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REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA Official translation REPUBLIC OF LITHUANIA Law on Privatisation of State-Owned and Municipal Property 4 November 1997 No VIII-480 (As last amended on 5 December 2006 No X-949) Vi

paragraph 1 before 1 March 2007: 1. The Property Fund, fulfilling the functions assigned to it under this Law and the Law on the Property Fund in the field of privatisation of state-owned and municipal property shall act as the holder of a privatisation object who is privatising state-owned property. Under separate agreements with municipalities, the Property Fund may also act as a representative of an individual municipality who is privatising the property owned by the municipality.

paragraph 1 after 1 March 2007:

  1. The Property Fund, fulfilling the functions assigned to it under this Law and the Law on the State Property Fund in the field of privatisation of state-owned and municipal property shall act as the holder of the privatisation object and authorised person who is privatising state-owned property. Under separate agreements with municipalities, the Property Fund may also act as a representative of an individual municipality who is privatising the property owned by the municipality.
  2. The Property Fund shall: 1) draft the list of privatisation objects and submit it to the Government for approval; 2) establish the method of privatisation and the terms and conditions of privatisation of a specific object (group of objects);

subparagraph 3 of paragraph 2 before 1 March 2007: 3) in accordance with the procedure established by the Republic of Lithuania Law on Public Procurement, hire legal or natural persons as well as enterprises without the rights of a legal person for the performance of privatisation tasks (including valuation of privatisation objects) and sign contracts for the fulfilment of the tasks;

subparagraph 3 of paragraph 2 after 1 March 2007: 3) in accordance with the procedure established by legal acts regulating public procurement, conclude public sales and purchase contracts for the performance of privatisation tasks (including valuation of privatisation objects);

subparagraph 4 of paragraph 2 before 1 March 2007: 4) set up a commission for assessing the value of the privatisation object (the block of shares in an enterprise) and for fixing the initial selling price, which shall valuate the privatisation object;

subparagraph 4 of paragraph 2 after 1 March 2007: 4) valuate the privatisation object according to the procedure established by legal acts regulating valuation of property and business; 5) restructure the enterprise controlled by the state, where such restructuring will enhance its privatisation possibility or increase the selling price of the privatisation object (shares in an enterprise); Subparagraph 5 of paragraph 2 shall be repealed on 1 March

  1. 6) in the cases provided in Article 12 of this Law, authorise the transactions entered into by an enterprise controlled by the state or refuse such authorisation; 7) seek investors for a privatisation object (also publish the Information Bulletin of Privatisation where information on a privatisation object prescribed by Article 11 of this Law must be announced and prepare promotional documents as well as arrange advertising of the privatisation object); 8) sign privatisation transactions on behalf of the Government; 9) supervise the implementation of privatisation transactions until the fulfilment of all terms and conditions of the transaction; 10) transfer documents certifying the right of ownership to persons who have acquired privatisation objects; 11) sign agreements with municipalities for the privatisation of shares and other property owned by them; 12) accumulate data on privatisation activities; 13) represent the Government in court proceedings relating to privatisation transactions signed by the Fund; 14) represent the Government in court proceedings relating to privatisation transactions entered into under the Law on the Initial Privatisation, and also transactions entered into prior to coming into force of this Law; 15) apply to the court in their own name or on behalf of the Government upon its instruction for the invalidation of transactions entered into by an enterprise controlled by the state that violate this Law and other laws, and for the compensation for damages. Article
  2. The Privatisation Commission
  3. The Privatisation Commission is a state institution set up for the purpose of privatisation supervision and operating in accordance with this Law and the regulations approved by the Government.
  4. The Privatisation Commission shall be accountable to the Seimas.
  5. The Privatisation Commission shall consist of 13 members. The Chairman of the Commission and its 6 members shall be appointed and removed from office by the Seimas on the recommendation of the Government. The remaining 6 members of the Privatisation Commission shall be appointed and removed from office by the Seimas on the recommendation of the members of the Seimas political groups.
  6. The Privatisation Commission shall have the right to: 1) approve or refuse to approve draft object privatisation programmes; 2) approve or refuse to approve draft object privatisation transactions, except for the transactions concluded at the National Stock Exchange; 3) approve or refuse to approve a draft list of strategic investors; 4) suspend, in the cases provided by this Law, the implementation of an object privatisation programme and/or consider the programme completed; 5) approve or refuse to approve the selling of the block of shares owned by the state or a municipality and transferred under agreement to the state enterprise the State Property Fund for privatisation that entitle them to less than 1/4 of the total votes at the general meeting of shareholders where a tender offer to buy this block of shares has been submitted in accordance with the procedure established by the Republic of Lithuania Law on the Securities Market; 6) approve or refuse to approve the selling of the block of shares owned by the state or a municipality and transferred under agreement to the state enterprise the State Property Fund for privatisation that entitle them to less than 1/20 of the total votes where this block of shares is bought on a compulsory basis in accordance with the cases and the procedure established by the Republic of Lithuania Law on the Securities Market.
  7. The Privatisation Commission shall have the right to obligate the Property Fund to perform an additional examination of the documents submitted for its consideration. The Privatisation Commission shall have the right to delegate its representative or representatives to perform the examination of the privatisation documents.
  8. If the Privatisation Commission adopts a negative decision concerning the issue specified in paragraph 4 of this Article, the Property Fund shall have the right to submit the draft decision for consideration to the Government, which shall take the final decision. The Privatisation Commission shall regularly report to the Seimas on the work accomplished by it.
  9. The decisions of the Privatisation Commission shall be taken by simple majority vote of all the Commission members. A member of the Privatisation Commission shall have no right to vote on the issue under consideration, if he or his family members (parents and children, brothers and sisters, or the spouse) have a personal interest in the results of the decision.
  10. The Government Resolutions adopted in the cases provided for by this Law, and also the decisions of the Privatisation Commission shall be published in the official gazette Valstybės žinios. Article
  11. Municipal Property Privatisation Commissions
  12. Municipal property privatisation commissions shall be set up pursuant to the decision of municipal councils.
  13. The number of the members of municipal property privatisation commissions and their composition shall be determined by the municipal council. At the municipality level, the municipal property privatisation commissions shall perform the functions of the Privatisation Commission. If the municipal council decides not to set up the municipal property privatisation commission, its functions shall be performed by the Privatisation Commission.
  14. The regulations of the municipal property privatisation commission shall be approved by the municipal council.
  15. The municipal property fund or, where it is not set up, another municipal administration department which holds, uses and disposes of the property owned by the municipality, shall fulfil, at the municipality level, the functions prescribed under this Law for the Property Fund.
  16. A notice about the privatisation of property owned by the municipality must be published in the Information Bulletin of Privatisation. Article
  17. Privatisation Funds
  18. Privatisation funds shall consist of: 1) income received from privatisation transactions and selling of the block of shares owned by the state (municipality) in accordance with the Republic of Lithuania Law on the Securities Market in the cases specified in paragraph 3 of Article 2 of this Law; 2) interest for deferred payments and default interest (penalties and late payment interest for non-fulfilment of the terms and conditions stipulated in privatisation transactions); 3) other income (aid from international organisations, income from additionally provided services, use of the database and other income); 4) other proceeds.
  19. If the privatisation object is owned by the state, the privatisation funds specified in subparagraphs 1 and 2 of paragraph 1 hereof shall be transferred into the Privatisation Fund account opened for the Ministry of Finance (except for the method of privatisation specified in Article 18 of this Law), and if the object is owned by the municipality - into a special account of the municipality.
  20. Privatisation funds in the Privatisation Fund account opened for the Ministry of Finance shall be used for: 1) restoration of savings of the citizens and covering of the related expenses as well as for setting up of the Reserve (Stabilisation) Fund by a decision of the Government (not less than 2/3 of funds received from privatisation). The Reserve (Stabilisation) Fund shall be set up by the Government and its regulations shall be approved by the Seimas upon recommendation of the Government. The funds of the Reserve (Stabilisation) Fund may be used, by Government Resolution, for the following purposes: to finance the pension system reform, to accumulate and restore monetary funds of the Lithuanian State Reserve required for maintaining functioning of the economy under conditions of emergency and in the presence of threats to the economy as well as to cover the Fund management expenses and, subject to repayment, discharge property obligations of the state related to the state debt. The funds for restoration of savings of the citizens and covering of the related expenses may, upon a decision of the Government, be used temporarily, in the period 1999-2001, for the discharge of property obligations of the state arising from the implementation of the Republic of Lithuania Law on the State Debt;

