LITHUANIA REPUBLIC
LITHUANIA LAW ON THE ESTABLISHMENT
THE LITHUANIAN DEVELOPMENT BANK AND ON THE APPROVAL
ITS STATUTE The Seimas
the Republic
Lithuania, on the basis
the Joint Declaration
Ministers from Denmark, Finland, Iceland, Norway, Sweden, Estonia, Latvia and Lithuania on the Establishment
a Baltic Investment Program for Small and Medium-Sized Enterprises in Estonia, Latvia and Lithuania, done in Helsinki on 4 March 1992, and the Memorandum
Understanding between the Government
the Republic
Lithuania, the European Bank for Reconstruction and Development, and the Nordic Investment Bank, done in Vilnius on 28 June 1993 hereby passes this Law: 1. To approve the Statute
the Lithuanian Development Bank. 2. To establish that in case
conflict between the Statutes
the Lithuanian Development Bank and the laws and other standard acts
the Republic
Lithuania, the provisions
the Statutes
the Lithuanian Development Bank shall prevail; and 3. To propose to the Government
the Republic
Lithuania to take part in the establishment
the Lithuanian Development Bank. I promulgate this Law passed by the Seimas
the Republic
Lithuania. ALGIRDAS BRAZAUSKAS President
the Republic Vilnius 14 December 1993 No. I-335 Appendix to the Law
the Republic
Lithuania
14 December 1993 No. I-335 STATUTE
THE LITHUANIAN DEVELOPMENT BANK CHAPTER 1 GENERAL PROVISIONS Article 1 The Lithuanian Development Bank (LDB) is a stock investment bank to be set up by the Government
Lithuania and the European Bank for Reconstruction and Development (EBRD), with possible participation
other Lithuanian and foreign shareholders. The LDB is guided by the laws
the Republic
Lithuania, this Statute and international banking principles. The LDB is a legal person operating in an independent and autonomous manner. The name
the Bank is: in Lithuanian: Lietuvos Vystymo Bankas (abbreviated form - LVB), in English: Lithuanian Development Bank (abbreviated form - LDB). The seat
the Bank is located in Vilnius. Article 2 The LDB shall be established to promote the economic development
the Republic
Lithuania. Its principal activities shall be the financing
capital investment and related permanent working capital requirements
financially profitable and creditworthy private capital enterprises. In exceptional cases the LDB may also channel resources to state enterprise projects as a trustee or agent for third parties without taking financial risk. In its activities the LDB shall especially promote the establishment and development
small and medium size enterprises and
a capital market in Lithuania. It will only pursue such activities and in such manner as to earn a commercial rate
return. The LDB financing shall be provided for medium and long term, short term loans may be granted only in exceptional cases and with the assent
the Board
Directors. Article 3 The LDB shall be liable for its obligations with all its property. The LDB shall not be liable for the obligations
the state. The state is not liable for the obligations
the LDB, with the exception
cases where the state undertakes such obligations. The LDB shall not be liable for the obligations
its shareholders. The shareholders shall be liable for the obligations
the LDB only to the extent
their commitments to the Bank's capital, but not with their own property. Article 4 The LDB shall guarantee the secrecy
its clients' correspondent accounts and operations. The Board members, President
the LDB, staff
the Bank, auditors and other persons authorized to obtain such information shall be obliged to maintain the secrecy
all information relating to customer accounts and bank operations. Such information may be disclosed only in cases stated by law. Article 5 The LDB may open its affiliates and representative
fices in Lithuania and abroad. Article 6 Upon its adoption by the Seimas, the Statute
the LDB shall be registered with the Bank
Lithuania. The LDB may commence activities: upon receiving a license from the Bank
Lithuania and upon the registration
the LDB in the Registration Book
the Bank
Lithuania; and upon presenting to the Bank
Lithuania the LDB auditor's certification that the share capital has been paid-in in accordance with the founding and subscription agreement. The affiliates and representative
fices
the LDB shall commence their activities upon their registration in the Registration Book
the Bank
Lithuania. The licence shall be issued free
charge within 30 days from submitting an application and all the requisite documents to the Bank
Lithuania. The application shall be submitted with the following: 1) the founding and subscription agreement between the Government
the Republic
