Official translation

Official translation Official translation REPUBLIC OF LITHUANIA LAW ON THE CENTRAL CREDIT UNION 18 May 2000 No. VIII-1682 Chapter ONE General Provisions Article 1. Scope of the Law 1. This Law shall establish the grounds for democratic co-operative activities of the Central Credit Union, terms and conditions of the membership in it, establishment, management, reorganisation and liquidation of the Central Credit Union, supervision of the activities thereof, as well as principles of activities of the Stabilisation Fund formed by the Central Credit Union to ensure the stability of activities of credit unions and to restore the impaired solvency thereof. 2. The purpose of this Law - to set up and put into effect a co-operative banking system in Lithuania. Article 2. Main Definitions Used in this Law 1. “Central Credit Union” means a credit institution organised on co-operative basis, established by credit unions of legal persons and the Government of the Republic of Lithuania or a body authorised by it, registered in the manner prescribed by this Law, functioning as a co-operative society. The Central Credit Union shall function on the basis of share capital and discharge the functions of the supporting of liquidity and restoration of solvency of credit unions, accept deposits and other repayable funds, provide loans and assume the risk and responsibility related to it, as well as, when discharging functions and performing operations established in Article 5 of this Law, engage in other activities specified by this Law. 2. “Credit union” means a credit institution organised on co-operative basis, established by natural persons or by natural persons together with public organisations, trade union organisations, religious communities associations, agricultural co-operatives registered in the Republic of Lithuania, and registered in the manner prescribed by the Law of the Republic of Lithuania on Credit Unions, which pools savings from its members and its associate members and clients with the aim of satisfying business and social needs of its members that are provided for in the bylaws of the credit union by making member loans and assuming related risks and responsibility. 3. “Associations of credit unions” means unions of credit unions, registered in the manner prescribed by law, which represent credit unions operating in Lithuania and express interests of their members. 4. “Licence” means a permit issued for the activities of the Central Credit Union by an institution carrying out the licensing of credit institutions and exercising the supervision of activities (hereinafter referred to as a supervisory body), to engage in the activities specified in the Bylaws and to perform all operations or parts thereof laid down in Article 5 of this Law. 5. “Main share” means share acquired by a member of the Central Credit Union, which grants him the right to have one vote during a general meeting of the members of the Central Credit Union - the supreme management body of the Central Credit Union, when resolving all the issues within the competence of the general meeting, established by Article 27 of this Law, and grants the right to get dividends. The minimum amount of main share of a member of the Central Credit Union - Litas 1 000. 6. “Additional shares” means shares acquired by the members of the Central Credit Union, which do not grant the right of vote, but which grant the right to get dividends. The amount of each share - Litas 1 000, and the number of acquired shares is not limited. 7. “Stabilisation Fund of Credit Unions” (hereinafter referred to as the Stabilisation Fund) means a fund formed in the manner prescribed by Article 23 of this Law, designated to ensure the stability and continuity of activities of credit unions, and functioning as the lender of last resort in order to restore the impaired solvency of a credit union. 8. “Capital of the Central Credit Union” means the sum total of the main and supplementary capitals. 9. “Main capital” means the sum of share capital, reserve capital and retained earnings (losses) of the previous year. 10. “Reserve capital” means deductions from the profit of the Central Credit Union. 11. “Supplementary capital” means the sum total of the Stabilisation Fund, received subordinated loans, if they correspond to the requirements established by the supervisory body, retained earnings (losses) of the current year, revaluation reserve of fixed assets, and other capitals and reserves provided for in the Bylaws of the Central Credit Union. 12. “Impaired liquidity of a credit union” means a condition when the liquidity of a credit union falls below the established liquidity ratio and when the composition of credit union assets and liabilities by maturity is partly mismatching for the coming months and therefore may impair the fulfilment of the obligations. 13. “Impaired solvency of a credit union” means a condition when a credit union does not comply with the capital adequacy ratio, as well as in the presence of indication that the assets of the credit union (at net value) may fall below its on and off-balance sheet liabilities. Article 3. The Status of the Central Credit Union The Central Credit Union shall be a legal person from the moment of its registration in accordance with the procedure established by this Law and shall operate in compliance with this Law, other laws and legal acts of the Republic of Lithuania, and its Bylaws. The provisions of the Law of the Republic of Lithuania on Co-operative Societies (Co-operatives) shall apply to the activities of the Central Credit Union to the extent that they are in compliance with the Law on the Central Credit Union. Article 4. Ownership of the Central Credit Union 1. The assets of the Central Credit Union, accumulated from the shares of its members, entrance fees as well received from its own activities shall belong to the Central Credit Union by right of ownership. 2. The resources of the Stabilisation Fund and the assets accumulated from the activities of this Fund shall also belong to the Central Credit Union by right of ownership. The resources and assets of the Stabilisation Fund shall, in the manner prescribed by this Law, be managed and used by the Stabilisation Fund Commission. Chapter TWO FUNCTIONS, Rights and Obligations of the Central Credit Union Article 5. Functions of Credit Unions 1. The Central Credit Union shall: 1) support liquidity of credit unions; 2) represent the interests of the credit unions-members of the Central Credit Union; 3) render a technical service to the Stabilisation Fund which is formed at the Central Credit Union; 4) adopt decisions related to the membership in the Central Credit Union; 5) take time and demand deposits from its members, associations of credit unions, public organisations, religious communities registered in the Republic of Lithuania, institutions authorised by the Government of the Republic of Lithuania and/or local authorities, charity (sponsorship) foundations and financial institutions of the Republic of Lithuania, international charity (sponsorship) foundations and financial institutions and/or such foundations and institutions of foreign states; 6) borrow money in the manner prescribed by the laws of the Republic of Lithuania; 7) grant loans, issue guarantees and render, in the manner prescribed by the Bylaws of the Central Credit Union, financial assistance to credit unions-members of the Central Credit Union; 8) invest free funds into securities issued of the Government of the Republic of Lithuania, securities issued by the Bank of Lithuania, and securities issued by the governments of the foreign states which have the highest rating (A group countries); 9) conduct clearing operations among its members and participate in clearing settlements operations through the settlements centre of the Bank of Lithuania and other clearing institutions; 10) participate in programmes and projects, initiated by various institutions of the Republic of Lithuania and other states, intended for credit institutions, and receive resources and assets related to such programmes and projects; maintain relations with similar international institutions or institutions of other states, represent credit unions of Lithuania therein, receive resources, technical and other assistance from the institutions, as well as the obligations related thereto; 11) monitor and, when necessary, examine credit unions-members of the Central Credit Union and provide information, proposals and recommendations to a supervisory body regarding the disclosed violations and non-compliance with the prudential requirements; 12) perform money transfer operations; 13) issue means of payment (payment cards, traveller’s checks, bills of exchange) and provide services thereto; 14) perform foreign exchange operations; 15) submit proposals and remarks on legal acts regulating the activities of credit unions; 16) consult credit unions and their associations; 17) organise the training of credit union staff on the issues of co-operative banking and provide methodical assistance to credit unions; 18) establish for the credit unions-members of the Central Credit Union forms and rules of unified standardised document processing, information systems, financial statements; 19) carry out other functions and operations, appropriate for credit unions, with which the Central Credit Union is tasked by its members at a general meeting, when approving the Bylaws of the Central Credit Union. 2. The operations and functions, specified in this Article, or the part thereof may be performed by the Central Credit Union, provided that it has been issued a licence by a supervisory body for the performance of the above operations and functions. Article 6. Rights of the Central Credit Union When performing the functions and operations laid down in Article 5 of this Law, the Central Credit Union shall have the right: 1) act as a temporary administrator and liquidator of credit unions in the manner prescribed by the Law on Credit Unions, the Bylaws of the Central Credit Union, and legal acts adopted by a supervisory body; 2) delegate representatives to general meetings of the credit unions-members of the Central Credit Union in a deliberative capacity; 3) have accounts in national and foreign currency in the settlements centre of the Bank of Lithuania, other banks in the manner prescribed by laws and other legal acts of the Republic of Lithuania; 4) have its own seal, change and use it at its own discretion; 5) buy or in other ways acquire property necessary for the maintenance and development of its activities as well as sell, lease, pledge the said property or dispose thereof in any other way; 6) conclude transactions and assume responsibilities which are in compliance with this Law, the Law on Credit Unions and other legal acts of the Republic of Lithuania; 7) issue, approve, receive and discount bills of exchange, checks, other payable liabilities; 8) conduct clearing operations among its members and participate in clearing settlements operations through the settlements centre of the Bank of Lithuania and other clearing institutions; 9) receive information form credit unions, necessary to carry out functions and operations of the Central Credit Union and the Stabilisation Fund; 10) reorganise or liquidate itself in accordance with the procedure established by this Law and other laws; 11) establish obligatory conditions to which a credit union must adhere when receiving financial assistance; 12) fix targeted contributions of the members of the Central Credit Union, the amount thereof, as well as the rates of fees for the services rendered; 13) determine its organisational structure; 14) pay interest on funds kept in the reserve to support liquidity and other accounts of the Central Credit Union under a deposit or bank account agreement; 15) take interest on loans and receive fees for the services rendered; 16) enjoy other rights provided for in this Law and other legal acts. Chapter THREE Members OF the CENTRAL Credit Union, THEIR REGISTRATION, Rights and Duties Article 7. Members of the Central Credit Union 1. Founders of the Central Credit Union and other credit unions which join it after its establishment shall be members of the Central Credit Union. 