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REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA Official translation REPUBLIC OF LITHUANIA LAW ON INSURANCE OF DEPOSITS AND LIABILITIES TO INVESTORS 20 June 2002 No. IX-975 Vilnius CHAPTER ONE GENERAL PROVISIONS Article

  1. Purpose of the Law This Law shall lay down the procedure for insurance of deposits held with commercial banks established in the manner set forth in the laws of the Republic of Lithuania (hereinafter “commercial banks”), subsidiaries/branches of foreign banks established in the Republic of Lithuania (hereinafter ”branches”), the Central Credit Union and credit unions (hereinafter “credit unions”), the level of insurance compensations for these deposits, the procedure for insurance of liabilities of commercial banks, brokers undertakings and investment funds or management undertakings of investment companies of variable capital (hereinafter “undertakings”) also of branches, subsidiaries of foreign brokers undertakings and management undertakings (hereinafter “undertaking subsidiaries”) to their investors and the level of insurance compensations. Article
  2. Definitions
  3. The insured - a commercial bank, a foreign bank which has set up a branch (hereinafter “a foreign bank”), a credit union or an undertaking or a foreign undertaking licensed to provide investment services, which pays, following the procedure established by this Law, premiums to the Deposit Insurance Fund or the Fund of Insurance of Liabilities to the Investors administered by the state undertaking “Deposit and Investment Insurance”.
  4. Insured event - institution of bankruptcy proceedings against a credit union, commercial bank or an undertaking or taking of a decision by a supervisory authority on the suspension of banking activities, acceptance of deposits or provision of investment services where a credit union or a commercial bank/branch is not able to settle with creditors or when an undertaking/a subsidiary of an undertaking is not able to meet its liabilities to the investors.
  5. Insurance premium – a sum of money paid by the insured in accordance with the procedure laid down by this Law.
  6. Insurance undertaking- the state undertaking “Deposit and Investment Insurance”
  7. Insurance compensation - a sum of money prescribed by this Law to which a depositor or an investor is entitled in the event of occurrence of a insured event.
  8. Insured sum - the amount of the insured deposit or the liabilities to the investors.
  9. Depositor – a natural or legal person holding deposits with commercial banks, branches and credit unions other than entities whose deposits under this Law may not be covered by insurance. Where a natural or a legal person, other than management undertakings of investment companies and management undertakings of pension funds, having a deposit acts as a trustee, the trustor shall be held a depositor. Where a group of persons has rights of claim to the funds under contracts, each person of the group shall be held a depositor and the funds shall be divided among them in equal shares unless the contracts under which their rights of claim arise or court rulings provide otherwise.
  10. Deposit - the amount of money, including the accrued interest, held by a depositor with a commercial bank, a branch or a credit union under a bank deposit and/or a bank account agreement, and of other money to which the depositor has rights of claim arising from the obligation of a credit institution to perform transactions with the depositor's money or to provide to him investment services, including the accrued interest.
  11. Deposit Insurance Fund - funds accumulated for payment of insurance compensations to the depositors.
  12. Investment services - the investment services referred to in Article 2

(11)subparagraphs 1-6 of the Law of the Republic of Lithuania on the Securities Market.
  1. Investor - a natural and legal person who has entrusted money or securities to the insured with the aim of availing himself of the investment services provided by the insurer. Where a group of persons had, under contracts, a right of claim to the money and/or securities, each person of the group shall be regarded an investor and the securities and money shall be divided among them in equal portions unless the contracts from which the rights of claim arise or court rulings provide otherwise. Where a person, other than management undertakings of investment companies and management undertakings of pension funds, who has entrusted money or securities acted as a trustee, the trustor shall be regarded as the investor.
  2. Liabilities to investors - the following amount of liabilities to the investor by the insurer when providing investment services: 1) the money entrusted by the investor or belonging to him that has to be repaid; 2) the securities belonging to the investor that have to be repaid.
  3. Fund of Insurance of Liabilities to the Investors - funds accumulated for paying insurance compensations to the investors.