subparagraph 2 of paragraph 3 before 1 March 2007: 2) setting up of the small and medium-sized business promotion fund and for the implementation of the national programmes approved by the Government (up to 1/3 of funds received from privatisation);

subparagraph 2 of paragraph 3 after 1 March 2007: 2) for the implementation of the programmes approved by the Government (up to 1/3 of funds received from privatisation);

subparagraph 3 of paragraph 3 before 1 March 2007: 3) deductions into a special fund to be used for satisfying the employment-related claims of employees of enterprises under bankruptcy or those already declared bankrupt;

subparagraph 3 of paragraph 3 after 1 March 2007: 3) the Guarantee Fund according to a separate programme;

subparagraph 4 of paragraph 3 before 1 March 2007: 4) covering the expenses related to the fulfilment of functions of the Privatisation Commission and the Property Fund provided for by this Law;

subparagraph 4 of paragraph 3 after 1 March 2007: 4) covering the expenses related to the fulfilment of functions of the Privatisation Commission and the Property Fund provided for by this Law and other legal acts; 5) remuneration of experts for their services; 6) preparation of objects for privatisation in accordance with the procedure established by the Government.

paragraph 4 before 1 March 2007: 4. The share of the privatisation funds subject to transfer to the Property Fund shall be established as a percentage from income, specified in subparagraphs 1 and 2 of paragraph 1 hereof, received in money and transferred into the account of the Privatisation Fund. The percentage shall be approved by the Government on the recommendation of the Ministry of Finance every six months. The funds for the fulfilment of functions of the Privatisation Commission shall be allocated every six months by the Government according to the estimate submitted by the Ministry of Finance. The Government shall establish the procedure for the accounting and use of funds of the Privatisation Fund. The Government shall regularly inform the Seimas about the use of the privatisation funds.

paragraph 4 after 1 March 2007:

  1. The share of the privatisation funds subject to transfer to the Property Fund shall be established as a percentage from income, specified in subparagraphs 1 and 2 of paragraph 1 hereof, received in money and transferred into the Privatisation Fund account. The percentage shall be approved by the Government on the recommendation of the Ministry of Finance every six months. The funds for the fulfilment of functions of the Privatisation Commission shall be allocated by the Government according to the estimate submitted by the Ministry of Finance. The Government shall establish the procedure for the accounting and use of funds of the Privatisation Fund. The Government shall regularly inform the Seimas about the use of the privatisation funds.
  2. The privatisation funds received from the privatisation of property owned by a municipality shall be transferred into a special account of the municipality upon deducting the amount due to the Property Fund under the agency agreement signed by the Property Fund and the authorised representative of the municipality. The procedure for the use of funds allocated to the municipality shall be established by the municipal council. CHAPTER THREE PREPARATION OF OBJECTS FOR PRIVATISATION Article
  3. Information about Privatisation Objects
  4. Each holder of a privatisation object must present to the Property Fund and/or potential buyers documents and other information about the privatisation object in accordance with the procedure established by the Government. Confidential information must be furnished to potential buyers only upon prior receipt of their written pledge not to disclose the information. The requirements for safekeeping of confidential information may be laid down in the privatisation transaction.
  5. Confidential information is information, which has received such status by a decision of an enterprise. Information, which is public under the laws of the Republic of Lithuania, may not be considered confidential.
  6. The holder of the privatisation object, the head of the enterprise administration and the chief financier (accountant) shall be held liable, within their sphere of competence, for the distortion, falsification and/or delayed presentation of the data prescribed by this Law.

Article 9before 1 March 2007: Article 9.

Valuation of a Privatisation Object

  1. The value of a privatisation object shall be assessed by the Property Fund or the commission composed of persons who have qualification certificates of property valuers or of property valuers selected by the Property Fund by way of tender and who will receive remuneration for their work.
  2. The value of a privatisation object may be assessed by applying one of the following methods or a combination thereof: 1) comparative value (analogous selling price) method, which is based on comparison, i.e. the market value is determined by comparing the transaction prices of analogous objects upon taking into account minor differences between the object which is under valuation and the analogous objects; 2) replacement value (costs) method, which is based on the calculation of the cost of restoration of the objects in their current physical condition and with their current maintenance and efficiency properties according to the technologies used and at the prices valid at the time of valuation; 3) value-in-use (income capitalisation or discounted cash flows) method, where the asset is valued as a profit generating business object rather than the sum total of separate assets. The method is based on the forecasts of the future cash flows and the current cash value. Where less than 1/3 of the shares in the enterprise are offered for sale, a simplified variant of this method may be applied in accordance with the procedure established by the Government; 4) special value method, applied for the valuation of unique objects of art and history, jewellery and antiques, and also various collections (valued according to special valuation techniques applicable to such property); 5) other methods recognised as applicable in the European Union and approved by the Government.
  3. Where the state or a municipality owns less than 1/3 of shares in a public limited liability company, the application of valuation methods listed in paragraph 2 hereof shall not be mandatory for the valuation of shares sold by public subscription or at a public auction, if the shares are quoted on the stock exchange.
  4. When assessing the buildings, structures and facilities owned by the state or a municipality by applying international valuation methods approved by the Government, the value of the land parcel attached to the buildings, structures and facilities in the established manner must also be assessed.
  5. The procedure for applying privatisation object valuation methods specified in this Law shall be established by the Government.
  6. The damage incurred by the holder of a privatisation object due to inaccurate property valuation shall be compensated by property valuers in accordance with the procedure stipulated in the contract of valuation.

Article 9after 1 March 2007: Article 9.

Valuation of a Privatisation Object

  1. A privatisation object shall be valued by applying value determination methods stipulated in the Law on the Basics of Property and Business Valuation and in accordance with the procedure established therein, except for the cases when this Law provides otherwise.
  2. The Government shall have the right to establish simplified value determination methods and their combinations, which may be applied by a decision of a privatisation institution in the cases where less than 1/3 of the shares in the enterprise are offered for sale.
  3. By a decision of a privatisation institution, the application of value determination methods stipulated in the Law on the Basics of Property and Business Valuation shall not be mandatory for valuation of shares sold by public subscription or at a public auction, if less than 1/3 of the shares in a public limited liability company are owned by the state or a municipality and the shares in this public limited liability company are traded on the stock exchange. In such case, the value of a share is the market value of the share established pursuant to legal acts regulating the securities market.
  4. When assessing the value of structures and facilities, or a part thereof, owned by the state or a municipality and subject to privatisation, the value of the land parcel, or a part thereof, attached to these structures and facilities in the established manner must also be assessed.
  5. A privatisation object shall be valued by the Property Fund or property valuation companies selected in accordance with the procedure established by legal acts regulating public procurement.
  6. Property valuers shall be held liable, in accordance with the procedure stipulated in legal acts and in the contract of valuation, for correctness of the performed valuation and its performance deadlines and shall compensate for the damage incurred by the holder of a privatisation object due to improper fulfilment of obligations. Article
  7. The List of Privatisation Objects and the Object Privatisation Programme
  8. The list of privatisation objects is a document approved by the Government in accordance with the procedure set forth by laws, which specifies: 1) the name of the companies, type of principal activity, the authorised capital, the nominal value of shares owned by the state (municipality), profitability of the enterprise and the number of employees, in case of privatisation of shares in public and private limited liability companies;

subparagraph 2 of paragraph 1 before 1 March 2007: 2) the name of a privatisation object, short description of the object, residual book value of the object - in case of privatisation of other property.

subparagraph 2 of paragraph 1 after 1 March 2007: 2) the name of a privatisation object and a short description of the object - in case of privatisation of other property.