2. Founders of the Central Credit Union shall become its members following the registration of the Central Credit Union in the manner prescribed by laws. 3. A person shall become a member of the Central Credit Union only when the Board of the Central Credit Union satisfies the person’s application to join the Central Credit Union, and when the person buys out one of the additional shares possessed by the Government or an institution authorised by it. This share shall become the main share of a member of the Central Credit Union. When the Government or an institution authorised by it sells all the additional shares possessed by it, as well as one main share possessed by it, a new member of the Central Credit Union shall join it after he buys out a new main share of the Central Credit Union. Article 8. Registration of Members of the Central Credit Union 1. Members of the Central Credit Union must be registered in the Register of the Members of the Central Credit Union which is kept by the Board of the Central Credit Union. The following information must be recorded in the Register: the name of a credit union and the Government or an institution authorised by it, code, address, date of admission, the amount of the share paid and the payment procedure, other contributions fixed by the Bylaws of the Central Credit Union and the amount of contributions paid. 2.A credit union shall be registered upon the submission to the Board of the Central Credit Union of an application to become a member of the Central Credit Union, other documents required by the Board of the Central Credit Union, payment of the main share and satisfying the application by the Board of the Central Credit Union. Article 9. Rights and Duties of a Member of the Central Credit Union 1. A member of the Central Credit Union shall have the following rights: 1) to appoint its representative to attend general meetings of the members of the Central Credit Union and to have one vote during voting. A representative of the member of the Central Credit Union may elect and be elected to the bodies of management and control of the Central Credit Union; 2) to obtain information about the activities of the Central Credit Union and the Stabilisation Fund, their financial-economic condition and assets and to request that the Central Credit Union present for familiarisation or for copying the annual and intermediate financial accounts, reports of the Board concerning the activities of the Central Credit Union and the Stabilisation Fund, minutes of general meetings. Other documents may be presented to the member of the Central Credit Union, provided that they contain no secrets the divulging whereof would inflict material damage to the Central Credit Union, the Stabilisation Fund or the members of the Central Credit Union. It shall be prohibited to refuse access to the information due to other reasons. The refusal to present the required documents must be executed in writing, if that is requested by a member of the Central Credit Union. Disputes concerning the member’s right of access to information shall be settled in court; 3) to appeal in court against the resolutions of a general meeting of the Central Credit Union and other management bodies of the Board; 4) to have additional shares in the Central Credit Union; 5) a credit union-member of the Central Credit Union shall have the right to receive from the Central Credit Union and the Stabilisation Fund loans, guarantees, as well as other financial assistance provided for in this Law, in the manner and under conditions established by this Law, the Bylaws and contracts of the Central Credit Union; 6) to keep time and demand deposits in the Central Credit Union; 7) to receive the share of profit distributed among the members dividend in proportion to the amount of the main and additional shares possessed by the member in the Central Credit Union; 8) to make use of other services rendered for credit unions under the conditions specified in the Bylaws and this Law; 9) to receive a portion of assets of the Central Credit Union in liquidation in proportion to the amount of his shares; 10) to cancel membership in the Central Credit Union only after the intention to cancel membership has been announced in the Informaciniai pranešimai, annex to the Valstybės žinios, and written consents concerning the request for cancelling membership has been received from the creditors of this credit union - the Central Credit Union and the credit unions-members of the Central Credit Union. Resources and shares of the withdrawing credit union, which are kept in the Central Credit Union’s reserve to support liquidity and deposits shall be returned in the manner and under the conditions prescribed by the Bylaws of the Central Credit Union. 2. The Central Credit Union’s Bylaws may also provide for other rights of members which are in compliance with the laws of the Republic of Lithuania. 3. A representative of the credit union-member of the Central Credit Union shall have no right to vote when the issue of the granting of a loan to the credit union of such representative or rendering of financial assistance to this credit union is being resolved by the general meeting, the Board or the Stabilisation Fund Commission, and in other cases provided for in the Bylaws when the credit union-member of the Central Credit Union and his representative have a direct interest in the results of a resolution. 4. A member of the Central Credit Union must: 1) pay a share and other targeted contributions in the manner and within the time limits established by the Bylaws of the Central Credit Union; 2) act in compliance with the Bylaws of the Central Credit Union, participate in the activities of the Central Credit Union. 5. A credit union-member of the Central Credit Union must: 1) fulfil the obligations of the credit union to the Central Credit Union and carry out the resultions of the management and control bodies of the Central Credit Union; 2) duly and timely carry out loan, deposit and other agreements concluded with the Central Credit Union; 3) keep funds only in the Central Credit Union according to deposit or bank account agreements, except the cases when the Board of the Central Credit Union issues a consent for the keeping of such funds in other concrete banks; 4) receive a consent of the Board of the Central Credit Union, if it wishes to borrow or take deposits directly from other credit unions or banks; 5) keep a part of the funds on the account opened for supporting liquidity in the Central Credit Union, under the conditions specified in Article 22 of this Law; 6) buy out additional shares possessed by the Government or an institution authorised by it in the Central Credit Union in accordance with the conditions and manner established by the Founding Agreement of the Central Credit Union and other agreements between the Government or an institution authorised and the Central Credit Union. 6. If a representative authorised by the credit union to participate in the management or control bodies of the Central Credit Union withdraws or is expelled from his credit union, he must resign or be removed from the position of a representative of a general meeting, a member of the Board of the Central Credit Union, a member of the Stabilisation Fund Commission, and may not carry out his functions in the bodies of the Central Credit Union. Article 10. Termination of Membership in the Central Credit Union 1. Membership of the credit union-member of the Central Credit Union shall be terminated upon the liquidation or reorganisation of the credit union in the cases laid down in the Law on Credit Unions of the Republic of Lithuania, as well as upon the withdrawal of the credit union from the Central Credit Union in the manner prescribed by subparagraph 10 of paragraph 1 of Article 9 of this Law. 2. The membership of the Government or an institution authorised by it - member of the Central Credit Union - in the Central Credit Union, shall be terminated upon purchase of the Government shares belonging to it. Chapter FOUR Establishment and liquidation of the Central Credit Union Article 11. Minimum Main Capital 1. The minimum main capital of the Central Credit Union shall be Litas 5 million. 2. The main capital of the Central Credit Union must be registered with the supervisory body; however, its amount may not be less than the amount fixed in paragraph 1 of this Article. Article 12. Establishment and Founders of the Central Credit Union 1. The Central Credit Union shall be established for an unlimited period of time. 2. Expenses related to the establishment of the Central Credit Union shall be covered from contributions and shares of founders. Contribution of each founder shall be proportionate to the amount of shares paid by the founder in the form of money and contributions in kind. During the establishment all shares shall be paid only by the founders in the form of their contributions in cash and in kind. 3. A founder of the Central Credit Union may be any credit union registered in the Republic of Lithuania. 4. According to this Law, the Government or an institution authorised by it shall be one of the founders of only one Central Credit Union established in the Republic of Lithuania. 5. The Central Credit Union may be established by at least 20 credit unions. 6. A credit union may be a founder, if in course of the joining of the Central Credit Union no sanctions provided for in the Law of the Republic of Lithuania on Credit Union have been applied to such credit union and if it complies with all the prudential requirements of a credit union. 7. Each founder, except the Government or an institution authorised by it, must, in course of the establishment of the Central Credit Union, acquire and pay for one main share in the amount of Litas 1 000, which is paid with contributions in cash. 8. The Government or an institution authorised by it - a founder of the Central Credit Union - must , in course of the establishment of this Union, acquire one main share in the amount of Litas 1 000 which is paid with contributions in cash, and 5 299 shares in the amount of Litas 1 000 each, which may be paid with contributions in cash and (