  4. Supervisory authority: 1) the Bank of Lithuania; 2) the Securities Commission; 3) an institution in a foreign country performing functions analogous to those performed by the Bank of Lithuania and the Securities Commission.
  5. Securities - securities and investment instruments specified in Article 3
(1)
(2)of the Law on the Securities Market. CHAPTER TWO INSURANCE PREMIUMS Article
  1. Insurance Cover
  2. Deposit insurance cover shall be provided for deposits in Litas and foreign currency - the US dollars, euros, and national currency of the Member States of the European Union (hereinafter "foreign currency").
  3. Insurance cover for liabilities to investors shall be obligations provided for liabilities to the investors to repay the securities irrespective of their denomination or money in Litas or foreign currency - the US dollars, euros and national currency of the Member States of the European Union
  4. The deposits and liabilities to investors specified in paragraphs 1 and 2 of this Article must be insured at an insurance undertaking by commercial banks, credit unions, undertakings as well as foreign banks and undertakings having branches in the Republic of Lithuania at which deposits or liabilities to investors have no insurance coverage/are not subject to compensation or which are not covered by any other protection schemes under the legislation of a foreign state exercising jurisdiction over the bank having a branch or the undertaking having a subsidiary.
  5. Insurance coverage may not be provided to debt securities/deposit certificates issued by the same insurer or liabilities arising out of own acceptances and promissory notes and to the deposits of or liabilities to the following persons: 1) the Bank of Lithuania; 2) insurance undertakings; 3) credit institutions; 4) brokers undertakings; 5) insurance undertakings operating under the Law on Insurance; 6) pension funds and management undertakings of pension funds; 7) investment companies of variable capital and management undertakings; 8) undertakings engaged in leasing/financial lease. Article
  6. Supplementary Insurance Cover
  7. Where deposits are held with a branch, the liabilities of a foreign bank or an undertaking to the investors shall be insured/compensated or their protection shall be ensured in any other way under the legislation of a foreign state and where the council of the undertaking determines that these conditions of deposit insurance or insurance of liabilities to investors or any other conditions ensuring their protection are less favourable than in this Law, the bank having a branch or a subsidiary of an undertaking must provide, following the procedure established by the council of the insurance undertaking and published in "Valstybės žinios" ("Official Gazette"), supplementary coverage for the deposits held with the branch and the liabilities of a foreign bank or an undertaking to the investors.
  8. Supplementary insurance cover shall be provided only to the deposits or liabilities to the investors who, under the legislation of a foreign state, have less favourable conditions of insurance/compensation or any other conditions of ensuring their protection than those provided by this Law.
  9. The deposits or liabilities to the investors which are not provided insurance cover/compensation or any other protection under the legislation of a foreign state must be insured in accordance with this Law. Article
  10. Insured Sum
  11. The insured sum shall be equal to the depositor’s deposit kept with a commercial bank, a branch or a credit institution on the day of the insured peril, however it may not be in excess of: 1) LTL 45, 000 – from the day of entry of this Law into force; 2) LTL 50, 000 – from 1 January 2004; 3) LTL 60, 000 – from 1 January 2007; 4) the amount of LTL equivalent to EUR 20, 000 – from 1 January
  13. The insured sum of a deposit under supplementary cover shall be equal to the difference between the deposit and the amount payable to a depositor under the legislation of a foreign state; however, it may not be in excess of the insured sums specified in paragraph 1 of this Article.