  1. The list of privatisation objects shall be approved by the Government on the recommendation of the Property Fund. The list may include shares in all enterprises owned by the state and a municipality, except for shares in public and private limited liability companies privatisation whereof is restricted by laws. On the recommendation of municipalities, the Property Fund shall also include in the list of privatisation objects those privatisation objects owned by municipalities, which the municipalities decide to privatise. Under this Law, the property owned by the Republic of Lithuania by the right of exclusive ownership, municipal housing (except for derelict houses whose residents have been moved and provided with other accommodation on an open-ended lease basis, and also if the said derelict houses have been removed from the housing inventory documents), and property in respect of which natural persons and religious communities claim to restore their right of ownership in the manner prescribed by the laws of the Republic of Lithuania may not be included in the list of privatisation objects.
  2. The decision to include the shares owned by a municipality or any other municipal property in the list of privatisation objects shall be taken by the municipal council. The decision to include in the list of privatisation objects the shares owned by the state and any other state-owned property held in trust and used by the municipality shall be taken by the Property Fund.
  3. The object privatisation programme is a document, which specifies: 1) the name of the object and the privatisation method; 2) the deadline for privatisation;

subparagraph 3 of paragraph 4 before 1 March 2007: 3) a short description of the privatisation object (the authorised capital or value, the nominal value of shares owned by the state or a municipality, profitability of the authorised capital, the volume of production or annual turnover, the number of employees, type of principal activity, geographical location, information on the market share of the production or services of the enterprise controlled by the state or a municipality and the rights of third persons to the enterprise);

subparagraph 3 of paragraph 4 after 1 March 2007: 3) a short description of the privatisation object (the authorised capital, the nominal value of shares owned by the state or a municipality, profitability of the authorised capital, the volume of production or annual turnover, the number of employees, type of principal activity, geographical location, information on the market share of the production or services of the enterprise controlled by the state or a municipality and the rights of third persons to the enterprise); 4) terms and conditions of privatisation.

  1. The Government shall have the right to set requirements other than those laid down in paragraph 4 hereof for drafting of the object privatisation programmes (including the right to establish binding terms and conditions of the object privatisation programmes and methods of privatisation), and also the right to approve or refuse to approve draft programmes of privatisation of the key objects of Lithuanian economy and draft privatisation transactions.
  2. Prior to recognition and announcing a potential buyer the winner with whom a privatisation transaction is to be signed, the Government shall have the right to suspend or terminate the implementation of the object privatisation programme without any consequences for the Republic of Lithuania. In performing the above actions, the Government must specify the reason for suspending or terminating the object privatisation programme.
  3. Enterprises controlled by the state (municipality) must, within the time period prescribed by the Property Fund, compile the data necessary for the draft object privatisation programme: 1) the user of the state-owned land parcel attached, in the established manner, to enterprises controlled by the state (municipality), buildings and facilities, must transfer to the enterprise controlled by the state (municipality) the land parcel lease or loan for use agreement and, where such agreements were not concluded - other documents of the allotment of the land parcel for use prescribed by the Government. The enterprise controlled by the state or a municipality whose shares are included in the list of privatisation objects must apply to the user of the land parcel with a written request to prepare the documents specified in this subparagraph; 2) state institutions (the State Tax Inspectorate, the State Social Insurance Fund Board, etc.), which supervise the fulfilment of obligations to the state and/or a municipality by the enterprises controlled by the state (municipality), must submit to the enterprise controlled by the state or a municipality, in the manner laid down by the Government, the data on the enterprise’s arrears in payments due to the state (municipality) (including penalties and late payment interest). The enterprise controlled by the state or a municipality, the shares whereof are included in the list of privatisation objects, must apply to the appropriate state institutions with a written request to prepare the documents specified in this subparagraph.
  4. The executive body of the municipality must, within the time period prescribed by the Government, communicate to the Property Fund the data from the list of privatisation objects and the object privatisation programmes for their announcement in the Information Bulletin of Privatisation.
  5. The Government and the Property Fund shall have no right to correct the data from the list of privatisation objects owned by a municipality or the data from the object privatisation programme, if the data complies with the requirements stipulated in this Law.
  6. Privatisation programmes of objects that are protected by the state in the manner prescribed by the laws of the Republic of Lithuania may be approved only upon agreeing the terms of their use with the institution which carries out state supervision of such objects.
  7. After the Government approves the list of privatisation objects, each potential buyer shall have the right to make an initial tender offer to buy tangible fixed assets and/or the block of shares in those enterprise where the state owns less than 1/3 of shares. The Government shall establish the procedure for and the terms and conditions of submission of the initial tender offer. If a potential buyer submits the initial tender offer according to the requirements set by the Government, the object privatisation programme must be prepared within the time period prescribed by the Government. Paragraph 11 shall be repealed on 1 March 2007.

paragraph 12 before 1 March 2007: 12. A privatisation object may be removed from the list of privatisation objects approved by the Government, and the implementation of its privatisation programme may be suspended and/or declared completed, if bankruptcy proceedings are instituted against the enterprise in the manner laid down in the Enterprise Bankruptcy Law, or the enterprise is put into liquidation according to the procedure prescribed by the Company Law, or the privatisation object has not survived a natural disaster or similar disaster, or its physical properties have changed by more than 1/3, when this object is used to compensate to the citizens for the existing real property redeemed by the state in accordance with the Law on the Amount of Compensations for Real Property Redeemed by the State, their Sources, Term of Payment and Procedure and Guarantees and Privileges provided for in the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, and also if the object privatisation programme has already been announced at least once in the manner established by this Law but the object has not been sold within the time period set in the object privatisation programme. A privatisation object may also be removed from the list of privatisation objects, if it is required for satisfying the needs of the state, a municipality or the society.

paragraph 12 after 1 March 2007:

  1. A privatisation object may be removed from the list of privatisation objects approved by the Government, and the implementation of its privatisation programme may be suspended and/or declared completed, if bankruptcy proceedings are instituted against the enterprise in the manner laid down in the Enterprise Bankruptcy Law, or the enterprise is put into liquidation according to the procedure prescribed by the Company Law, or the privatisation object has not survived a natural disaster or similar disaster, or its physical properties have changed by more than 1/3, when this object is used to compensate to the citizens for the existing real property redeemed by the state in accordance with the Law on the Amount of Compensations for Real Property Redeemed by the State, their Sources, Term of Payment and Procedure and State Guarantees and Privileges provided for in the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, and also if the object privatisation programme has already been announced at least once in the manner established by this Law but the object has not been sold within the time period set in the object privatisation programme. A privatisation object may also be removed from the list of privatisation objects, if it is required for satisfying the needs of the state, a municipality or the society. The privatisation programme of the privatisation object shall be declared completed, if the shareholder of a public limited liability company, acting independently or with other persons, has acquired shares that account for at least 95 per cent of the voting capital and carrying at least 95 per cent of votes at the general meeting of shareholders of the public limited liability company and demands that the remaining shareholders of this public limited liability company would sell the shares that belong to them in accordance with the procedure established by legal acts regulating the securities market.
  2. Under the Civil Code of the Republic of Lithuania, the expenses incurred by a lessee when improving a privatisation object (structure) during the period of the lease shall be reimbursed by a potential buyer, who is acquiring the privatisation object, in accordance with the procedure established by the Government of the Republic of Lithuania. When assessing the value of such privatisation object in accordance with the procedure laid down in the Law on the Basics of Property and Business Valuation, the increase in value, expressed as a percentage, resulting from the expenses for improvements of this object (structure) shall be estimated. Funds received from the privatisation transaction shall be transferred to the privatisation fund account opened for the Ministry of Finance (if the privatisation object is owned by a municipality – to the special account of the municipality) upon reducing them respectively due to the increase in the value of the privatisation object, but not exceeding the amount of the expenses for improvement of this object. The remaining part of the privatisation funds shall be transferred to the lessee, except for the part that has been included in the rent. This part of funds that has been included in the rent shall be transferred to the account of the holder of the privatisation object. Article
  3. Publishing of Information on Privatisation Objects
  4. The following information on privatisation object must be publicly announced in the Information Bulletin of Privatisation: 1) the object privatisation programme;