1. or)in kind. Contributions in kind may not exceed 10 per cent of the value of all the shares acquired by the Government. 9. The Government or an institution authorised by it - a member of the Central Credit Union - shall, within one year from the establishment and registration of the Central Credit Union, acquire 4 000 additional shares in the amount of Litas 1 000 each, or grant the Central Credit Union a medium-term subordinated loan on preferential terms. 10. Until the Central Credit Union is granted with a licence: 1) its founder shall be prohibited from selling or transfer in any other way to any other persons a part of share capital of the Central Credit Union or (and) the right to vote, acquired by him and established by a founding agreement; 2) it shall be prohibited from issuing new shares and accepting new members or otherwise changing the amount of share capital or composition of founders, as established in a founding agreement. 11. When establishing the Central Credit Union, the founders shall be represented by the representatives authorised by them. Article 13. Founding Agreement of the Central Credit Union 1. The founders shall conclude a founding agreement of the Central Credit Union in which the following must be stated: 1) the name of the Central Credit Union; 2) the founders and their addresses; 3) the registered office of the Central Credit Union, which must be located in the Republic of Lithuania; 4) the rights and duties of the founders while establishing the Central Credit Union and responsibility for failure to perform their obligations; 5) a person (persons) authorised by the founders to conclude transactions and to perform other deeds related to the establishment of the Central Credit Union; 6) the amount of contributions in cash and in kind of each founder, as well as the dates of payment of theses shares and transfer of contributions in kind, and the procedure for the temporary use of contributions in cash (resources) during the establishment of the Central Credit Union; 7) the amount of contributions of the founders, the procedure of payment and use thereof, the procedure for compensating expenses related to the establishment and the writing-off of such expenses at the founders’ cost; and 8) the procedure for settling disputes between the founders. 2. The founding agreement shall be signed by all the representatives of the founders. The agreement must be confirmed with seals of the founders. The agreement concluded in such manner shall grant the right to open accumulating accounts with the Bank of Lithuania or (and) other bank registered in the Republic of Lithuania. 3. The founders must, prior to a statutory meeting, record all the legal persons, who have contributed (transferred) a share of the Central Credit Union under the establishment, in the register of members. 4. Minimum share capital must be accumulated and shares of the founders must be paid up prior to the statutory meeting. 5. Prior to the statutory meeting, any founder who has been authorised by other founders shall have the right to conclude transactions regarding the Central Credit Union under the establishment from the funds consisting of establishment contributions. Said transactions shall create obligations for the Central Credit Union after the approval thereof by the statutory meeting. In the event that the statutory meeting refuses to approve the transactions, the founders who have concluded them shall be liable for the obligations arising from said transactions. On the recommendation of a founder, the statutory meeting of the Central Credit Union may transfer to the Central Credit Union the obligations arising from the transactions created by a founder in his own name and reimburse the founders for their expenses related to the establishment of the Central Credit Union. Article 14. Statutory Meeting of the Central Credit Union and Statutory Report 1. The founders of the Central Credit Union must call a statutory meeting no later than within 4 months of the day of signing of the founding agreement. 2. The statutory meeting shall: 1) consider and approve the Bylaws of the Central Credit Union; 2) elect members of management bodies for the first term of four-year office, and renew not less than half of the management body members every two years; 3) approve the statutory report; 4) resolve other issues within the competence of the general meeting. 3. The statutory meeting must be attended by the representatives of at least 2/3 of the founders registered in the register of members. 4. The statutory meeting shall be presided over by a representative of the Government or an institution authorised by it. 5. Minutes must be kept of the statutory meeting. The minutes shall be signed by the chairperson and the secretary. 6. The founders must, no later than within 7 days from the day of the statutory meeting, hand over to the elected Board the founding documents of the Central Credit Union and transfer all the acquired assets thereto. 7. The founders of the Central Credit Union must draw up a statutory report and present it to the statutory meeting for approval. The following must be stated in the statutory report: 1) establishment costs and duly substantiation thereof; 2) the number and amount of shares paid up by the founders; 3) the number and amount of additional shares paid up (transferred) by each founder; 4) the obligations arising from the transactions which are transferred by the founders to the Central Credit Union. Article 15. The Staff and Technical Preparedness of the Central Credit Union The licence to engage in the activities shall be issued to the Central Credit Union when the Central Credit Union is prepared for it: 1) book entries, financial accounting, transfer, clearing operations are computerised; 2) internal control system is applied; 3) presence of the staff meeting the requirements established by the supervisory body; 4) possession of technical, information, technological, physical security ensuring measures and the facilities appropriate for the activities, insured property; 5) presence of the management structure and systems, as well as the proper technical personnel. Article 16. Legalisation of the Activities of the Central Credit Union 1. The registered the Central Credit Union may carry out its functions and render all financial services or a part thereof as provided for in Article 5 of this Law, only upon having been issued a licence by the supervisory body. 2. In addition to the case specified in paragraph 1 of this Article, permission of the supervisory body must also be necessary: 1) to register amendments of the Bylaws in the cases provided for in this and other laws; 2) to reorganise the Central Credit Union; 3) to liquidate the Central Credit Union; 4) to initiate bankruptcy proceedings against the Central Credit Union; 5) to establish branches, representative offices or other divisions which do not have the rights of a legal person and are located in the place of the Republic of Lithuania other than the registered address of the Central Credit Union; 6) to terminate all or a part of the operations for the performance of which a licence is issued, or to transfer the rights to conduct such operations to other persons. 3. The conditions and procedure for the issuance to the Central Credit Union of the permits and licences referred to in paragraphs 1 and 2 of this Article shall be established by this Law and legal acts of the supervisory body. Article 17. Bylaws of the Central Credit Union 1. Bylaws shall be a legal document governing the activities of the Central Credit Union. The Bylaws shall be drawn up by the founders of the Central Credit Union and approved at the statutory meeting. The Bylaws shall be signed by the representatives of all founders of the Central Credit Union. Their signatures shall be confirmed by the founders’ seals. 2. The Bylaws must state: 1) the full name of the Central Credit Union and, if necessary, the abbreviated name; 2) the registered address of the Central Credit Union; 3) the purpose and principles of the establishment; 4) the type of activities (support liquidity and restore the impaired solvency, take deposits and other payable funds, grant loans and assume the risk related thereto, other types of co-operative banking services and other activities); 5) rights and duties of the members; 6) the grounds and procedure for entrance of, withdrawal and expulsion from the Central Credit Union, as well as the termination of the membership; 7) the management structure of the Central Credit Union; 8) the composition and accumulation of capitals of the Central Credit Union; the number of additional shares of the Government, the procedure for the buying-out of such shares and assigning them to other members of the Central Credit Union; 9) the procedure for the formation, paying-up (transfer) of the main share and additional shares, as well as the assignment of additional shares; 10) the competence of general meetings, the procedure for convocation of the meetings and their voting rules; 11) the procedure for electing the Supervisory Board, the Board, the Stabilisation Fund Commission, the Auditing Commission, their competence limits; the procedure for electing the heads of such bodies, their rights and responsibility; 12) the procedure for the formation of the reserve to support liquidity of credit unions, the Stabilisation Fund, use of resources and disposal thereof; 13) the procedure of profit and loss approval, the procedure for the distribution of profit and compensation for losses; 14) the procedure for drawing up, checking, auditing and approving the accounts; 15) the procedure of the reorganisation and liquidation of the Central Credit Union; 16) the procedure for communicating the announcements of the Central Credit Union; and 17) information which is classified secret by the Central Credit Union. 3. The Bylaws may also include other provisions regulating the activities of the Central Credit Union and determining property and other relations of the members as well as the relations between the Central Credit Union and third persons, provided that the above provisions are in compliance with this Law and other laws of the Republic of Lithuania. Article 18. Permission to Establish the Central Credit Union 1. A permit to establish the Central Credit Union shall be granted only when the Central Credit Union in process of establishment is in compliance with the requirements of this Law regarding the organisational form (type of a company) of an institution, legal status, founders, main capital. 