  14. The insured sum of liabilities to the investor shall be equal to the liabilities of a commercial bank or an undertaking to the investor on the day of the insured event, however, it may not be in excess of: 1) LTL 45, 000 – from the day of entry of this Law into force; 2) LTL 50, 000 – from 1 January 2004; 3) LTL 60, 000 – from 1 January 2007; 4) the amount of LTL equivalent to EUR 20, 000 – from 1 January
  16. The insurance sum of liabilities to the investor under supplementary cover shall be equal to the difference between the liabilities to the investor and the amount payable to the investor under the legislation of a foreign state, however, the insurance sum may not be in excess of the insurance sums specified in paragraph 3 of this Article. Article
  17. Insurance Premium of Commercial Banks, Branches and Credit Unions
  18. The insurance premium for commercial banks, branches and credit unions shall be calculated from the sum of the Litas-denominated and/or foreign currency-denominated balance of money on the depositors accounts opened under bank deposit and/or bank account agreements at credit unions, commercial banks and branches where the deposits held with them are not compensated or protected in any other way under the legislation of a foreign state having jurisdiction over the foreign bank which has established the branch. When providing, in the case specified by this Law, supplementary cover for deposits, the insurance premium shall be calculated from the sum which amounts to the difference between the balance of money on the accounts of deposits under supplementary cover opened under bank deposit and/or bank account agreements and the compensations payable to depositors under the legislation of a foreign state.
  19. The annual rate of an insurance premium, with the exception of the case specified in paragraph 3 of this Article, shall be as follows: 1) 0.45 per cent for commercial banks and branches; 2) 0.2 per cent for credit unions.
  20. The council of the insurance undertaking shall have the right to change the rate of the insurance premium in the following cases: 1) when the ratio between the Deposit Insurance Fund and all the deposits covered by insurance becomes higher than 3 per cent but does not exceed 4 per cent. In this case the annual rate of the insurance premium for the insured specified in paragraph 2
(1)of this Article must not be lower than 0.045 per cent, and for the insured specified in paragraph 2
(2)of this Article – not lower than 0, 0025 per cent; 2) when the ratio between the Insurance Fund and all the deposits covered by insurance becomes higher than 4 per cent. In this case the annual rate of the insurance premium for the insured specified in paragraph 2
(1)of this Article must not be lower than 0.001 per cent, and for the insured specified in paragraph 2
(2)of this Article – not lower than 0.0005 per cent . 4. Commercial banks authorised to accept deposits, and foreign banks which have established branches authorised to accept deposits in cases specified in Article 4
(1)shall pay, following the procedure established by the council of the insurance undertaking, into the account of the insurance undertaking the first/advance insurance premium in the amount of LTL 5,
  1. Credit unions authorised to accept deposits, and newly established credit unions authorised to accept deposits shall pay, following the procedure established by the council of the insurance undertaking, into the account of the insurance undertaking the first/advance insurance premium in the amount of LTL
  2. Other insurance premiums shall be calculated and paid each month by the insured into the account of the insurance undertaking.
  3. The insurance premium of commercial banks and branches shall not depend on the investment services provided by them. Article
  4. Insurance Premium Paid by Undertakings
  5. The annual insurance premium of an undertaking which does not handle accounting of the investors’ securities shall be LTL 3,
  6. The annual insurance premium of an undertaking which handles accounting of the investors’ securities shall be LTL 10,
  8. An undertaking which carries out transactions at the expense of the investors shall additionally pay a portion of the annual rate – 0.01 per cent of the total amount of transactions carried out by the undertaking during the previous calendar year at the expense of the investors, however, this portion may not be lower than LTL 1, 000 and not higher than LTL 10,
  9. Article
  10. Procedure for Payment of the Insurance Premium
  11. The procedure for calculation of the insurance premium, its payment and time limits as well as the procedure for changing the rate of the insurance premium shall be determined by the council of the insurance undertaking and announced in the “Valstybės žinios” (“Official Gazette”).
  12. If the insured fails to pay the insurance premium or its part into the account of the insurance undertaking within the prescribed time limit, default interest shall be charged for each overdue day. The rate of the default interest shall be determined by the council of the insurance undertaking, taking into account the average interest rate of the previous calendar quarter payable on the bonds of the Government in LTL with maturities up to one year. Default interest shall be calculated and paid according to the procedure for calculation of default interest for failure to pay the insurance premium when due, approved by the council of the insurance undertaking. Where the insured fails to pay insurance premiums, the sum due and default interest shall be recovered from him in the manner prescribed by the laws of the Republic of Lithuania.