Lithuania and other possible founders, covering: - the Statute
the Bank, - the names
the founders
the Bank and the address
their
fices, - the amount
shares subscribed for by each founder, and - the term during which all the shares must be paid for; 2) the minutes
the constitutive meeting
the shareholders covering the elected members to the Board
Directors and the appointed auditors
the Bank; 3) certification from the auditors that the subscribed share capital has been paid-in; 4) name and address
the members to the Board
Directors as well as their alternates; 5) name and address
the President
the Bank; 6) name and address
all persons authorized to sign on behalf
the Bank; and 7) name and address
the affiliates and representative
fices
the LDB in Lithuania and abroad. The LDB must present to the Bank
Lithuania for registration all decisions
the shareholders to increase or decrease the share capital
the LDB, to liquidate the LDB or to appoint the liquidators, as well as all decisions to change or supplement the documents and information set forth herein. Article 7 The LDB shall pay the taxes in accordance with the Law on Foreign Investments in the Republic
Lithuania and other laws
the Republic
Lithuania. CHAPTER 2 CAPITAL AND SHARES
THE LDB Article 8 The initial subscribed share capital
the LDB amounts to ECU five
ECU 100,000 each. Contributions to the share capital shall be made in accordance with the procedure established in the founding and subscription agreement in cash or in kind. The value
in kind contributions must be duly verified by independent experts and auditors
the Bank. The shares shall be considered to be paid-in by in kind contributions after their evaluation has been confirmed by the General Meeting
Shareholders pursuing from the recommendations
the Board
Directors. Article 9 The share capital
the LDB may be increased as per resolution
the General Meeting: 1) by issue and placement
new payable shares; 2) by transferring part
the restricted or unrestricted reserves to the share capital and thereby increasing the par value
a share or by issuing new free shares; and 3) by using the 1st and the 2nd methods simultaneously. Article 10 The General Meeting
Shareholders shall determine the conditions
subsequent issue
shares, the class and number
shares issued when increasing the capital, subscription terms and procedures. Subscribed shares must be paid-in within the time schedule decided by the General Meeting
Shareholders but within one year from the day
the subscription therefor. Article 11 The reserve capital (restricted reserves) shall be formed by deducting at least 10%
profits annually, until it has reached the level determined by the General Meeting but no less than 1/4
subscribed share capital. The reserve capital may be used only to cover the losses or to increase the share capital. Article 12 Unrestricted reserves may be formed from the profits left after the deductions in accordance with Article 11
this Law. Article 13 The shareholder
the LDB shall have the following property and non-property rights: 1) to receive the dividend if it is assigned; 2) to receive part
the property
the Bank under liquidation; 3) to have a priority to subscribe for such part
any increase in the share capital which is proportional to the value
his subscribed for and paid-in shares; 4) to sell or transfer in any other way all or part
his stock to other persons; and 5) to participate in the governing
the Bank in line with Chapter 4
this Statute. Article 14 The share capital
LDB can be decreased by decision
the General Meeting, taking into consideration the rights
creditors as well as stating the reasons
decrease and setting the procedure
decrease. CHAPTER 3 FUNCTIONS
THE LDB Article 15 THE LDB shall perform the following operations: 1) shall grant loans in national and foreign currency; 2) shall issue guarantees; 3) shall participate in co-financing activities; 4) shall borrow funds for its own account in foreign and national currency, in Lithuania and abroad, using all relevant financial instrument; 5) shall accept managed funds from Lithuania and abroad directly related to the activities undertaken by the LDB; 6) shall invest its liquid assets in Lithuania and abroad; 7) shall engage in correspondent activities with foreign banks and shall maintain hard currency accounts with these banks; and 8) shall provide advisory services on the issues
project financing. Upon separate authorization from the shareholders, the Bank may make equity investments. Such authorization shall be passed through at the shareholders meeting by at least 2/3 majority vote in accordance with the procedure for conducting the General Meeting