2. The persons authorised by the founders of the Central Credit Union shall present an application to the supervisory body concerning the permission to establish the Central Credit Union. The following shall be appended to such application: 1) founding agreement; 2) minutes of the statutory meeting and the list of the participants; 3) the Bylaws of the Central Credit Union in process of establishment; 4) document confirming that the founders have paid up (transferred) the shares mandatory in accordance with this Law, as well as other fix contributions, and have accumulated adequate capital of the Central Credit Union in process of establishment; 5) information on the legal status of the founders and identification documents; 6) certificate of the registration of the name of an institution in process of establishment; and 7) receipt for payment of a stamp duty. Article 19. Registration of the Central Credit Union Upon being issued by the supervisory body the permit to establish the Central Credit Union, the founders of the Central Credit Union shall register it in compliance with the procedure established by the Law of the Republic of Lithuania on the Register of Enterprises. Article 20. Licence for the Activities of the Central Credit Union 1. A licence to engage in the activities of the Central Credit Union shall, by application of the said credit institution, be issued by a supervisory body in accordance with the procedure established by it. 2. The application must indicate the types of activities of the Central Credit Union and the operations for the carrying-out of which a licence is sought. The application must also specify the address of the registered office and the official name. 3. The following must be presented by the Central Credit Union together with the application: 1) the Bylaws of the Central Credit Union and the certificate of registration; 2) documents confirming that the pecuniary part of the main capital of the Central Credit Union has been paid in the established manner, and the balance of the main capital funds which have not been used to cover the establishment expenses is not less than the amount of the minimum main capital fixed in paragraph 1 of Article 11 of this Law; 3) the list of the founders; 4) the list of its heads the election or appointment whereof is subject to granting of permission by a supervisory body, as well as information on such persons in the form and of the content as established by a supervisory body; 5) an business plan for the first three years and documents confirming that the staff meeting the requirements established by a supervisory body, as well as adequate technical preparedness are present to ensure sound activities of a credit institution; 6) documents confirming the description of organisational structure, management scheme, competence of the heads of the management bodies; 7) information that the Central Credit Union has the system of the information accumulation, processing and furnishing, which meets the requirements; 8) detailed description of accounting system; 9) information that it has been prepared to directly carry out money-transfer operations through the system of mutual settlements of banks, which operates in the Republic of Lithuania, as well as the confirmation of auditors of certified information systems that the information system used for this purpose is protected from hackers; 10) information that there is a possibility to render services related to money transfer in foreign currency, carrying out them directly through international settlements and (
2. or)clearing systems or indirectly - through another credit institution; and 11) permission of other credit institutions to render other financial services which are not characteristic of a credit institution, if the laws require so. 4. The Central Credit Union may start carrying out its functions and render a part or all financial services laid down in its Bylaws only upon receipt of a licence from a supervisory body to engage in the activities of a credit institution and announcement thereof in the Informaciniai pranešimai, annex to the Valstybės žinios. Article 21. Liquidation of the Central Credit Union 1. The Central Credit Union may be liquidated on the following grounds: 1) by resolution of the general meeting of the Central Credit Union adopted upon the recommendation of the supervisory body; 2) the main capital of the Central Credit Union has fallen below the minimum level set out in paragraph 1 of Article 11 of this Law and it has not been re-established by the time limit fixed by the supervisory body, and there is no proposal of the said supervisory institution to reorganise the Central Credit Union; 3) the minimum number of the members of the Central Credit Union, specified in paragraph 5 of Article 12 of this Law, has decreased and it has not been re-established by the time limit fixed by the supervisory body, and there is no proposal of the said supervisory institution to reorganise the Central Credit Union; 4) the court’s ruling to liquidate the Central Credit Union has come into effect. 2. The procedure for the liquidation of the Central Credit Union shall be established by its Bylaws, this and other laws of the Republic of Lithuania, as well as by legal acts of the supervisory body. 3. The body which has adopted the ruling to liquidate the Central Credit Union, shall appoint a liquidator. The candidature of a liquidator shall be submitted by the supervisory body. 4. After the appointment of the liquidator, the Central Credit Union shall acquire the status of a credit institution under liquidation, its functions shall be carried out by the liquidator, and the management bodies of the Central Credit Union shall lose their powers. When discharging his functions, the liquidator shall: 1) inform the institution which has registered the Central Credit Union and the supervisory body about the change in the status of the Central Credit Union, and its data; 2) announce publicly in the press 3 times, at no shorter than 2-month intervals about the liquidation of the Central Credit Union, or each member and creditor of the Central Credit Union shall be personally notified about this in writing; 3) represent the Central Credit Union in liquidation in court, as well as when maintaining contacts with State government and administration institutions and other legal and natural persons; 4) perform other functions assigned by laws. 5. The liquidation procedure of the Central Credit Union shall be carried out in accordance with this Law and other laws and legal acts of the Republic of Lithuania, regulating credit institution liquidation. 6. Documents of the liquidated the Central Credit Union shall be safeguarded in accordance with the procedure established by legal acts of the Republic of Lithuania. 7. The reorganisation of the Central Credit Union provided for in subparagraphs 2 and 3 of paragraph 1 of this Law may be carried out only upon the coming into force of the amendments and supplements of this Law, regulating the reorganisation of the Central Credit Union. Chapter FIVE SUPPORT OF LIQUIDITY OF Credit UnionS AND RESTORATION OF IMPAIRED SOLVENCY Article 22. Support of Liquidity of Credit Unions - Members of the Central Credit Union 1. Credit unions - members of the Central Credit Union must, in the account opened with the Central Credit Union especially for that purpose, keep funds which would constitute not less than the per cent, established by the general meeting of the members of the Central Credit Union, of all the received time and demand deposits in Litas and foreign currency in the credit union. The procedure for keeping, supplementing and returning funds and the interest rate shall be established by the Board of the Central Credit Union, on the basis of the requirements of the programme on support of liquidity of credit unions, as approved by the general meeting of the members. 2. The funds specified in paragraph 1 of this Article shall comprise the reserve of support of liquidity of credit unions. They shall be included into the accounting as targeted funds and used for the purpose of support of liquidity of credit unions. 3. Credit unions which joined the Central Credit Union must within one year transfer funds to the reserve of support of liquidity of credit unions. 4. The Central Credit Union shall provide loans for support of liquidity to the credit unions - members of the Central Credit Union for the period not exceeding six months. By decision of the Board, the term of loan may be prolonged for the period not exceeding another six months, establishing the conditions of loan renewal and repayment as well as measures to ensure the repayment of a loan in the contract. 5. Loans to support liquidity of credit unions may be provided when the liquidity of a credit union falls below the established liquidity ratio and when the composition of credit union assets and liabilities by maturity is partly mismatching for the coming months and therefore may impair the fulfilment of the obligations. 6. Terms of the repayment of loans provided for support of liquidity of credit unions as well as interest rates shall be established by the Board of the Central Credit Union, on the grounds of subparagraph 7 of paragraph 2 of Article 27 of this Law. 7. The sum of loans provided for support of liquidity of a credit union may not exceed 60 per cent of the liabilities of this credit union in Litas and foreign currency, and 5 per cent of the funds and other assets of the Central Credit Union. 8. The provided loan shall be extended in a lump sum or instalments according to the needs. When submitting an application for a loan for support of liquidity, the credit union must also present calculations in support of the repayment of a loan. The repayment of a loan must be guaranteed by at least one measure, provided for in the Civil Code of the Republic of Lithuania, to ensure the performance of obligations. Article 23. Stabilisation Fund 1. The Stabilisation Fund shall be formed in the Central Credit Union. The Stabilisation Fund Commission shall have the exclusive rights to manage it. The said Commission shall be set up and function in accordance with the procedure established by Article 26, subparagraph 8 of paragraph 2 of Articles 27, Articles 35, 36 and 37 of this Law. The Stabilisation Fund shall function as the lender of last resort in order to restore the impaired solvency of credit unions - members of the Central Credit Union. 2. The resources of the Stabilisation Fund shall be calculated and kept in a separate account. 3. The amount of the Stabilisation Fund must be not less than 1 per cent of the assets of all credit unions - members of the Central Credit Union and not less than the amount of assets attributed on average to one member at the end of a fiscal year. This amount shall be received dividing general assets of credit unions - members of the Central Credit Union by the number of the credit unions - members of the Central Credit Union. The amount of the Stabilisation Fund shall be recalculated at the intervals fixed by the Stabilisation Fund Commission. 4. The contribution of a credit union - a member of the Central Credit Union to the Stabilisation Fund shall be the expenses of the credit union. 5. The initial Stabilisation Fund shall be formed from the money of the Government of the Republic of Lithuania - member of the Central Credit Union or an institution authorised by it, and shall not be subject to repayment. The amount of such Fund must not be less than Litas 700 000. 6. Other resources of the Stabilisation Fund shall comprise: 1) obligatory contributions of the credit unions - members of the Central Credit Union which are in proportion to the assets of the credit unions. The procedure and terms of contributions to the Stabilisation Fund shall be established by the Stabilisation Fund Commission; 2) income received from the investment of free resources of the Stabilisation Fund in securities of the Government of the Republic of Lithuania, securities of the Bank of Lithuania, as well as securities of the governments of the foreign states which have the highest rating (A group countries); 3) targeted contributions from the profit of the Central Credit Union, designated for the Stabilisation Fund; 4) resources received from credit union associations, sponsorship funds, international financial institutions and Government targeted programmes; 5) taken-over property for the non-performed obligations of a credit union. 