  13. From the day when the insured event occurs for the insured or when the council of the insurance undertaking terminates deposit insurance for the insured, the premiums shall cease to be paid. In this case the part of the insurance premium not paid shall be deemed a debt of the insured, and default interest laid down in paragraph 2 of this Article shall not be calculated from the day of the insured event or from the day of termination of insurance. CHAPTER THREE INSURANCE COMPENSATIONS Article
  14. Amount of Insurance Compensation
  15. A depositor shall become entitled to insurance compensation from the day of the insured event. An investor shall become entitled to insurance compensation from the day of the insured event only where the insured has transferred or used the investor's securities and/or funds without consulting the investor. When calculating the insurance compensation for liabilities to the investors, only those securities and funds of the investor shall be included into the liabilities to the investor which the insured is not able to repay.
  16. Insurance compensations for deposits and insurance compensations for liabilities to the investors shall be calculated and paid separately.
  17. Rates of insurance compensations to the depositors or investors shall be as follows: 1) 100 per cent of the deposit or liabilities to the investors up to LTL 10, 000 - from the day of entry of this Law into force up to 31 December 2007; 2) 90 per cent of the deposit from LTL 10, 000 up to LTL 45, 000 - from the day of entry of this Law into force up to 31 December 2003; 3) 90 per cent of the deposit or liabilities to the investors from LTL 10, 000 up to LTL 50, 000 - from 1 January 2004 up to 31 December 2006; 4) 90 per cent of the deposit or liabilities to the investors from LTL 10, 000 up to LTL 60, 000 - from 1 January 2007 up to 31 December 2007; 5) from 1 January 2008 - 100 per cent of the deposit or liabilities to the investors up to the amount of Litas equivalent to EUR 3, 000 and 90 per cent of the deposit or liabilities to the investors from the amount of Litas equivalent to EUR 3, 000 up to the amount of Litas equivalent to EUR 20,
  19. Compensations for deposits or liabilities to the investors in foreign currency shall be calculated on the basis of the exchange rate of Litas and the foreign currency determined by the Bank of Lithuania on the day of the insured event .
  20. The amount of the compensation to the investors shall be calculated on the basis of the market value of the investor's securities on the day of the insured event. Article
  21. Procedure for Payment of Insurance Compensation
  22. Compensations shall be paid in Litas within three months from the day of the insured event. The council of the insurance undertaking may extend this time limit for up to 3 months (in case of deposit insurance - at most twice for up three months each time).
  23. A depositor or an investor shall be entitled to an insurance compensation for 5 years from the day of the insured event.
  24. The compensation shall be calculated and paid by the insurance undertaking on the basis of the information about the depositors or investors, their deposits or liabilities to the investors as well as about the amounts of deposits and liabilities to the investors covered by supplementary insurance. The procedure for calculation of insurance compensations and their payment shall be determined by the council of the insurance undertaking and announced in the "Valstybės žinios" ("Official Gazette").
  25. The amount of supplementary insurance compensation shall be calculated by deducting from the insurance compensation calculated pursuant to the provisions of Article 9 of this Law the insurance compensation/guarantee calculated pursuant to the legislation of a foreign state.
  26. Disputes about the right of a depositor or an investor to a compensation shall be settled by court. Article
  27. Impact of Payment of Compensation
  28. After the insurance undertaking pays insurance compensations to the depositors or investors of the insured, the insured must, subject to a direction of the insurance undertaking, reduce its liabilities to the depositors or investors by the amounts specified by the insurance undertaking and increase accordingly its liabilities to the insurance undertaking.