subparagraph 2 of paragraph 1 before 1 March 2007: 2) the surname, official position, address, telephone and fax number of the Property Fund employee responsible for the implementation of the object privatisation programme;

subparagraph 2 of paragraph 1 after 1 March 2007: 2) the surname, official position, address, telephone number, e-mail and fax number of the Property Fund employee responsible for the implementation of the object privatisation programme;

subparagraph 3 of paragraph 1 before 1 March 2007: 3) the time of a visit to the enterprise controlled by the state (municipality) whose shares are offered for sale;

subparagraph 3 of paragraph 1 after 1 March 2007: 3) the time of a visit to the enterprise controlled by the state (municipality) whose shares are offered for sale and whose property is subject to privatisation; 4) the procedure for acquisition of privatisation documents and payment for them; 5) the place of sale of the privatisation object; Paragraph 1 shall be supplemented with subparagraph 6 after 1 March 2007: 6) the deadline for the final payment for the privatisation object set by the holder of the privatisation object.

  1. The Privatisation Fund may also announce other (additional) information in the Bulletin and in the mass media.
  2. The information on the privatisation object specified in paragraph 1 hereof must be announced in the Information Bulletin of Privatisation at least 30 days prior to the commencement of acceptance of applications or other privatisation documents required for participation in the privatisation, and when information on the privatisation object is announced repeatedly – at least 10 days in advance. When the shares are traded on the stock exchanges, information on the privatisation object shall be announced in the Information Bulletin of Privatisation and in the bulletin of the stock exchange or any other information sources of the exchange in accordance with the regulations laid down by the stock exchange. Where there is a real possibility of selling the privatisation object to a foreign natural or legal person, the information on the privatisation object prescribed by the Property Fund must also be published in the foreign press. Article
  3. Restrictions on the Activities of an Enterprise Controlled by the State (Municipality)
  4. From the day of publishing of the object (enterprise shares) privatisation programme until the day of conclusion of privatisation transactions or until the day of suspension of the object privatisation programmes and/or acknowledgement of their completion, enterprises controlled by the state (municipality) shall have no right to conclude the following contracts without the written consent of the Property Fund (municipal property funds): 1) loan agreements, contracts of pledge, warranty, guarantee, lease, contracts of purchase, sale and any other transfer of tangible fixed assets, and also to purchase securities of other enterprises, issue bonds, increase or reduce the authorised capital of the enterprise where the value of the contract or several contracts (the total value of the property which is the object of the contract per calendar year) exceeds 5 per cent of the authorised capital of the enterprise; 2) contracts for the purchase and sale or any other transfer of materials and raw materials where the value of the contract or several contracts (the total value of the property which is the object of the contract per calendar year) exceeds 10 per cent of the authorised capital of the enterprise.
  5. From the day of approval of the list of privatisation objects until the day of conclusion of privatisation transactions or until the day of suspension of the object privatisation programmes and/or acknowledgment of their completion, enterprises controlled by the state (municipality) whose shares are offered for privatisation shall have no right to either divide or join associations without the written consent of the Property Fund (municipality property funds).
  6. The contracts specified in paragraphs 1 and/or 2 hereof concluded without the consent of the Property Fund shall be invalid, except for the contracts concluded by third persons who did not know and could not have known about the restrictions applied to the enterprise under this Article. Where such contracts are concluded with the consent of the Property Fund (municipal property funds), the Property Fund (the municipal property fund) must immediately notify the potential buyers thereof by: 1) publishing the changed information in the Information Bulletin of Privatisation; 2) and/or informing every potential buyer who applies with a written request for information about the shares in the enterprise controlled by the state (municipality) that has been offered for privatisation.
  7. From the day of announcement of the object privatisation programmes until the day of conclusion of privatisation transactions or until the day the object privatisation programmes are suspended and/or acknowledged as completed, the person who represents the shares owned by the state or a municipality in the enterprise in which the state or the municipality holds less than 1/2 of voting shares must vote against at the general meeting of shareholders, if matters specified in paragraphs 1 and 2 hereof are under consideration and provided that the Property Fund has not instructed the person representing the shares owned by the state or a municipality to vote otherwise. CHAPTER FOUR METHODS OF PRIVATISATION AND ACQUISITION OF A PRIVATISATION OBJECT Article
  8. Methods of Privatisation
  9. There shall be the following methods of privatisation: 1) public subscription for shares; 2) public auction; 3) public tender; 4) direct negotiations; 5) transfer of the state or municipal control at an enterprise controlled by the state or a municipality; 6) lease with an option to purchase.

paragraph 2 before 1 March 2007: 2. The holder of a privatisation object shall have the right to change the method of privatisation or to apply a combination of methods established by this Law. The Privatisation Commission must approve the change of the method of privatisation, and the new information about the privatisation object must be announced in the manner prescribed by this Law.

paragraph 2 after 1 March 2007:

  1. The Property Fund (municipal property funds) shall have the right to apply a combination of methods established by this Law or to change the method of privatisation subject to the approval of the Privatisation Commission. Information about application of the combination of methods of privatisation in respect of the privatisation object and the change of the method of privatisation shall be announced in the Information Bulletin of Privatisation in the manner prescribed by this Law.
  2. The Government shall establish the procedure for the implementation of methods of privatisation regulated by this Law.

paragraph 4 before 1 March 2007: 4. For each of the privatisation objects which are being privatised by applying any of the methods of privatisation specified in this Law, the Property Fund shall have the right, in the manner prescribed by the Republic of Lithuania Law on Public Procurement, to hire natural or legal persons as well as enterprises without the rights of a legal person for the performance of privatisation tasks (including finding an investor and drafting of the sale and purchase agreement).

paragraph 4 after 1 March 2007:

  1. For each of the privatisation objects which are being privatised by applying any of the methods specified in this Law, the Property Fund shall have the right, in the manner prescribed by the Republic of Lithuania Law on Public Procurement, to conclude public purchase and sale agreements for the performance of all the tasks involved in the privatisation (including finding an investor and drafting of the sale and purchase agreement concerning the privatisation object). Article
  2. Public Subscription for Shares
  3. Public subscription for shares is a method of selling the shares owned by the state or a municipality, where the shares are sold to the public by trading them in the domestic securities market and/or the securities markets of foreign countries, and where the selling price of the shares is determined according to the supply and demand ratio.
  4. The shares of public limited liability companies shall be sold on the stock exchanges in conformity with the norms of the legal acts regulating the activities of these stock exchanges. In order to sell the securities of the state or a municipality on the stock exchange, the Property Fund or an appropriate municipal body shall have the right to hire an intermediary of public trading in securities.
  5. The shares in private limited liability companies shall not be sold applying the method of public subscription for shares. Article
  6. Public Auction
  7. A public auction is a method of selling of the privatisation object where the number of potential buyers participating in the auction is not limited and where the privatisation transaction is concluded with the highest bidder.
  8. Privatisation objects which are put up for privatisation with a view to getting the highest revenue can be sold at a public auction, but, in such case, the terms and conditions specified in the privatisation programme must be fulfilled. Only the block of shares and tangible fixed assets of public limited liability or private limited liability companies may be sold at a public auction. If the terms and conditions for the privatisation of the object have been specified, they may not be changed when concluding the privatisation transaction.
  9. If the block of shares in a private limited liability company whose block of shares granting more than ½ votes in the general meeting of shareholders is owned by the state or the block of shares in a public limited liability company is offered for sale at a public auction, an information bulletin about the company must be prepared in the manner prescribed by the Property Fund. Article
  10. Public Tender

paragraph 1 before 1 March 2007: 1. A public tender is the transfer of one or several privatisation objects to a potential buyer, successful tenderer, whose written offers with regard to the price and investment (money for the acquisition of tangible fixed and current assets by increasing the authorised capital of the public limited liability or private limited liability company), after meeting the minimum requirements for jobs stipulated in the terms and conditions of privatisation, have been found to be the best. Negotiations on how to improve the bids may be entered into with the potential buyer or potential buyers who have submitted the highest bids and whose bids do not differ from each other by more than 15 per cent.