7. The resources of the Stabilisation Fund shall, in a manner prescribed by this Law, be managed, disposed of by the Stabilisation Fund Commission. The said Commission shall be liable for the rational, effective and proper use of the resources. 8. Resources from the Stabilisation Fund may be provided to credit unions in the form of loans, in compliance with the provisions of paragraph 13 of Article 2, Articles 35 and 36 of this Law and the procedure established by the Stabilisation Fund Commission. Article 24. Settlement with Credit Unions - Members of the Central Credit Union in the Event of Their Liquidation Upon the announcement of the bankruptcy procedure in a prescribed manner and the announcement of the liquidation of a credit union, this credit union shall acquire the right of claim over the assets of the Central Credit Union, which does not exceed the sums paid (transferred) by it to shares, the reserve of support of liquidity of credit unions, taking into consideration the obligation of the credit union to the Central Credit Union. CHAPTER SIX Management of the Central Credit Union and Control of its Activities Article 25. Basis of Management of the Central Credit Union The Central Credit Union shall be managed on co-operative basis: one member - one vote. Article 26. Management Bodies of the Central Credit Union 1. Bodies of management of the Central Credit Union shall be the general meeting, the Supervisory Board, the Board and the Stabilisation Fund Commission. Only representatives authorised by credit unions and representatives appointed by the Government of the Republic of Lithuania or an institution authorised by it - founders of the Central Credit Union, may be members of the management bodies of the Central Credit Union. 2. The Board of the Central Credit Union shall form the Administration in accordance with the procedure established by Article 39 of this Law, and shall delegate to the Administration the functions relating to the implementation of the representation and decisions provided for in subparagraphs 2 and 6 of paragraph of Article 34 of this Law. Until the formation of the Administration, the functions thereof shall be fulfilled by the Board of the Central Credit Union. Article 27. General Meeting of the Members of the Central Credit Union 1. General meeting of the members of the Central Credit Union (hereinafter referred to as general meeting) shall be the supreme management body of the Central Credit Union. 2. It shall be within the exclusive competence of the general meeting to: 1) approve, amend and supplement the Bylaws of the Central Credit Union; 2) admit credit unions into the Central Credit Union and terminate their membership; 3) approve the statutory report of the Central Credit Union; 4) change the amount of entrance fee; 5) elect and remove from office members of the Supervisory Board, the Board, the Stabilisation Fund Commission and Auditors’ Commission, as well as chairpersons of such bodies; 6) consider complaints and proposals of the Central Credit Union members and their representatives concerning the work of the Supervisory Board, the Board and the Stabilisation Fund Commission; 7) establish main principles of support of liquidity of credit unions and approve a programme of the implementation of such principles, as well as the per cent of resources kept in the reserve of support of liquidity of credit unions, as fixed in paragraph 1 of Article 22 of this Law; 8) establish principles of the foundation and use of the Stabilisation Fund; 9) establish principles of the payment of interest for the resources kept in the Central Credit Union and principles of the provision of loans, as well as principles of reliable investment of free resources of the Stabilisation Fund; 10) fix salaries of the members of the Auditors’ Commission and annual payments (premiums) from profit for the members of the management bodies of the Central Credit Union, if this is provided for in the Bylaws of the Central Credit Union; 11) establish the limit of funds that may be allotted as remuneration for the work of an independent auditor of financial accounting; 12) approve an annual plan of the activities of the Central Credit Union and an annual estimate of income and expenditures; 13) approve the annual accounts of the Central Credit Union , adopt a resolution concerning the procedure of the distribution of profit and compensation for losses; 14) resolve issues related to an increase and reduction of the core capital; 15) adopt a resolution to reorganise or liquidate the Central Credit Union in the cases laid down in Article 21 of this Law; 16) evaluate the reports of the bodies of management of the Central Credit Union and the Auditors’ Commission; 17) during the meeting, if requested by the Board or the Stabilisation Fund Commission, resolve their issues; and 18) resolve other issues reserved for the competence of the general meeting by the Bylaws of the Central Credit Union. Article 28. Grounds for Calling the General Meeting 1. General meetings shall be called by the Board of the Central Credit Union. 2. The right of initiative to call an extraordinary general meeting shall belong to the Supervisory Board, the Board, the Stabilisation Fund Commission or a group of no less than 1/2 of the members of the Central Credit Union. An extraordinary general meeting must be called if: 1) the Central Credit Union is not in the position to satisfy its financial liabilities or is declared insolvent; 2) it is requested by the members of the Central Credit Union who have the right of initiative, or the Supervisory Board, or the Board, or the Stabilisation Fund Commission; 3) the number of the members of the Board of the Central Credit Union has become less than it is fixed in the Bylaws of the Central Credit Union or in the Law on the Central Credit Union, and there are no possibilities to replace the missing Board members with the elected candidates; 4) a regular general meeting has not been called within 3 months of the end of the business year and at least one member of the Central Credit Union appealed to court for this reason; 5) the initiators of an extraordinary general meeting appeal to court upon the failure of the Board to call such a meeting within the time period set out in paragraph 1 of Article 30 of this Law. Article 29. Quorum of the General Meeting and Adoption of Resolutions 1. The general meeting may adopt resolutions if it is attended by more than 1/2 of representatives of all the members of the Central Credit Union. If the meeting does not have a quorum, a repeat meeting must be called, which shall have the right to adopt even without the quorum resolutions on all the issues on the agenda of the meeting which has been convoked but not held. 2. Representatives of the members of the Central Credit Union attending the general meeting shall be registered by signing in the register list which shall be signed by the presiding officer and the secretary of the meeting. Head of the Administration may attend the meeting in a deliberative capacity. A member of the Central Credit Union who is not attending the general meeting but who has familiarised himself with the agenda and the draft resolution may inform the general meeting in writing whether he is “for” or “against” it. Such communications shall be included in the quorum of the meeting and added to the voting results, but only of that issue on which the member voted in writing. 3. Voting at the general meeting shall be open. Secret voting shall be held provided 1/4 of representatives of the members of the Central Credit Union attending the meeting so request. 4. Resolutions of the general meeting by a simple majority vote. In the cases provided for in subparagraphs. 1, 2, 3, 4, 14 and 15 of paragraph 2 of Article 27 of this Law, the adoption of resolutions shall require 2/3 of votes of those attending the meeting. 5. The minutes of the general meeting shall be signed by the presiding officer, the secretary and at least one representative authorised by the general meeting. The list of members attending the meeting must be attached to the minutes and if the voting was in writing, the ballot papers must be attached as well, and kept till the end of the next general meeting. Article 30. Procedure and Time Limits for Convening of General Meetings 1. A regular general meeting shall be convened by the Board of the Central Credit Union every year, but no later than within 3 months after the close of a business year. The Board must notify about a general meeting according to the procedure established by the Bylaws of the Central Credit Union and at least 20 days in advance of the date on which the meeting is to be held. 2. The persons who request that an extraordinary meeting be called, shall submit an application to the Board, indicating the reasons and objectives for calling such a meeting and a draft agenda thereof. Upon receipt of an application, the Board must, within 10 days from the submission of the application, notify the members of the Central Credit Union about the calling of an extraordinary general meeting and no later than within 20 days of the announcement thereof, convene said meeting. 3. A repeat general meeting of the Central Credit Union must be called within 10 days of the day of the meeting which failed to be convened and the members of the Central Credit Union must be notified thereof at least 5 days in advance of the repeat meeting. 4. A general meeting may be called without observing the above time requirements, provided that all the members of the Central Credit Union give their consent thereto and confirm in writing this fact to the Central Credit Union. 5. The notice about the general meeting must specify: 1) the place, date and time of the meeting; and 2) the agenda of the meeting and draft resolutions. 6. The members of the Central Credit Union must be given the opportunity to familiarise themselves with the documents relating to issues on the agenda of a planned meeting at least 5 days prior to the meeting. 7. The presiding officer of a general meeting shall each time be elected from representatives of the members of the Central Credit Union, and until his election, the meeting shall be presided over by the chairman of the Board unless the Bylaws of the Central Credit Union provide otherwise. 8. A general meeting shall not have the right to adopt resolutions on the issues which are not on the agenda, if it is attended by less than 2/3 of representatives of the members of the Central Credit Union. Only the agenda of a meeting which failed to take place shall be valid at the repeat meeting. Article 31. The Supervisory Board of the Central Credit Union 1. The Supervisory Board is the body supervising the legality and expediency of the activities of the Central Credit Union. 2. The number of the members of the Supervisory Board, which may not be less than 3 and no more than 9, shall be prescribed by the Bylaws of the Central Credit Union. The Supervisory Board and its Chairperson shall be elected for a term of 4 years by the general meeting which shall every 2 years renew not less than half of the members. 3. A member of the Board of the Central Credit Union, a member of the Stabilisation Committee or an auditor may not be members of the Supervisory Board. A member of the Supervisory Board may not assign or delegate his functions to other persons. 4. The members of the Supervisory Board may be given bonus payments for their activities, if it is provided for in the Bylaws of the Central Credit Union. Article 32. The Powers of the Supervisory Board 1. The Supervisory Board shall: 1) observe and analyse the activities of the Central Credit Union, its Board and the Stabilisation Fund Commission, the accumulation and utilisation of financial resources, remuneration for work, and financial condition; 2) present to the general meeting the report on the work done by the management bodies of the Central Credit Union, along with its findings and proposals; 3) warn the Board of the Central Credit Union , the Stabilisation Fund Commission and (