  29. From the day on which the insurance compensation was paid to the depositor or the investor he shall forfeit any right of claim to a sum of money in the amount of the insurance compensation from a bank, a credit union or undertaking. Article
  30. Limitations on Compensations
  31. Compensations shall not be paid in the following cases: 1) to depositors or investors whose deposits or liabilities to the investors have been declared by a court ruling as acquired illegally; 2) to depositors or investors whose deposits or liabilities to the investors have been transferred, subject to contracts or any other way, after the day of the insured event; 3) to heads of the administration of a bank, a credit union or undertaking, heads of the subsidiaries/branches of a bank, a credit union or undertaking, members of the council/supervisory board and the board; to persons having at least 5 per cent of the bank's authorised capital, or persons holding at least 50 per cent of the capital of undertakings having at least 5 per cent of the bank's share capital; to persons who are carrying out independent audit of a bank, a credit union or undertaking; to children, adopted children, spouses, cohabitants living in registered partnership, parents and adoptive parents of the persons indicated above; 4) to borrowers of a bank, a credit union or undertaking where the deposits or liabilities to the investors are not in excess of their liabilities (the outstanding loans and interest). If the deposit of a borrower of a bank, a credit union or undertaking is in excess of his liabilities (the outstanding loans and interest), the insured sum shall be calculated by deducting the liabilities of the borrower from the deposit or liabilities to the investor, however, it may not be higher than the amount specified in Article 9
(3)of this Law; 5) for deposits kept in anonymous and coded accounts; 6) for deposits for which the insured has fixed the interest rate twice as high as the interest rate set for comparable deposits held with the same credit institution.
  1. Payment of compensations to the depositors and investors against whom an application has been filed with law enforcement or judicial authorities or courts in respect to the legality of acquisition of their deposit funds shall be suspended, pending coming into effect of the appropriate ruling. CHAPTER FOUR PROVIDING INFORMATION ABOUT INSURANCE AND TERMINATION OF INSURANCE Article
  2. Providing Information about Insurance
  3. The insured must provide information to the depositors and investors in Lithuanian about the terms and conditions of insurance. Moreover, where a depositor or an investor requests so, he must be provided information about the terms and conditions of payment of compensations.
  4. Terms and conditions of insurance may not become an instrument of competition used in advertising. Only an insurance undertaking which has provided insurance cover for the deposits and liabilities to the investors may be mentioned in advertisements. Article
  5. Termination of Insurance
  6. The council of an insurance undertaking shall, without a prior warning, terminate insurance where the supervisory authority of the insured withdraws the right of the insured to accept deposits. Insurance of the liabilities of the insured to the investors shall be terminated where the supervisory authority withdraws the right of the insured to provide investment services.
  7. The supervisory authority must notify forthwith the council of the insurance undertaking about withdrawal of the right to accept deposits or provide investment services.
  8. Where the insured acts in breach of the procedure of insurance and/or where its activities pose a risk to the capability of the insurance undertaking to meet its liabilities, the council of the insurance undertaking, after a prior communication to the supervisory authority, gives notice to the insured of the likely termination of insurance at least 12 months in advance. If the insured fails to eliminate breaches in the procedure of insurance within 12 months after the notice, insurance of the deposits accepted by the insured or its liabilities to the investors may be terminated pursuant to a decision of the council of the insurance undertaking and subject to the approval of the supervisory authority of the insured.
  9. The insurance undertaking shall make public notification of its termination of insurance of deposits and its liabilities to the investors in the "Informaciniai pranešimai" ("Information Supplement") of the "Valstybės žinios" ("Official Gazette"). Article
  10. Impact of Termination of Insurance Where an insured event occurs to the insured for whom insurance has been terminated, the insurance undertaking pays compensations only for the deposits and liabilities which had been accepted before the decision about the termination of insurance was adopted and had not been repaid or met before the day of the insured event. CHAPTER FIVE STATE UNDERTAKING "INSURANCE OF DEPOSITS AND INVESTMENTS" Article
  11. Status of the Insurance Undertaking
  12. The insurance undertaking shall be a state undertaking established under the Law of the Republic of Lithuania on the Insurance of Deposits of Individuals by the Government of the Republic of Lithuania and registered pursuant to the procedure laid down in legal acts of the Republic of Lithuania, having its own seal with the state emblem of Lithuania and the name "state undertaking "Insurance of Deposits and Investments". Its founder shall be the Ministry of the Finance.