paragraph 1 after 1 March 2007:

  1. A public tender is the transfer of one or several privatisation objects to a potential buyer, successful tenderer, whose written offers with regard to the price and investment (money for increasing the authorised capital of the public limited liability or private limited liability company), after meeting the requirements stipulated in the terms and conditions of privatisation have been found to be the best. The potential buyer who has submitted the highest bid and all the potential buyers whose bids differ from the highest bid by less than 10 per cent are offered to improve their bids within the time limit prescribed by the Government. Ranking of potential buyers shall be made according to the improved bids of potential buyers and approved by the Head of the Property Fund. The potential buyer who has submitted the best improved bid shall be recognised as a successful tenderer of the public tender and he shall be invited to agree on the sale and purchase agreement. Where the potential buyer who has been recognised as the successful tenderer of the public tender fails to present measures required for securing the discharge of contractual obligations to be assumed and specified in the privatisation programme, or fails to arrive to agree, against his signature, on a draft sale and purchase agreement, or refuses to sign the sale and purchase agreement or fails to pay for the object acquired at the public tender prior to the expiry of the established time limit (when the payment for the privatisation object has to be made immediately), recognition of the potential buyer as the successful tenderer shall be considered invalid. In such case, a potential buyer who is next in the ranking of potential buyers shall, in accordance with the procedure established by legal acts, be recognised as the successful tenderer of the public tender and shall be invited to agree on the sale and purchase agreement.
  2. The method of a public tender may be applied only to such privatisation objects the privatisation terms and other obligations whereof the potential buyer has the right to implement.
  3. When privatising shares in an enterprise controlled by the state (municipality) by way of a public tender, the employees of the enterprise may be offered, in accordance with the procedure established by the Government, to acquire at the nominal value up to 5 per cent of the shares owned by the state (municipality). This offer shall not apply to enterprises controlled by the state (municipality) to which the state (municipality) would, subsequent to the sale of 5 per cent of shares, transfer its control as set forth in Article 18 of this Law, or where the employees of the enterprise have already acquired shares in the enterprise pursuant to other laws of the Republic of Lithuania.
  4. Information bulletins about the blocks of shares in public limited liability and private limited liability companies offered for sale by way of a public tender shall be prepared in the manner prescribed by the Property Fund. The requirements laid down in the Law on the Securities Market shall not be applicable to these information bulletins. Article
  5. Direct Negotiations

paragraph 1 before 1 March 2007: 1. Direct negotiations is a transfer of one or several privatisation objects to the winner of direct negotiations whose written offers with regard to the price and investment (money intended for the acquisition of tangible fixed and current assets for increasing the authorised capital of a public limited liability or private limited liability company), after the implementation of the minimum requirements for jobs stipulated in the terms and conditions of privatisation, have been found to be the best.

paragraph 1 after 1 March 2007:

  1. Direct negotiations is a transfer of one or several privatisation objects to the winner of direct negotiations whose written offers with regard to the price and investment (money intended for the acquisition of tangible fixed and current assets for increasing the authorised capital of a public limited liability or private limited liability company), after the implementation of the requirements stipulated in the privatisation conditions, have been found to be the best.
  2. Direct negotiations with one or several potential buyers - strategic investors the list whereof has been approved by the Privatisation Commission and approved by the Government, may be conducted in the manner prescribed by this Law.
  3. When privatising shares in an enterprise controlled by the state (municipality) by way of direct negotiations, the employees of the enterprise may be offered, in accordance with the procedure established by the Government, to acquire at the nominal value up to 5 per cent of the shares owned by the state (municipality). This offer shall not apply to enterprises controlled by the state (municipality) to which the state (municipality) would, subsequent to the sale of 5 per cent of shares, transfer its control as set forth in Article 18 of this Law, or where the employees of the enterprise have already acquired shares in the enterprise pursuant to other laws of the Republic of Lithuania.
  4. Information bulletins about the blocks of shares in public limited liability and private limited liability companies offered for sale by way of direct negotiations shall be prepared in the manner prescribed by the Property Fund. The requirements laid down in the Law on the Securities Market shall not be applicable to such information bulletins.

paragraph 5 before 1 March 2007: 5. Buildings or premises owned by the state or a municipality in which private capital whose value exceeds ½ of the market value of the rented buildings or premises was invested with the permission of the lessor can be privatised through direct negotiations, if these buildings or premises satisfy at least one of the following conditions: at least ½ of the basic constructions was replaced; the total area or capacity was increased by more than 1/3; more than ½ of engineering communications were replaced or new engineering communications were installed; and also the works performed and/or technological equipment or industrial machinery installed disassembling of which would cause considerable harm to the equipment, machinery, building or premises. When privatising such property in accordance with the procedure established by the Government, direct negotiations can be carried out with one buyer who has invested private capital under conditions provided for in this paragraph.

paragraph 5 after 1 March 2007:

  1. Buildings or premises owned by the state or a municipality that were improved by the lessee with the permission of the lessor can be privatised through direct negotiations. In such case, direct negotiations with the sole buyer – the lessee of these buildings or premises or a person who has the lessee’s claims to reimbursement of the compulsory expenses - can be conducted in accordance with the procedure established by the Government, if the following conditions are satisfied: 1) in accordance with the procedure prescribed by laws, the lessee or any other person has the claim to reimbursement of the compulsory expenses incurred by the lessee when improving, with the permission of the lessor, the buildings or premises and when the amount of the expenses to be reimbursed exceeds ½ of the market value or the rented buildings or premises and the land parcel attached to them. Direct negotiations shall not be conducted if, before adopting a decision concerning opening of direct negotiations, the claim to reimbursement of the compulsory expenses has reduced to the extent that the amount of the expenses to be reimbursed does not exceed ½ of the market value of the rented buildings or premises and the land parcel attached to them; 2) the buildings or premises satisfy at least one of the following conditions: at least ½ of the basic constructions was replaced; the total area or capacity was increased by more than 1/3; more than ½ of engineering communications were replaced or new engineering communications were installed; and also the works performed and/or technological equipment or industrial machinery installed disassembling of which would cause considerable harm to the equipment, machinery, building or premises.
  2. Direct negotiations with one or several potential buyers can also be conducted in the case of privatisation of the shares in a private limited liability company that the state or a municipality has acquired for non-residential buildings or premises transferred to this private limited liability company, if the potential buyers are shareholders of this private limited liability company.

paragraph 7 before 1 March 2007: 7. The holder of a privatisation object shall, within 45 calendar days from the receipt of the initial tender offer from a potential buyer and the documents certifying that the conditions stipulated in paragraphs 5 and 6 of this Article are satisfied, adopt a decision to conduct direct negotiations concerning privatisation of property specified in paragraphs 5 and 6 of this Article or to give a reasoned response why, according to the submitted documents, this property can not be privatised through direct negotiations.