3. or)the Administration that they should immediately eliminate violations of activities in the Central Credit Union , or notify the general meeting thereof; it may also propose to the general meeting to terminate the powers of the members of the Board and the Stabilisation Fund Commission who, in the opinion of the Supervisory Board, have violated this Law, other legal acts, the Bylaws of the Central Credit Union or other rules thereof; 4) present to the general meeting its findings and proposals concerning the annual accounting balance sheet of the Central Credit Union, the draft distribution of profit and compensation for losses, as well as proposals regarding violations established by the Auditors’ Commission and other work drawbacks; 5) represent the Central Credit Union in court proceedings when disputes between the Central Credit Union and its Board, the Central Credit Union and the Stabilisation Fund Commission, the members of the Central Credit Union and its Board, or the members of the Central Credit Union and the Stabilisation Fund Commission are settled; 6) submit proposals to the Board, the Stabilisation Fund Commission to revoke unlawful resolutions adopted by them or request that the general meeting should revoke unlawful resolutions adopted by the Board or the Stabilisation Fund Commission; 7) may refer issues that are within their competence to the general meeting for resolution; and 8) resolve other issues provided for in the Bylaws. 2. The Supervisory Board shall have the right to invite an expert or an independent auditor to inspect and assess the accounting balance sheet of the Central Credit Union and other accounts. 3. On the request of the Supervisory Board, the Board of the Central Credit Union, the Stabilisation Fund Commission and /or the Administration must present documents concerning the activities of the Central Credit Union. 4. The meeting of the Supervisory Board shall be lawful, if it is attended by more than half of its members. The resolutions shall be adopted by a simple majority vote of those present. The members of the Supervisory Board shall have equal rights. During voting, each member shall have one vote. In the event of a tie vote, the chairperson shall have the casting vote. 5. The members of the Supervisory Board must keep the secrets of the Central Credit Union confidential. 6. The Supervisory Board shall work according to the procedure established by its work regulations. Article 33. The Board of the Central Credit Union 1. The Board is a collegiate executive-managing body of the Central Credit Union the activities of which are directed by its chairperson. The number of the Board members, which must be odd and at least 3, shall be established by the Bylaws of the Central Credit Union. The members of the Board and its chairperson shall be elected by the general meeting of the Central Credit Union for the term not exceeding 4 years. Members of the Supervisory Board the Central Credit Union, members of the Stabilisation Fund Commission or the Auditors’ Commission may not be a member of the Board and its chairperson. 2. In addition to the main members of the Board, no more than 3 candidates to the Board members may be elected for the same term, who, upon the decrease of the number of the Board members, shall replace the Board members who may not serve in the office. These candidates shall have the right to attend the Board meetings in a deliberative capacity. 3. If the number of the members of the Board becomes less than the minimum number of members established by the Bylaws of the Central Credit Union and there is no possibility to replace the lacking members of the Board with the elected candidates, the remaining members of the Board must convene an extraordinary meeting of the Central Credit Union. 4. The members of the Board may be given bonus payments for their activities, if it is provided for in the Bylaws of the Central Credit Union. Article 34. Powers of the Board of the Central Credit Union 1. The powers of the Board and its members shall be established by the Bylaws of the Central Credit Union, and the procedure of its work by the work regulations adopted by it. 2. The Board shall: 1) draw up and submit proposals to the general meeting concerning the admitting of new members into the Central Credit Union , suspend membership of credit unions - members of the Central Credit Union and present proposals to the general meeting regarding the termination of their membership; 2) represent the Central Credit Union in court, arbitration bodies and other institutions; 3) organise and convene general meetings of the Central Credit Union ; 4) set interest rate on loans, deposits and other repayable funds which are provided by the Central Credit Union, on the basis of the requirements laid down in subparagraphs 7 and 9 of paragraph 2 of Article 27 of this Law; 5) on behalf of the Central Credit Union enter into an employment contract with the head of the Administration; 6) on behalf of the Central Credit Union enter into transactions with the third parties and members of the Central Credit Union, including agreements with credit unions regarding loans for the restoration of impaired solvency of credit unions and ensuring reliability of their activities in accordance with the decisions adopted in a manner prescribed by Article 36 of this Law; 7) in conjunction with the Stabilisation Fund Commission, control that contributions of each credit union to the Stabilisation Fund Commission be paid in due time and completely. These functions may be transferred by the Board to the Administration; 8) consider the material submitted by the Auditors’ Commission, the activities of the Administration and present its findings to the Supervisory Board or the general meeting; 9) prepare drafts of accounting balance sheet, procedure for the distribution of profit and the compensation for losses and other drafts of accounts of the Central Credit Union; 10) invest free funds of the Central Credit Union in Government securities, securities of the Bank of Lithuania and government securities of the foreign states which have the highest rating (A group countries); 11) adopt resolutions concerning the lending of resources managed by the Central Credit Union to credit unions - members of the Central Credit Union, taking deposits from credit unions, receiving loans from banks, other institutions; 12) furnish to a supervisory body and the Stabilisation Fund Commission necessary information on the Central Credit Union and credit unions - its members, as well as results of special inspection thereof; 13) consider other issues concerning the activities and management of the Central Credit Union that are not within the exclusive competence of the general meeting, the Supervisory Board and the Stabilisation Fund Commission. 3. The Board shall adopt resolutions on issues assigned to its competence by this Law or Bylaws. A meeting of the Board shall be deemed lawful when more than half of its members attend such meeting. Members of the Board shall have equal voting rights. Resolutions shall be adopted by a simple majority vote of those present at the meeting. In the event of a tie vote, the chairperson of the Board shall have a casting vote. 4. Members of the Board and candidates to the members of the Board must keep the secrets of the Central Credit Union and its members confidential. 5. The Board shall account for its activities to the general meeting and the Supervisory Board in a manner prescribed by the Bylaws of the Central Credit Union, at least once a year. Article 35. The Stabilisation Fund Commission 1. The Stabilisation Fund Commission shall be a management body of the Stabilisation Fund Commission. The Stabilisation Fund Commission shall be accountable to the general meeting and shall follow the policy of formation and use of the Stabilisation Fund Commission, set by the general meeting. In the period between general meetings, the Stabilisation Fund Commission shall be accountable to the Supervisory Board and carry out the functions and duties established in Articles 23, 35 and 36. 2. The number of the Stabilisation Fund Commission members Loans Committee - not less than 3 and not more than 7 - shall be established by the Bylaws of the Central Credit Union. The Stabilisation Fund Commission and its chairman shall be elected by the general meeting of the Central Credit Union for the period not exceeding three years from representatives delegated by the members of the Central Credit Union . 3. A member of the Board of the Central Credit Union and a member of the Auditors’ Commission may not be a member of the Stabilisation Fund Commission. A member of the Stabilisation Fund Commission may not assign or transfer his functions to other persons. 4. A meeting of the Stabilisation Fund Commission shall be deemed lawful if more than half of its members attend it. Resolutions shall be adopted by a simple majority vote of those present at the meeting. Members of the Stabilisation Fund Commission shall have equal voting rights. During the voting each member shall have one vote. In the event of a tie vote, the chairperson of the Commission shall have a casting vote. 5. Members of the Stabilisation Fund Commission must keep the secrets of the credit unions and the Central Credit Union confidential. 6. The procedure of work of the Stabilisation Fund Commission shall be established by the rules of procedure adopted by it. 7. The members of the Stabilisation Fund Commission may be given bonus payments for their activities in the Commission, if it is provided for in the Bylaws of the Central Credit Union. Article 36. Duties and Rights of the Stabilisation Fund Commission 1. In conjunction with the Board of the Central Credit Union or, upon its instruction, in conjunction with the Administration, the Stabilisation Fund Commission shall supervise the activities of credit unions (control). The Administration of the Central Credit Union and when necessary, an appropriate credit union - member of the Central Credit Union must, in a manner, form and frequency established by the Stabilisation Fund Commission, furnish to the Commission required information and financial statements of credit unions - members of the Central Credit Union. 2. Taking into consideration the information provided in paragraph 1 of this Article and, when necessary, the material and results of special on-sight inspection of credit unions, the Stabilisation Fund Commission shall analyse and assess the quality of assets of credit unions, factors related to liquidity, solvency, reserve amount and other factors affecting operational risks. 