Shareholders. The LDB may engage in other activities relating to its operation. The LDB shall not take deposits or conduct current account business. The Bank shall take into account the potential environmental impact associated with its investment decisions. Article 16 The LDB shall conduct its operations according to the following principles and standards meeting international banking practices: 1) the LDB shall choose clients by itself independently according to project profitability; 2) generally, loans and guarantees shall be granted for medium and long terms; loans may be granted for a short term only in exceptional cases; 3) the LDB may make loans directly to borrowers or indirectly through other banks serving as intermediaries; 4) the LDB shall not incur the foreign exchange risk in its lending and funding operations; 5) in making or guaranteeing a loan, the LDB must obtain adequate security or payment depending on the financial capability
the ultimate borrower to meet contractual obligations; 6) the interest rates charged and other financial conditions fixed by the LDB for its lending and related activities shall be set at levels to cover the operating and financing costs
the LDB as well as to earn a commercial return and to reflect appropriate market terms for the type
investment envisaged; and 7) the LDB shall charge a fee for all its services. Article 17 When performing its operations, the LDB shall in the normal course conform to the following economic standards: 1) the Bank's borrowings may not exceed more than four times the total amount
the Bank's paid-up share capital and reserve capital; 2) equity investments in the share capital
a single enterprise or group
enterprises connected by ownership right may not exceed 25%
the issued capital
the enterprise or group
enterprises and 10%
the Bank's paid-up share capital and reserve capital; 3) the aggregate total
equity investments shall not exceed 75%
the Bank's paid-up share capital and reserve capital; 4) the total commitment to any single enterprise or group
enterprises connected by ownership right (loans guarantees, equity and any other type
assistance) may not exceed 20%
the Bank's paid-up share capital and reserve capital; 5) the total commitment to a single project may not exceed 20%
the Bank's paid-up share capital and reserve capital. If the above standards are not conformed to, the Board
Directors must immediately adopt a decision concerning the term and means
resolution
the non-conformity. The economic standards and reserve requirements established by the Bank
Lithuania shall not be obligatory to the LDB. CHAPTER 4 THE GOVERNING BODIES
THE LDB Article 18 The governing bodies
the LDB are: 1) the General Meeting
Shareholders; 2) the Board
Directors; and 3) the President. Article 19 The General Meeting
Shareholders is the supreme governing body
the LDB. The annual General Meeting shall be convoked by the Board
Directors no later than within four months from the end
each financial year. Extraordinary General Meetings shall be convoked by the auditors or upon the decision
the Board
Directors adopted on its initiative or whenever requested in writing by the owners
at least 1/10
all shares. The shareholders must be notified
the General Meeting by registered letters no later that two weeks before the Meeting. Invitations with the enclosed agenda, time and place
the Meeting must be sent to the addresses recorded in the register
shareholders. The following matters shall be within the exclusive competence
the General Meeting: 1) approval
amendments to the Statute
the Bank to be presented to the Seimas; 2) increase and reduction
the share capital and other matters stated in Article 10
this Statute; 3) approval
the Annual Report
the LDB, the Annual Statement
Accounts, and allocation and distribution
profit and compensation for the losses; 4) election
the auditors and liquidators and establishment
their salaries; 5) election
the members
the Board
Directors and establishment
their salaries; and 6) dissolution or merger
the LDB. The General Meeting may adopt resolutions if the attending shareholders or their proxy have more than 1/2
the total number
votes. If there is no quorum, the Board
Directors, in compliance with the procedure for convoking Meetings established in Article 19
this Statute, must immediately convoke a repeat Meeting. Repeat Meeting shall have the right to pass resolutions regardless
the number
the attending shareholders. The General Meeting may resolve only the issues included on the agenda, with the exception
cases when all the shareholders are present in person or by proxy and give their unanimous consent that the issues which are not on the agenda be considered. The General Meeting