  13. In its activities the insurance undertaking shall be guided by this Law, the Law of the Republic of Lithuania on the State and Municipal Undertakings of the Republic of Lithuania and other legal acts unless this Law provides otherwise and by its own by-laws. Article
  14. By-laws of the Insurance Undertaking The by-laws of the insurance undertaking must lay down its functions, the rights and duties of its council and administration as well other requirements set out in the Law of the Republic of Lithuania on State and Municipal Undertakings of the Republic of Lithuania. The by-laws shall be approved by the Government of the Republic of Lithuania. Article
  15. Functions of the Insurance Undertaking
  16. In implementing this Law the insurance undertaking shall: 1) accumulate funds pursuant to this Law in the Deposit Insurance Fund and the Fund of Insurance of Liabilities to the Investors; 2) calculate and pay compensations to the depositors and investors of the insured; 3) assess the terms and conditions of insurance/compensation of deposits and liabilities to the investors or any other protection provided by foreign states the banks or undertakings whereof are setting up branches/subsidiaries in the Republic of Lithuania; 4) supervise compliance of the insured with the procedure of insurance laid down in this Law; 5) evaluate the risk of the insurance undertaking; 6) perform other functions specified in this Law and the by-laws of the insurance undertaking. Article
  17. Activities of the Insurance Undertaking The insurance undertaking shall provide insurance cover for deposits of the depositors and liabilities to the investors, administer the Deposit Insurance Fund and the Fund of Insurance of Liabilities to the Investors as well as carry out other activities specified in the by-laws of the insurance undertaking. Article
  18. Rights of the Insurance Undertaking The insurance undertaking shall have the following rights: 1) to have accounts with the Bank of Lithuania, commercial banks and branches; 2) to conclude agreements and assume liabilities; 3) to dispose of the property it administers in the manner prescribed by laws and its own by-laws; 4) to terminate deposit insurance and insurance of liabilities to the investors in the cases specified in this Law; 5) to verify calculation and payment of insurance premiums by the insured; 6) to obtain from the insured the information necessary for the performance of its functions; 7) to obtain from the supervisory authorities of the insured the following information: the measures applied to the insured; the issue and withdrawal of authorisations for commercial banks, credit unions, and branches to accept deposits; the rights granted to commercial banks, undertakings, credit unions and branches; 8) to take loans in order to meet the liabilities of the undertaking; 9) to receive part of the assets of the commercial bank, undertaking or the credit union in liquidation which provided insurance coverage for the deposits of its depositors and its liabilities to the investors pursuant to this Law; 10) to enter into property valuation agreements with persons having a right to engage in securities valuation; 11) to engage in other activities provided for in the by-laws of the insurance undertaking.
  19. The insurance undertaking shall have full control of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to the Investors.
  20. The insurance undertaking must obtain insurance cover for the fixed tangible assets transferred to it in trust at an insurance undertaking registered in the Republic of Lithuania. Article
  21. Management of the Insurance Undertaking
  22. The council and the administration shall be the managing bodies of the insurance undertaking.
  23. The council shall comprise 6 members appointed by the Government of the Republic of Lithuania. The Ministry of Finance shall nominate 3 candidates, the Bank of Lithuania - 2 candidates, and the Securities Commission - 1 candidate. With the approval of the council, one representative from each of the following - the association of banks, the brokers' association and the association of credit unions may take part in the meetings of the council with a deliberative vote. Members of the council shall be remunerated for their work by the institutions which have delegated them.
  24. The term of office of members of the council shall be 4 years and the number of terms shall not be limited. The institution which has nominated its candidate to the members of the council may recall him/her and nominate another candidate to fill the vacancy.
  25. Only nationals of the Republic of Lithuania, permanently residing in the Republic of Lithuania, shall be eligible for membership in the council.
  26. The activities of the council shall be directed by chairman of the council and when he is not available - by deputy chairman of the council. Chairman and deputy chairman of the council shall be elected by the council of the undertaking from among its members.