3. The Stabilisation Fund Commission shall also enjoy the right to exchange confidential information on the activities of credit unions and the results of on-sight inspection thereof with a supervisory institution and, upon having informed the Board, to instruct the Administration of the Central Credit Union to carry out special on-sight inspection of the activities of a credit union and report the results to the supervisory body. The supervisory body shall have the right for supervisory purposes to present the obtained information to the Central Credit Union in accordance with the agreement, in a prescribed manner and within fixed terms. 4. The Stabilisation Fund Commission shall have the right to invite an independent auditor to determine a position of a credit union in the event of impaired solvency of the credit union. 5. The Stabilisation Fund Commission shall, in compliance with the requirements of Article 23 of this Law, fix an amount of contributions of credit unions to the Stabilisation Fund, a manner and conditions of the payment thereof. 6. The Stabilisation Fund Commission in conjunction with the Board of the Central Credit Union or, under its instruction, the Administration shall control the due and full payment of contributions by each credit union to the Stabilisation Fund. If a credit union has violated these requirements more than one time, the Stabilisation Fund Commission shall have the right to submit proposals to the Board and the general meeting of representatives regarding the continuity of membership of such credit union in the Central Credit Union. 7. The Stabilisation Fund Commission shall establish conditions and interest rates for the funds kept by other institutions which are not the members of the Central Credit Union in the Stabilisation Fund, and shall adopt resolutions on the investment of free resources of this Fund only in Government securities, securities of the Bank of Lithuania and government securities of the foreign states which have the highest rating (A group countries). 8. The Stabilisation Fund Commission shall draw up an action plan and draft agreements with credit unions on the provision of loans for the restoration of impaired solvency of credit unions and ensuring of the reliability of their activities, approve them at Commission meetings and refer to the Board of the Central Credit Union for further execution of transactions, as well as supervise the implementation of such plans and agreement obligations. 9. A plan for the restoration of solvency of credit unions must among other things: 1) specify the reasons of impaired solvency of a credit union and evaluate the present condition of solvency and its perspectives; 2) design a strategy and actions ensuring a solution of solvency crisis, ground on calculations resources necessary for the implementation of plan on the restoration of solvency; 3) motivate the need of dismissal of the Board of a credit union or the chairman of the Board of a credit union, or more than half of its members, including the chairman of the Board, as well as the need of election of a new Board; 4) motivate the need of dismissal of the entire Administration of a credit union and appointment of a provisional administrator, recommended by the Stabilisation Fund Commission; 5) foresee possibilities of the reorganisation or liquidation of a credit union and the amount of expenses related thereto; 6) motivate the sum of resources planned to lend from the Stabilisation Fund for the restoration of solvency of a credit union, as well as the use of such resources; 7) specify planned results and consequences. 10. A decision on the use of the resources of the Stabilisation Fund for the restoration of impaired insolvency of a credit union in accordance with the plan laid down in paragraphs 8 and 9 of this Article shall be adopted by the Stabilisation Fund Commission upon having obtained from the Administration of the Central Credit Union and the body supervising the credit union appropriate information, as provided for in this Article, and having evaluated it. Article 37. Liability of the Central Credit Union, its Supervisory Board, the Board and the Stabilisation Fund Commission Members 1. The Central Credit Union shall be held liable in accordance with the procedure established by the Civil Code of the Republic of Lithuania for the damage caused to a member of the Central Credit Union by the actions of the Supervisory Board, the Board and the Stabilisation Fund Commission members. The Central Credit Union shall have recourse against the persons who have inflicted the damage. 2. Only those members of the Supervisory Board, the Board and the Stabilisation Fund Commission shall be released from the obligation to compensate for the damages, who voted against the resolutions that are not in compliance with this Law, the Bylaws of the Central Credit Union or other laws of the Republic of Lithuania, or did not attend the meeting at which such resolutions were passed. In this event, they must present a written protest to the presiding officer within 7 days after they learnt or ought to have learnt about such a resolution. Article 38. The Auditors’ Commission of the Central Credit Union 1. The Bylaws of the Central Credit Union shall fix a number of the members of the Auditors’ Commission - not less than 3 and not more than 5. Chairman of the Auditors’ Commission shall be elected by a general meeting for a period not exceeding three years. 2. The Auditors’ Commission must have at least one auditor who shall be elected by the general meeting for a term set out in the Bylaws of the Central Credit Union but not exceeding three years. The auditors’ office may be held by representatives of a member the Central Credit Union, who have acquired proper qualifications of an auditor. A member of the Supervisory Board, the Board and the Stabilisation Fund Commission or the Administrator or chief financier (accountant) employed in the Central Credit Union may not be the auditor. Employees of the Board, the Supervisory Board or the Loan Committees and Administrations of the credit unions-members of the Central Credit Union may not be the auditor also. 3. The Auditors’ Commission shall control the financial-business activities of the Central Credit Union and the Stabilisation Fund, and the implementation of the resolutions passed by the general meeting and the Supervisory Board. For the carrying-out of these functions, the Auditors’ Commission shall have the right to demand to present to it all necessary accounting records and financial documents of the Central Credit Union and the Stabilisation Fund. 4. The Auditors’ Commission shall present to the Supervisory Board and the general meeting an annual report on the audit of financial-business activities. It must immediately report to the Board and the Supervisory Board the violations determined in the financial-business activities of the Central Credit Union and the Stabilisation Fund, and keep their secrets. 5. The members of the Auditors’ Commission may be paid salaries in the manner prescribed by the general meeting. 6. The members of the Auditors’ Commission shall be liable under the law of the Republic of Lithuania for the unsatisfactory control of the Central Credit Union and the Stabilisation Fund and the concealment of deficiencies in their activities. Article 39. The Administration of the Central Credit Union 1. The Board of the Central Credit Union shall form the Administration of the Central Credit Union, comprising the heads and deputy heads of the central management body, structural divisions and affiliates (branches) which are established in the Republic of Lithuania. 2. The Administration of the Central Credit Union shall direct the activities of the Central Credit Union and carry out resolutions of the general meeting and the Board. 3. The Administration of the Central Credit Union shall also execute the instructions of the Stabilisation Fund Commission, related to the obligations of Article 36 of this Law. 4. The duties of the Administration of the Central Credit Union and its head shall be established by the Bylaws of the Central Credit Union and the Administration working rules approved by the Board. 5. The Board of the Central Credit Union shall appoint the Administration of the Central Credit Union and its head. 6. The head of the Administration of the Central Credit Union may not occupy a position of a chief financier (accountant), be a member of the Board of a credit union or a bank, as well as occupy any other position in the administration of a credit union or bank. 7. The head of the Administration of the Central Credit Union shall conclude employment contracts with other employees of the Administration. 8. The chairperson of the Board of the Central Credit Union or another member of the Board may hold a position of head of the Administration of the Central Credit Union. Chapter SEVEN Capital of the Central Credit Union, DIVIDENDS, ACCOUNTING, Financial REPORT AND AUDIT Article 40. Types of Capital of the Central Credit Union The Central Credit Union shall have the main and supplementary capitals. Article 41. Main Capital 1. The Central Credit Union’s main capital shall consist of the sum of share capital, reserve capital and retained earnings (losses) of the previous year. 2. Upon having received advanced permission of the supervisory body, the Central Credit Union may reduce its main capital up to an established minimum amount of the main capital. 3. Share capital shall be formed out of main and additional shares of credit unions and the Government of the Republic of Lithuania or an institution authorised by it. 4. The minimum amount of a member of the Central Credit Union shall be Litas 1 000. A member may have one more main share. 5. The amount of an additional share of a member of the Central Credit Union shall be Litas 1 000. The number of additional shares acquired by the members shall not be restricted. These shares shall be acquired only by the members of the Central Credit Union in accordance with the conditions and procedure established in Article 7, subparagraph 6 of paragraph 5 of Article 9 and Article 12 of this Law. 6. By resolution of the general meeting the main capital of the Central Credit Union may be reduced by the sum of losses or a part thereof in the cases provided for in paragraph 2 of Article 44 of this Law. The reducing must be carried out by accordingly reducing the value of the shares of the members of the Central Credit Union. 7. Purpose of the reserve capital - to guarantee financial stability of the Central Credit Union. The reserve capital shall be formed from the profit of the Central Credit Union which is left after the deduction of taxes, each year deducting not less than 10 per cent from such profit, until the reserve capital shall form at least 5 per cent of the sum of long-term investments and extended loans, as fixed on the basis of an annual accounting balance-sheet. Upon the use of a part of the reserve capital to cover the losses of the Central Credit Union, deductions from the profit shall be again made to the reserve capital until the latter reaches the fixed amount. Article 42. Supplementary Capital Supplementary capital of the Central Credit Union shall be formed from the Stabilisation Fund, subordinated loans, if they correspond to the requirements established by a supervisory body, retained earnings (losses) of the current year, revaluation reserve of fixed assets, and other capitals and reserves provided for in the Bylaws of the Central Credit Union. Article 43. Distribution of Profit 1. The profit of the Central Credit Union shall consist of the funds which remain after deduction of the Central Credit Union’s expenses and the sums of losses of the financial year from the annual income of the Central Credit Union of the same year. 2. The profit must be distributed not later than within 3 months after the close of the financial year and following the approval of the annual balance-sheet in accordance with this and other laws of the Republic of Lithuania. 