paragraph 7 after 1 March 2007:

  1. The holder of a privatisation object shall, within 45 calendar days from the receipt of a written tender offer from a potential buyer and the documents certifying that the conditions stipulated in paragraphs 5 and 6 of this Article are satisfied, adopt a decision to conduct direct negotiations concerning privatisation of property specified in paragraphs 5 and 6 of this Article or to give a reasoned response why, according to the submitted documents, this property can not be privatised through direct negotiations. Article
  2. Transfer of State (Municipality) Control at an Enterprise Controlled by the State (Municipality)
  3. Transfer of control at an enterprise controlled by the state (municipality) is an issue of convertible bonds or new shares from additional contributions, which results or may result in the reduction of the share of the state or municipality in the authorised capital falling below the level of 2/3, 1/2 or 1/3, respectively, of voting shares at the general meeting of shareholders.
  4. An enterprise controlled by the state or municipality may be privatised by transfer of control only in the event of failure to sell the shares in the enterprise or when not less than 1/2 of shares owned by the state or a municipality in the enterprise under the state or municipality control have been privatised by applying the methods prescribed by this Law and specified in the privatisation programme.
  5. The funds from the privatisation of the object by applying this method of privatisation shall be accumulated and accounted by the enterprise that is being privatised. Within five working days following the end of the time period for the distribution of shares or convertible bonds, the enterprise which is being privatised must transfer to the privatisation fund account opened for the Ministry of Finance the difference between the issue price of the shares or bonds and their nominal value in proportion to the number of shares owned by the state prior to the issue. If the bonds or shares are being sold at their nominal value, the privatisation costs shall be covered by the enterprise that is being privatised. Article
  6. Lease with an Option to Purchase
  7. Lease with an option to purchase is a public method of privatisation where a potential buyer, upon signing the privatisation transaction and taking over the privatisation object – tangible fixed assets, acquires the right to hold and use the object. The potential buyer shall acquire the right of ownership to the privatisation object only after full payment for the object and meeting of the other terms of acquisition of the privatisation object set forth in the privatisation transaction. The provisions of this Article shall not be applicable to those natural and legal persons who have taken a lease on the property controlled by the state or a municipality not under this Law.
  8. A lease with an option to purchase may be applicable to the privatisation of: 1) tangible fixed assets the privatisation whereof, pursuant to this Law, by public auction has failed. The valuation criterion for a lease with an option to purchase is the rent discounted on the day of holding the tender for a lease with an option to purchase;

subparagraph 2 of paragraph 2 before 1 March 2007: 2) buildings or premises owned by the state or a municipality in which private capital whose value exceeds ½ of the market value of the rented buildings or premises was invested with the permission of the lessor, if these buildings or premises satisfy at least one of the following conditions: at least ½ of the basic constructions was replaced; the total area or capacity was increased by more than 1/3; more than ½ of engineering communications were replaced or new engineering communications were installed; and also the works performed and/or technological equipment or industrial machinery installed disassembling of which would cause considerable harm to the equipment, machinery, building or premises. When privatising such property by applying the method of a lease with an option to purchase, in accordance with the procedure established by the Government, the negotiations can be carried out with one lessee (buyer) who has invested private capital under conditions provided for in this paragraph. The valuation criterion for a lease with an option to purchase is the rent discounted on the day of holding the tender for a lease with an option to purchase.

subparagraph 2 of paragraph 2 after 1 March 2007: 2) buildings or premises owned by the state or a municipality that were improved by the lessee with the permission of the lessor. This method of privatisation can be applied when the conditions specified in paragraph 5 of Article 17 of this Law are satisfied. When privatising such property by applying the method of a lease with an option to purchase, in accordance with the procedure established by the Government, the negotiations can be carried out with one buyer (the lessee or person who has the lessee’s claims to reimbursement of the compulsory expenses) who has incurred these expenses under conditions provided for in this paragraph. This method of privatisation can not be applied if, before adopting a decision concerning application of this method, the claim to reimbursement of the compulsory expenses has reduced to the extent that the amount of the expenses to be reimbursed does not exceed ½ of the market value or the rented buildings or premises and the land parcel attached to them. The valuation criterion for a lease with an option to purchase is the rent discounted on the day of holding the tender for a lease with an option to purchase.

  1. After the valuation of the duration of depreciation of tangible fixed assets, the privatisation programme of the object must establish the maximum term for a lease with an option to purchase - not longer than 10 years.
  2. The annual rate of rent shall be set forth in the privatisation transaction; however, it may not be less than the amount of the market value of the privatisation object calculated in accordance with the procedure set forth in Article 9 of this Law divided by the duration of the rent. The privatisation transaction must provide that, when the payment is made in the Litas, the unpaid rent shall be adjusted each year in accordance with the annual consumer price index on the market.
  3. If payment for the privatisation object acquired under a lease with an option to purchase is made in a foreign currency, the unpaid rent shall be adjusted according to the exchange rate of the currency in which the potential buyer is paying and the Litas announced by the Bank of Lithuania on the day of payment.
  4. The privatisation transaction must stipulate that the payment for the privatisation object shall be made in one of the following ways: 1) only by paying the rent;

subparagraph 2 of paragraph 6 before 1 March 2007: 2) by paying the rent and, upon the expiry of the term of lease, by purchasing the privatisation object at a minimum price – the amount which a potential buyer can transfer through a bank in the currency of his country.

subparagraph 2 of paragraph 6 after 1 March 2007: 2) by paying the rent and, upon the expiry of the term of lease, by purchasing the privatisation object at agreed price. 7. The privatisation transaction shall stipulate that: 1) upon failure to pay the rent when due, 0.1 per cent of late payment interest shall be paid for each overdue day. If the amount of the rent arrears exceeds the amount that a potential buyer must pay for 6 months and/or the period for which the rent is overdue exceeds 6 months, the lease shall be terminated and the amount paid shall not be refunded; 2) the lease shall be terminated prior to the expiry of the term and the amount paid shall not be refunded, if the terms and conditions provided for in the privatisation transaction are not satisfied; 3) the lessee must insure the leased property; 4) the lessee shall have no right to sub-lease the leased property without a prior consent of the holder of the privatisation object.

Article 20before 1 March 2007: Article 20.

Payment for a Privatisation Object

  1. A potential buyer who makes the payment in Lithuania shall pay for the privatisation object in the national currency of the Republic of Lithuania or by other payment documents established under the laws of the Republic of Lithuania, while a potential buyer who is registered abroad and who makes the payment abroad shall pay in a foreign currency stipulated in the privatisation transaction or by other payment documents established under the laws of the Republic of Lithuania.
  2. The procedure and time limits for the payment shall be set forth in the privatisation transaction. The privatisation object (shares) may also be paid for by installments; however, the first installment should be not less than 51 per cent of the shares being sold, and the payment for the last portion of the shares may not be deferred for more than 5 years. When the payment is deferred, the first portion of the shares being sold, or not less than 60 per cent of the purchase price when the shares are paid for in full, shall be paid for in Litas, if a potential buyer pays for the privatisation object in Lithuania, or in a foreign currency stipulated in the privatisation transaction, if the potential buyer is registered abroad and pays for the privatization object abroad. The buyer shall pay interest on the deferred payment, where the interest rate shall be calculated according to the average interest rate of commercial banks, from the whole unpaid amount for the block of shares. If the privatisation object is paid for by a resident or a group of residents of Lithuania, under the Law on the Declaration of Income of the Residents of the Republic of Lithuania for the Acquisition of Expensive Property or Declaration of Received or Transferred Income, a certificate from the State Tax Inspectorate must be submitted.

Article 20after 1 March 2007: Article 20.

