article 53 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 65-2638, 2002);
27) Law Amending Article 14 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 38-1691, 2003);
28) Law Amending and Supplementing Article 46 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 61-2756, 2003);
29) Law Amending Article 34 of the Law of the Republic of Lithuania on Commercial Banks (Official Gazette, No 4-50, 2004).
I promulgate this Law passed by the Seimas of the Republic of Lithuania.
ACTING PRESIDENT OF THE REPUBLIC ARTŪRAS PAULAUSKAS
Annex to
the Republic of Lithuania Law on Banks
Section 1.02 EU LEGAL ACTS IMPLEMENTED BY THIS LAW
1. Seventh Council Directive 83/349/EEC of 13 June 1983 based on the Article 54 (3) (g) of the Treaty on consolidated accounts (OJ 2004 special edition, Chapter 17, Volume 1, p. 58).
2. Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (OJ 2004 special edition, Chapter 6, Volume 1, p. 157).
3. Council Directive 89/117/EEC of 13 February 1989 on the obligations of branches established in a Member State of credit institutions and financial institutions having their head offices outside that Member State regarding the publication of annual accounting documents (OJ 2004 special edition, Chapter 6, Volume 1, p. 213).
4. Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes (OJ 2004 special edition, Chapter 6, Volume 2, p. 252).
5. (Repealed as of 1 January 2012).
6. Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (OJ 2004 special edition, Chapter 6, Volume 4, p. 15).
7. Directive 2001/65/EC of the European Parliament and of the Council of 27 September 2001 amending Directives 78/660/EEC, 83/349/EEC and 86/635/EEC as regards the valuation rules for the annual and consolidated accounts of certain types of companies as well as of banks and other financial institutions (OJ 2004 special edition, Chapter 17, Volume 1, p. 245).
8. Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) (OJ 2006 L 177, p. 1), as last amended by Directive 2010/78/EU of the European Parliament and of the Council of 24 November 2010 (OJ 2010 L 331, p. 120).
9. Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions (recast) (OJ 2006 L 177, p. 201), as last amended by Directive 2009/111/EC of the European Parliament and of the Council of 16 September 2009 (OJ 2009 L 302, p. 97).
10. Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 amending Council Directive 92/49/EEC and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector (OJ 2007 L 247, p. 1).
11. Directive 2009/14/EC of the European Parliament and of the Council of 11 March 2009 amending Directive 94/19/EC on deposit-guarantee schemes as regards the coverage level and the payout delay (OJ 2009 L 68, p. 3).