3. The resolution on the distribution of profit must state: 1) retained earnings (losses) at the beginning of a financial year; 2) net profit or losses of the financial year; 3) distributable result (profit or losses); 4) distribution of the profit to compensate for losses; 5) allocations to the reserve capital; 6) allocations to the Stabilisation Fund; 7) allocations to other types of capital and reserves, as established in the Bylaws of the Central Credit Union; 8) profit distribution to pay dividends; 9) a part of the profit intended for annual payments (bonuses) to the members of management bodies of the Central Credit Union, bonuses to the employees and other purposes provided for in the Bylaws of the Central Credit Union; 10) retained profit (losses) transferred to the next year. 4. Profit must be distributed adhering to the order of sequence of subparagraphs laid down in paragraph 3 of this Article. Article 44. Dividends Paid by the Central Credit Union 1. A dividend shall be a part of profit allocated to a member, which is proportional to the nominal value of main and additional shares possessed by him. 2. If losses are calculated in the balance of the Central Credit Union, then the general meeting shall not have the right to announce and pay dividends until such losses are not compensated for, or the main capital of the Central Credit Union is not reduced by the amount of such losses. Decisions related to the compensation for the losses or reducing of the main capital by the amount of such losses and announcement as well as payment of dividends may be adopted at the same general meeting. Dividends may be paid to the members only upon the compensation for the losses or reducing of the main capital by the amount of such losses. 3. Profit which is left after deductions to the capitals and (
4. or)funds and reserves established by this Law and the Bylaws of the Central Credit Union, may not be also paid in the form of bonuses, if due to this the minimum main capital of the Central Credit Union and sufficiency of the capital become lower than the amounts fixed by a supervisory body. 4. The Central Credit Union must pay dividends not later than within 3 months from the day of adoption of the resolution on profit distribution. It shall be prohibited to pay dividends in advance. 5. The Central Credit Union shall pay dividends in cash. If the member does not object, dividends may be paid to him in the form of additional shares of the Central Credit Union. 6. Only those members shall have the right to receive dividends who have been members of the Central Credit Union during all the accounting period. Article 45. Accounting and Reporting of the Central Credit Union 1. The financial year of the Central Credit Union shall coincide with the calendar year. 2. The procedure of accounting, reporting of the Central Credit Union shall be established by the laws of the Republic of Lithuania and legal acts of the supervisory body. 3. Within three months after the close of the financial year, the Central Credit Union shall submit to the supervisory body an annual financial statement which is checked by an independent auditor and approved by the general meeting. 4. The financial statement of the Central Credit Union shall be made public before the 1st of May of the current year in a manner prescribed by the supervisory body. The Central Credit Union shall, in the manner prescribed by the law, be responsible for the correctness of the information provided in its annual financial statement. Chapter EIGHT Supervision of the Activities of the Central Credit Union AND PARTICIPATION IN THE PERFORMANCE OF SUPERVISION OF THE ACTIVITIES OF CREDIT UNIONS Article 46. Body Supervising the Activities of the Central Credit Union, Prudential Requirements and Sanctions Applied by a Supervisory Body 1. Until the formation of a special body which shall supervise activities of credit unions and the approval of its bylaws, the Bank of Lithuania shall supervise the activities of the Central Credit Union and issue licences. 2. The supervisory body shall in compliance with this Law establish the procedure for the performance of supervision of the activities of the Central Credit Union. 3. The following prudential requirements shall be established for the Central Credit Union: 1) capital adequacy ratio; 2) liquidity ratio; 3) maximum open position in foreign currencies; 4) maximum exposure to a single borrower; 5) large exposure. 4. Ratios, methods of calculation and application thereof shall be set by the supervisory body. 5. The supervisory body may apply the following sanctions: 1) to give a notice to the Central Credit Union for the shortcomings and violations of its activities, and to set the term for their elimination; 2) to suspend or revoke the licence to perform one, several or all operations (moratorium); 3) to demand removal or remove from the office of a member (members) of the Board of the Central Credit Union and head of the Administration: 4) to demand suspension or suspend the powers of a member (members) of the Supervisory Board of the Central Credit Union; 5) to suspend the powers of the Supervisory Board of the Central Credit Union, to dismiss the Board, to remove head of the Administration from the office and to appoint a temporary Administrator; 6) to restrict disposal of the accounts in the Bank of Lithuania; 7) to revoke the licence of the Central Credit Union. 6. The following sanctions against the Central Credit Union may be applied by the supervisory body collegially in the presence of at least one of the following grounds: 1) incorrect information has been furnished to the supervisory body; 2) information or documents necessary for the carrying-out of the supervision of the Central Credit Union have not been furnished to the supervisory body; 3) established prudential requirements have not been complied with; and 4) laws or other legal acts of the Republic of Lithuania have been violated. 7. The procedure of application of the sanctions of supervisory bodies shall be established, type and terms of the sanction applied shall be determined by the supervisory body, taking into consideration the nature of the violation, its possible consequences for the Central Credit Union, as well as the consequences of the planned sanction for the reliability and stability of the whole system of credit unions. 8. The resolution concerning the application of a sanction of supervisory bodies must be adopted within 3 months from the date of the establishment of a violation. Sanctions of supervisory bodies may not be applied against the violations when more than one year has elapsed since the date of the carrying-out of such violations. 9. The resolution of the supervisory body concerning the application of a sanction of supervisory bodies against the Central Credit Union or its managers may be appealed against in court within one month from the date of the adoption of said resolution in accordance with the procedure established by the law of the Republic of Lithuania. Article 47. Participation of the Central Credit Union in the Performance of Supervision of Activities of Credit Unions Upon co-ordinating actions with the supervisory body, the Central Credit Union shall constantly monitor the activities of the credit unions-its members, and when necessary it shall perform special on-sight inspections of the activities of these credit unions, assess the risk of activities and present recommendations to the supervisory body concerning the application of sanctions against the credit unions. Article 48. Safeguarding of Documents of the Central Credit Union 1. During the whole period of validity of agreements and 10 year after the expiry thereof, the Central Credit Union shall keep: 1) loan, guarantee, warranty, mortgage and other contracts; 2) other documents of the partners of the Central Credit Union on the basis thereof the contract has been concluded; 3) other documents specified by the supervisory body. 2. The Central Credit Union may keep other documents as well, and set other terms of safekeeping, but not shorter than it is established in paragraph 1 of this Article or the Department of Lithuanian Archives. Article 49. Protection of Secrets of the Central Credit Union 1. Present and former members of the management bodies of the Central Credit Union, internal auditors, independent auditors, the Administration and employees must keep confidential the information obtained during their employment with the Central Credit Union, and must not use it for personal or other persons’ benefit. 2. On the request of the supervisory body, it must be furnished with all the documents and information related to the foundation and activities of the Central Credit Union. Documents and information requested by other institutions shall be furnished in the cases and procedure established by the law of the Republic of Lithuania. 3. The Central Credit Union must submit to the tax inspectorate the information specified in the Law of the Republic of Lithuania on the prevention of Money Laundering. 4. The procedure for the protection of secrets shall be established by the Bylaws of the Central Credit Union. Article 50. Liability for the Damage Done to the Central Credit Union Laws and other legal acts of the Republic of Lithuania as well as the Bylaws of the Central Credit Union shall establish liability of the management bodies, employees of the Administration of the Central Credit Union for the damage done through their fault to the Central Credit Union. Chapter NINE Final Provisions Article 51. Enforcement of the Law The Government of the Republic of Lithuania: 1) when drafting and approving estimate of costs for the first six months of the year 2001, shall provide for funds (Litas 6
5. m)intended for the capital of the Central Credit Union under establishment and the formation of the Stabilisation Fund. The main capital may be paid in cash and contributions in kind. Contributions in kind may not exceed 10 per cent of Government’s contribution to the main capital. The Stabilisation Fund shall be formed only of cash payments; 2) not later than 1 July 2000 to appoint an authorised person or an institution subordinate to the Government which would represent the Government when establishing the Central Credit Union and initiate procedures of its establishment as well as ensure that the fulfilment of the obligations set for the Government be fulfilled in due time, in a qualified manner and without delay, and the Central Credit Union be established by 1 November 2001. I promulgate this Law passed by the Seimas of the Republic of Lithuania. President of the Republic VALDAS ADAMKUS