Shareholders shall pass its resolutions by more than 2/3 majority
the votes cast in the matters defined in items 1), 2) and 6)
, whereas all other decisions shall be taken by a majority
the votes cast. General Meetings
Shareholders may be attended by shareholders who own shares registered in the Share Register
the LDB. Each General Meeting shall be recorded by minutes, which must be signed by the secretary and the chairman
the General Meeting. Lithuanian and English shall be used in General Meetings. All resolutions passed by a General Meeting as well as related
ficial documents must be announced in Lithuanian and in English and shall have equal force. Article 20 The Board
Directors shall consist
at least five
Directors as well as the number
its members shall be determined by the General Meeting. The right
representation in the Board
Directors shall be determined in proportion to the respective shareholder's subscribed and paid-in shares. The members
the Board
Directors as well as their alternates, except the President, shall be appointed for a three year period. All the members
the Board
Directors must be persons experienced in economic and financial matters and/or in banking. Article 21 Every year, no more than 30 days after annual General Meeting, the Board
Directors shall by simple majority vote elect one
its members as Chairman
the Board
Directors and one member as his deputy. The same person may be elected as Chairman
the Board
Directors for not more than six
the Board
Directors. The members
the Board
Directors shall account for their work to the General Meeting
Shareholders. All the powers
the LDB, except for the powers expressly vested in the General Meeting, shall be vested in the Board
Directors. In this respect the Board
Directors shall especially: 1) direct and supervise the activities and operations
the LDB; 2) appoint and dismiss the President
the LDB; 3) establish the LDB's operational guidelines, approve the Code
the Board
Directors and the annual budget
the LDB; 4) determine the remuneration
the President; 5) submit to the General Meeting
Shareholders the Annual Report
the Bank, the Annual Statement
Accounts, the Auditor's Report and the proposal for allocation and distribution
profit; 6) submit to the General Meeting any proposals to increase or reduce the capital; and 7) approve all investments and loans unless such powers are delegated to the President. Article 22 The meeting
the Board
Directors shall be convoked by the Chairman or, in case
his absence, by his deputy, at least four
the Board
Directors or by the President or by the auditor(s) with the subject
discussion stated. The Board
Directors may pass resolutions if a majority
its members are present in person or by proxy. Decisions
the Board
Directors shall be passed by majority vote
the Members present and voting with the exception
decisions on issues covered in items 2), 3) and 7)
which to be taken upon a more than 2/3 majority vote
the Board members present and voting. Each member shall have one vote. In the event
a tie the vote
the Chairman
the meeting shall be decisive. In case
urgency, the Board
Directors may pass its resolutions by letter or telegraphic balloting. Such decisions are deemed to have been passed, as soon as the matter to be decided has been transmitted to all members
the Board
Directors and affirmative written or telegraphic statements from at least a half or, on issues covered in items 2), 3) and 7)
,
more than 2/3
all Board members have been received. Written invitations to vote shall be sent by registered mail. Telegraphic invitations to vote shall be confirmed by telegraphic answer without undue delay. The results
voting by mail or by telegraph shall be announced at the next meeting
the Board
Directors. Each meeting
the Board
Directors shall be recorded by the minutes which are to be signed by the Chairman
the meeting and the secretary. All communication and documents related to the activities
the Board
Directors shall be in Lithuanian and in English. Article 23 The day-to-day management
the LDB shall be carried out by the President. The President shall be appointed for the term
five
the LDB must be a resident
the Republic
Lithuania. The President shall conduct the current business
the LDB under the direction
the Board
Directors. The President shall decide the organizational structure
the Bank, shall be responsible for appointment and dismissal
the staff. The President
the LDB shall be a non-voting member
the Board
Directors. Article 24 Two persons shall be authorized to jointly sign on behalf
the LDB. They may be members
the Board