Payment for a Privatisation Object

  1. A potential buyer shall pay for the privatisation object in cash in the currency stipulated in the privatisation programme of the object which, under legal acts effective in the Republic of Lithuania or in a state where the settlement has to be made, is considered lawful means of settlement. The procedure and time limits for the payment for the privatisation object shall be set forth in the privatisation transaction.
  2. The payment for the privatisation object may be made immediately (within five working days after signing the sales and purchase agreement of the privatisation object) or by instalments (in separate stages). The deadline for the final payment for the privatisation object shall be set by the holder of the privatisation object. This time limit shall not exceed the period of five years in case of privatisation of shares and the period of two years in case of privatisation of tangible fixed assets, except for the cases when tangible fixed assets are privatised by way of a lease with an option to purchase.
  3. In case of payment for the privatisation object by instalments, the first installment shall be paid within five working days after signing the sales and purchase agreement of the privatisation object. The first installment shall cover at least 51 per cent of the amount set in the sale and purchase agreement of the privatisation object in case of privatisation of shares or at least 25 per cent of the amount set in the sale and purchase agreement of the privatisation object in case of privatisation of tangible fixed assets. At least 25 per cent of the amount of the share of the state (municipality) in the purchase price shall be paid as the first installment where the percentage of the increase in the value due to the expenses incurred when improving the object during the period of a lease provided for in the privatisation programme of the object (structure) has been established. The initial payment made by a potential buyer shall be included in the amount of the first installment.
  4. A potential buyer shall pay the interest on deferred payment. The interest rate shall be calculated in accordance with the procedure set forth by the Government pursuant to the average interest rate of commercial banks from the whole unpaid amount for the privatisation object. Article
  5. Obligations of a Buyer in a Privatisation Transaction and Acquisition of the Right of Ownership to a Privatisation Object
  6. A privatisation transaction concluded in the manner prescribed by a public tender or direct negotiations may include the obligations of a buyer (buyers) to preserve the number of jobs, to invest in the enterprise controlled by the state (municipality) the shares whereof are being sold, or into other spheres of Lithuanian economy.
  7. The Property Fund may request to include in the privatisation transaction: 1) a clause restricting the rights of the buyer to dispose of the acquired shares in the enterprise controlled by the state (municipality) until the buyer satisfies the conditions stipulated in the privatisation transaction;

subparagraph 2 of paragraph 2 before 1 March 2007: 2) a clause prohibiting the suspension or termination of the activities of the enterprise controlled by the state (municipality). The privatisation transaction may stipulate the buyer’s obligation to lease or buy out a parcel of non-agricultural land attached to the privatisation object, and also other obligations of the buyer.

subparagraph 2 of paragraph 2 after 1 March 2007: 2) a clause prohibiting the suspension or termination of the activities of the enterprise controlled by the state (municipality). The privatisation transaction may stipulate the buyer’s obligation to lease or buy out a land parcel attached to the privatisation object, and also other obligations of the buyer.

  1. If, under the privatisation transaction, the buyer becomes the holder of the privatisation object and begins to use it prior to acquiring the right of ownership to it, the privatisation transactions must stipulate the terms ensuring the possibility for the Property Fund (municipal property fund) to control the activities of the privatised object. The lease with an option to purchase must be registered with the Immovable Property Register.
  2. The privatisation transaction must provide for sanctions against the buyer in proportion to the damage caused should he default on the assumed obligations, including termination or annulment of the privatisation transaction in the event of non-compliance with the terms and conditions, obligations and/or guarantees (a guarantor who will pay damages to the state or municipality shall be indicated) set forth in the privatisation transaction; the contract must also provide for the liability of the holder of the privatisation object for default on the assumed obligations.
  3. The buyer shall acquire the right of ownership to the privatisation object – tangible fixed assets – as of the day of registering it with the central data bank of the Immovable Property Register by submitting the sale and purchase agreement of the privatisation object and a document certifying the transfer and acceptance of the ownership right to the privatisation object. The buyer shall acquire the right of ownership to the privatisation object – shares as of the moment the number of shares acquired under the sale and purchase agreement are included in the personal securities account opened in his/her name (when intangible shares are on sale), or when the endorsement entry is made in the name of the buyer, or the share certificate is issued (when tangible share are on sale), after he/she has presented the document certifying the transfer and acceptance of the right of ownership to the privatisation object. It shall not be obligatory to notarize the privatisation transactions for tangible fixed assets owned by the state or a municipality. Paragraph 5 shall be repealed on 1 March 2007.

paragraph 6 before 1 March 2007: 6. Unless this Law or the privatisation transaction provide otherwise, the provisions of the Civil Code shall be applicable to the privatisation transaction.

paragraph 6 after 1 March 2007: 6. Unless this Law or the privatisation transaction provide otherwise, the provisions of the Civil Code shall be applicable to the privatisation transaction and the acquisition of the right of ownership to the privatisation object.

Article 22before 1 March 2007: Article 22.

The Right to Acquire or Lease a Parcel of Non-Agricultural Land

  1. If a potential buyer fits the definition of a national or foreign subject set forth in the Constitutional Law of the Republic of Lithuania on the Subjects, Procedure, Terms and Conditions of the Acquisition into Ownership of Land Parcels, Provided for in Paragraph 2 of Article 47 of the Constitution of the Republic of Lithuania, the said buyer, when acquiring into his ownership buildings or facilities in the manner prescribed by the Law on Privatisation of State-Owned and Municipal Property, shall have the right to buy out, in the manner prescribed by the Constitutional Law, the land parcel necessary for maintenance of buildings and facilities.
  2. If a potential buyer acquires shares in the manner prescribed by this Law of an enterprise controlled by the state or a municipality, the enterprise shall have the right to acquire a parcel of non-agricultural land assigned to the said enterprise in the manner prescribed by the Constitutional Law on the Subjects, Procedure, Terms and Conditions, and Restrictions of the Acquisition into Ownership on Land Parcels provided for in Article 47, Paragraph 2 of the Constitution of the Republic of Lithuania.
  3. If a potential buyer is a national of the Republic of Lithuania who acquires into ownership buildings and facilities in the manner prescribed by this Law, the said buyer shall have the right to acquire, together with the building and the facility, a land parcel, which is attached thereto, for the maintenance of the said building or facility.
  4. The buyer who has acquired, in the manner prescribed by this Law, a building or a facility, shall take over the rights and obligations of the previous owners of the privatisation objects under the lease contract of land necessary for the maintenance of such privatisation objects; and, where a lease contract has not been concluded, the buyer shall take over the right of leasing a land parcel necessary for the maintenance of the said privatisation objects.

Article 22after 1 March 2007: Article 22.

Sale, Lease or any other Transfer of Parcels of Land Attached to Structures and Facilities under Privatisation The procedure for sale, lease or any other transfer of parcels of land owned by the state or a municipality and attached to structures and facilities under privatisation shall be established in legal acts regulating land relations. CHAPTER FIVE FINAL PROVISIONS Article