  27. The council shall: 1) appoint and dismiss from office the head of the administration and the chief accountant of the insurance undertaking; 2) submit proposals to the founder concerning amendments of the by-laws of the insurance undertaking; 3) establish the procedure for calculation, payment of insurance premiums and its time limits, the rate of default interest for late payment of insurance premiums and the procedure for calculation and payment of default interest; 4) establish procedure for calculation and payment of insurance compensations; 5) establish the procedure for investment of the resources of the funds administered by the insurance undertaking and determine the countries into whose government and central bank securities investments may be made; 6) make decisions on the termination of deposit insurance or insurance of liabilities to the investors; 7) approve the annual financial statement of the insurance undertaking; 8) approve the estimate of administrative costs of the insurance undertaking; 9) make decisions on the change of the rate of the insurance premium, determine the amount of the loan to be taken by the insurance undertaking for meeting its liabilities; 10) determine what is a commercial secret of the insurance undertaking; 11) examine applications of the insured, the depositors and the investors entitled to insurance compensations about the conduct of the administration; 12) establish the procedure for complementary insurance of deposits and liabilities to the investors held with the branches; 13) determine the procedure for remuneration of and incentives for the administration and the employees, and the salary of the head of the administration and the chief accountant; 14) submit to the founder the annual report about its activities and the activities of the insurance undertaking; 15) perform other functions provided for in this Law and the by-laws.
  28. The administration of the insurance undertaking shall manage the insurance undertaking in the manner laid down in its by-laws.
  29. The activities of the administration shall be directed by the head of the administration. He shall be answerable to the council and the founder. The head of the administration, in the manner prescribed by laws, shall conclude and terminate employment contracts with the employees of the insurance undertaking. He shall have a right to enter into contracts on behalf of the insurance undertaking, represent the undertaking at government and administration institutions, courts, and may also have other rights provided for in the by-laws of the undertaking.
  30. The head of the administration and the employees must compensate to the undertaking, in the manner prescribed by laws of the Republic of Lithuania, for the losses caused through their fault. Article
  31. Confidentiality of the Commercial Secrets of the Insurance Undertaking The information which is a commercial secret of the insurance undertaking may be supplied only to the institutions specified in laws and in the manner prescribed by law. Article
  32. Separation of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to the Investors
  33. The insurance premiums paid by commercial banks, branches and credit unions, insurance compensations and earnings from the investments made by of the Deposit Insurance Fund, also the funds recovered from the insured in liquidation which had paid insurance premiums to the Deposit Insurance Fund shall be recorded and accumulated separately from the insurance premiums paid by undertakings, the insurance compensations and the earnings from the investments made by the Fund of Insurance of Liabilities to the Investors as well as from the income recovered from the insured in liquidation who had paid insurance premiums to the Fund of Insurance of Liabilities to the Investors .
  34. Insurance compensations for deposits and liabilities of commercial banks and branches to the investors shall be paid from the Deposit Insurance Fund, while insurance compensations for the liabilities of undertakings to the investors shall be paid from the Fund of Insurance of Liabilities to the Investors.
  35. Where one of the funds is short of resources for payment of insurance compensations while the other has such resources, insurance compensations may be paid from the fund which has the resources. Afterwards, the insurance premiums paid into the fund which was short of resources for payment of insurance compensations shall be used, first of all, for repayment of the resources to the other fund. Article
  36. Capital of the Insurance Undertaking
  37. The capital of the insurance undertaking shall be indicated in the by-laws of the insurance undertaking.
  38. The authorised capital of the insurance undertaking may be used for payment of insurance compensations only where both funds are short of monies.
  39. The portion of the authorised capital of the insurance undertaking, used pursuant to paragraph 2 of this Article, shall be restored up to the level of the authorised capital specified in the by-laws of the insurance undertaking from the resources of the Deposit Insurance Fund and of the Fund of Insurance of Liabilities to the Investors. Both the Deposit Insurance Fund and the Fund of Insurance of Liabilities to the Investors used to restore the authorised capital must equal the amounts by which the authorised capital was reduced for payment of insurance compensations of each fund respectively. Article
  40. Earnings and Expenses of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to the Investors
  41. The earnings of the Deposit Insurance Fund and of the Fund of Insurance of Liabilities to the Investors shall be made up of insurance premiums, the amounts recovered, in the manner prescribed by laws, from the insured in liquidation, and of the earnings from the investments made by the Deposit Insurance Fund and the Fund of Insurance of Liabilities to the Investors.