Directors, the President or persons authorized by the Board
Directors. Article 25 The members
the Board shall be liable to the LDB for the losses inflicted on the Bank by reason
their negligence or deliberately inadequate performance
their duties. CHAPTER 5 ANNUAL REPORT AND DISTRIBUTION
PROFITS Article 26 The Annual Statement
Accounts must be in accordance with the generally accepted principles
accounting as well as with the standards
accounting in effect in the Republic
Lithuania. The audit report and the principles
auditing must correspond to the generally accepted principles
accounting. The financial accounting
the LDB shall be carried out in the currency
the share capital. Transactions concluded in the national currency
the Republic
Lithuania or in any other currency must be accounted in the Bank accounts according to the exchange rate as fixed by the Bank
Lithuania for the day
the transaction. All transactions concluded in the currency other than the currency
the share capital must be accounted as converted in the currency used for the LDB accounting in accordance with the generally accepted standards. The LDB shall organize its book-keeping, accountancy and statistics as well as prepare and submit reports in accordance with the procedure established by the laws
the Republic
Lithuania. Article 27 The net annual profit after all necessary deductions, including those for loan losses, shall be allocated on the decision
the General Meeting
Shareholders in accordance with the procedure established in Articles 11-13
this Statute. Article 28 The General Meeting
Shareholders shall determine the amount
dividends according to the recommendations
the Board
Directors. Dividends shall be payable only for the fully paid-in shares. The LDB shall pay dividends, if any, to the shareholders not later than within four weeks after the allocation
profits. CHAPTER 6 SUPERVISING AND AUDITING
THE LDB'S ACTIVITIES Article 29 The auditing
the LDB shall be carried out by independent external auditors appointed by the General Meeting
Shareholders for the period
one year. The members
the Board
Directors and the staff
the LDB are excluded from being auditors. The auditor must be either a universally recognized international auditing firm or the auditor must represent an auditing firm associated with an internationally recognized auditing firm. Article 30 The auditors shall have access to and shall audit the accounts, book-keeping and operations
the LDB. Article 31 At the request
shareholders representing at least one tenth (1/10)
all shares a special auditor may be appointed to carry out a special auditing
the LDB. Such audit shall be carried out at the expense
the requestor. Article 32 The Board
Directors shall submit to the auditors the Annual Statement
Accounts and the Annual Report no later than within four
the financial year. The auditors shall submit to the Board
Directors the Auditor's Report no later than three weeks before the date
the annual General Meeting. The Board
Directors shall submit to the shareholders the Annual Statement
Accounts, the Annual Report and the Auditor's Report no later than two
the General Meeting. The Annual Statement
Accounts, the Annual Report and the Auditor's Report shall be delivered to the Bank
Lithuania within 30 days from approval thereof by the General Meeting
Shareholders. Article 33 The Bank
Lithuania shall carry out the supervision and auditing
the LDB's activities in pursuance
the Law on the Bank
Lithuania. CHAPTER 7 TERMINATION
THE LDB'S ACTIVITIES Article 34 The LDB shall terminate its activities by dissolution: 1) by the decision
the General Meeting; 2) in case
insolvency or bankruptcy; or 3) by decision
the court. The issues concerning the termination
the LDB's activities and procedures for the final settlement
debts with creditors shall be determined by the General Meeting
Shareholders. Article 35 The dissolution shall be carried out by liquidators appointed by the General Meeting
Shareholders or, in the case
bankruptcy, by court. At the end
the term
dissolution
the LDB, the liquidators submit to the General Meeting
Shareholders the final report and balance sheet. Article 36 The activities
the liquidators, the current and final reports as well as the balance sheet shall be inspected by the auditors
the LDB who shall submit to the General Meeting
Shareholders the Auditor's Report simultaneously with the current and final reports
the liquidators. Article 37 The assets
the LDB remaining after adjustment
all liabilities, shall be distributed to the shareholders in proportion to their shares in the share capital.
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