  1. Dispute Settling Procedure Disputes shall be settled according to the procedure established by laws of the Republic of Lithuania, international treaties of the Republic of Lithuania, and the privatisation transaction. Article
  2. Entry into Force of the Law
  3. This Law shall come into force as of 1 December
  5. Upon coming into force of this Law, the Lithuanian State Privatisation Agency under the Government of the Republic of Lithuania (hereinafter referred to as the “Privatisation Agency”), established in accordance with the Law No I-1001 of 4 July 1995 on Privatisation of State-Owned and Municipal Property, shall, pending a special Resolution of the Government concerning the transfer of the rights and duties provided for in this Law to the Property Fund, shall be financed from the National Budget and shall perform the following functions: 1) appoint its expert to the commission which assesses the value of a privatisation object, provided that the privatisation object is owned by the state; 2) draft object privatisation programmes and submit them to the Privatisation Commission in the manner prescribed by the Government; 3) publish the Information Bulletin of Privatisation, which must contain information stipulated in paragraph 1 of Article 11 of this Law about the privatisation object. The Privatisation Agency must announce in the Information Bulletin of Privatisation the information about the property subject to privatisation that is owned by a municipality; 4) prepare advertising documents and organise the advertising of the privatisation object; and 5) represent the Government in court in cases concerning privatisation transactions which have been concluded pursuant to the Law on the Initial Privatisation, as well as those privatisation transactions which have been concluded before coming into force of this Law.
  6. Upon transfer by the Government of the rights and duties specified in this Law to the Property Fund: 1) the Privatisation Agency shall be reorganised into a division of the Property Fund and all the functions provided for it in Article 24 of this Law shall be delegated to the Property Fund; and 2) subparagraph 14 of paragraph 2 of Article 4 of this Law shall come into force.
  7. Upon coming into force of this Law, a ministry, a municipality or any other state or municipal institution which holds and uses state or municipal shares, shall, pending a special Resolution of the Government concerning the transfer of the rights and duties stipulated in this Law to the Property Fund, perform, together with the Privatisation Agency, the functions of the Property Fund provided for in subparagraphs 4, 5, 6, 7, 8, 9 and 10 of paragraph 2 of Article 4 of this Law.
  8. Upon coming into force of this Law: 1) financial resources of the National Privatisation Fund accumulated in conformity with the Law on the Initial Privatisation, as well as loans granted from this Fund, and also interest and default interest must be transferred into a privatisation fund account opened for the Ministry of Finance; 2) financial resources, interest and default interest of the privatisation funds of municipalities accumulated in conformity with the Law on the Initial Privatisation must be transferred into a special account of a municipality; and 3) the object privatisation programmes announced prior to coming into force of this Law shall be implemented in accordance with the Law of the Republic of Lithuania No I-1001 on Privatisation of State-Owned and Municipal Property (Official Gazette, No 61-1530, 1995).
  9. The following legal acts shall be repealed on 1 December 1997: 1) Republic of Lithuania Law No I-1115 of 28 February 1991 on the Initial Privatisation of State-Owned Property (Valstybės žinios (Official Gazette), No10-261, 1991); 2) Republic of Lithuania Law No I-1614 of 25 July 1991 Supplementing Article 12 of the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 22-575, 1991); 3) Republic of Lithuania Law No I-1635 of 30 July 1991 Amending Article 11 of the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 23-604, 1991); 4) Republic of Lithuania Law No I-1146 of 14 March 1991 Amending Certain Articles of the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No10-262, 1991); 5) Republic of Lithuania Law No I-2385 of 17 March 1992 Supplementing Paragraph 4 of Article 7 of the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No10-247, 1992); 6) Article 1 of the Republic of Lithuania Law No I-2658 of 23 June 1992 concerning the Amendment of Certain Articles of Certain Laws of the Republic of Lithuania (Valstybės Žinios (Official Gazette), No 20-590, 1992); 7) Republic of Lithuania Law No I-2893 of 17 September 1992 Supplementing and Amending the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 28-812, 1992); 8) Republic of Lithuania Law No I-18 of 10 December 1992 on Postponement of Privatisation of State-Owned Property at Auctions and Public Subscription for Shares (Valstybės Žinios (Official Gazette), No 36-1098, 1992); 9) Republic of Lithuania Law No I-2117 of 18 December 1992 Amending Certain Articles of the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 3-32, 1992); 10) Republic of Lithuania Law No I-52 of 19 January 1993 on Privatisation of State-Owned Property at Auctions and Public Subscription for Shares (Valstybės Žinios (Official Gazette), No 4-80, 1993); 11) Republic of Lithuania Law No I-64 of 2 February 1993 Supplementing and Amending the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 6-116, 1993); 12) Republic of Lithuania Law No I-217 of 14 July 1993 Amending Article 20 of the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 30-686, 1993); 13) Republic of Lithuania Law No I-307 of 17 November 1993 Supplementing and Amending the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 63-1190, 1993); 14) Republic of Lithuania Law No I-570 of 20 July 1994 Amending Article 2 of the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 58-1137, 1994); 15) Republic of Lithuania Law No I-569 of 20 July 1994 Supplementing and Amending the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 59-1159, 1994); 16) Republic of Lithuania Law No I-610 of 20 October 1994 Amending Article 11 of the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 84-1585, 1994); 17) Republic of Lithuania Law No.I-1027 of 5 July 1994 Supplementing the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 59-1483, 1995); 18) Republic of Lithuania Law No I-861 of 20 April 1995 Supplementing the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 35-861, 1995); 19) Republic of Lithuania Law No I-897 of 18 May 1995 Supplementing Article 12 of the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 44-1080, 1995); 20) Republic of Lithuania Law No I-914 of 1 June 1995 Supplementing the Republic of Lithuania Law on the Initial Privatisation of State-Owned Property (Valstybės Žinios (Official Gazette), No 48-1164, 1995); 21) Republic of Lithuania Law No I-990 of 3 July 1995 on State Investments into Bank Shares (Valstybės Žinios (Official Gazette), No 59-1466, 1995); 22) Republic of Lithuania Law No I-1001 of 4 July 1995 on Privatisation of State-Owned and Municipal Property (Valstybės Žinios (Official Gazette), No 61-1530, 1995), except for privatisation of objects the privatisation programmes whereof were, in the prescribed manner, approved prior to 1 December 1997; 23) Republic of Lithuania Law No I-1067 of 18 October 1995 on the Use of the National Privatisation Fund (Valstybės Žinios (Official Gazette), No 89-1988, 1995); 24) Republic of Lithuania Law No I-1538 of 24 September 1996 Amending Article 13 of the Republic of Lithuania Law on Privatisation of State-Owned and Municipal Property (Valstybės Žinios (Official Gazette), No 100-2260, 1996); 25) Republic of Lithuania Law No VIII-58 of 23 December 1996 Supplementing Articles 1 and 2 of the Republic of Lithuania Law on Privatisation of State-Owned and Municipal Property (Valstybės Žinios (Official Gazette), No 126-2945, 1996); and 26) Republic of Lithuania Law No VIII-154 of 25 March 1997 Amending Article 4 of the Republic of Lithuania Law on Privatisation of State-Owned and Municipal Property (Valstybės Žinios (Official Gazette), No 30-710, 1997).
  10. The following legal acts shall be repealed: 1) Republic of Lithuania Law No I-2456 of 7 April 1992 on the Priority of Employees to Acquire Shares in Enterprises Subject to Privatisation (Valstybės Žinios (Official Gazette), No 12-310, 1992); 2) Republic of Lithuania Law No I-58 of 28 January 1993 Amending the Republic of Lithuania Law on the Priority of Employees to Acquire Shares in Enterprises Subject to Privatisation (Valstybės Žinios (Official Gazette), No 5-91, 1993); 3) Republic of Lithuania Law No I-59 of 1 February 1993 Amending the republic of Lithuania Law on the Priority of Employees to Acquire Shares in Enterprises Subject to Privatisation (Valstybės Žinios (Official Gazette), No 6-112, 1993); 4) Republic of Lithuania Law No I-438 of 21 April 1994 Supplementing the Republic of Lithuania Law on the Priority of Employees to Acquire Shares in Enterprises Subject to Privatisation (Valstybės Žinios (Official Gazette), No 32-569, 1994); and 5) Republic of Lithuania Law No I-495 of 9 June 1994 Amending the Republic of Lithuania Law on the Priority of Employees to Acquire Shares in Enterprises Subject to Privatisation (Valstybės Žinios (Official Gazette), No 45-828, 1994). I promulgate this Law passed by the Seimas of the Republic of Lithuania. PRESIDENT OF THE REPUBLIC ALGIRDAS BRAZAUSKAS

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