  42. The expenses of the Deposit Insurance Fund and of the Fund of Insurance of Liabilities to the Investors shall be made up of insurance compensations and the administrative expenses of the Deposit Insurance Fund and of the Fund of Insurance of Liabilities to the Investors.
  43. The amount of the administrative expenses of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to the Investors shall be determined, after assessment of the expected administrative expenses and the amounts of the funds, by the council of the insurance undertaking when approving the estimate of administrative expenses of the undertaking. Article
  44. Investment of the Deposits Insurance Fund and the Fund of Insurance of Liabilities to the Investors
  45. The resources managed by the insurance undertaking may be invested following the procedure established by the council of the undertaking, into the securities of governments and central banks of the countries determined by the Council.
  46. The earnings from the investment of the resources shall be distributed to the Deposits Insurance Fund and the Fund of Insurance of Liabilities to the Investors in proportion to their amounts. Article
  47. Announcement of Financial Statements The annual financial statement of the insurance undertaking must be publicly announced, following the prescribed procedure, within 4 months following the close of the financial year. Prior to the announcement of the financial statement, an audit of financial accounting must be carried out. Article
  48. Exemption of the Insurance Undertaking from Insurance of the State Capital and Payment of the Interest on the Use of the Capital The insurance undertaking shall be exempt from insurance of the state capital and from payment of the interest on the use of the state capital. Article
  49. Liquidation and Restructuring of the Insurance Undertaking The insurance undertaking shall be liquidated or restructured in accordance with the procedure laid down in the laws of the Republic of Lithuania. CHAPTER SIX FINAL PROVISIONS Article
  50. Entry into Force
  51. This Law shall enter into force on 1 July
  53. Until entry of this Law into force, the insurance compensations calculated but not paid to the depositors pursuant to the Law of the Republic of Lithuania on the Insurance of Deposits of Individuals and the Law of the Republic of Lithuania on Deposits Insurance shall not be changed and shall continue to be paid from the Deposit Insurance Fund.
  54. Deposits held with a commercial bank, a credit union and/or a branch which became the insured under the Law of the Republic of Lithuania on the Insurance of Deposits of Individuals and/or under the Law of the Republic of Lithuania on Deposits Insurance shall be deemed insured under this Law from the day of its entry into force. Liabilities to the investors shall be deemed as insured from the first day of payment of the insurance premium. Article
  55. Implementation of the Law
  56. The name "state undertaking "Deposit Insurance Fund" shall be replaced by the name "state undertaking "Deposit and Investment Insurance".
  57. At the moment of entry of this Law into force the funds controlled by the state undertaking Deposit Insurance Fund, with the exception of the authorised capital, shall be attributed to the Deposit Insurance Fund, and 3 million Litas shall be attributed to the Fund of Insurance of Liabilities to the Investors.
  58. Within 6 months from the day of entry of this Law into force, the Government of the Republic of Lithuania must amend the by-laws of the insurance undertaking and appoint one member of the council of the insurance undertaking. The term of office of the members of the council of the insurance undertaking appointed prior to the day of entry of this Law into force shall be calculated from the day of their appointment. Article
  59. Repeal of the Laws After entry of this Law into force, the following laws shall be repealed: 1) The Law of the Republic of Lithuania on Deposits Insurance ("Valstybės žinios" 2001, No. 23-760); 2) The Law of the Republic of Lithuania Amending Article 3, 4, 5 and 13 of the Law on Deposits Insurance ("Valstybės žinios" 2001, No. 90-3145); 3) The Law of the Republic of Lithuania on Insurance of Liabilities of Commercial Banks and Brokers Undertakings to Investors ("Valstybės žinios" 2001, No.112-4073). I promulgate this Law passed by the Seimas of the Republic of Lithuania PRESIDENT OF THE REPUBLIC VALDAS ADAMKUS

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