LIETUVOS RESPUBLIKOS

LIETUVOS RESPUBLIKOS OFFICIAL TRANSLATION REPUBLIC OF LITHUANIA LAW ON INSURANCE OF DEPOSITS AND LIABILITIES TO INVESTORS 20 June 2002 No IX-975 (As last amended on 14 October 2008 – No X-1749) Vilnius CHAPTER ONE GENERAL PROVISIONS Article

1. Purpose of the Law
2. This Law shall lay down the procedure for insuring the deposits held with the banks established in accordance with the procedure laid down by laws of the Republic of Lithuania (hereinafter referred to as “banks”), the branches of foreign banks established in the Republic of Lithuania (hereinafter referred to as “branches of banks”) as well as the Central Credit Union and credit unions (hereinafter referred to as “credit unions”) and the level of insurance compensations for these deposits, the procedure for insuring liabilities of banks, financial brokerage firms and management companies authorised to provide investment services (hereinafter referred to as “undertakings”), also of branches of banks, branches of foreign financial brokerage firms and management companies (hereinafter referred to as “branches of undertakings”) to their investors and the level of insurance compensations.
3. The provisions of this Law have been harmonised with the legal acts of the European Union referred to in the Annex to this Law. Article
4. Definitions
5. Insurance undertaking shall mean the state company Deposit and Investment Insurance.
6. Insured event shall mean institution of bankruptcy proceedings against a credit union, bank or undertaking or taking of a decision by a supervisory authority on discontinuation of banking activities, acceptance of deposits or provision of investment services where the credit union or bank (branch of the bank) is not able to settle with creditors or when the undertaking (branch of the undertaking) is not capable of meeting its liabilities to investors.
7. Depositor shall mean a natural or legal person holding a deposit with a bank, branch of a bank or a credit union, with the exception of the entities whose deposits under this Law may not be covered by insurance. Where the natural or legal person (with the exception of a management company, where it manages collective investment undertakings and pension funds) having a deposit acts as a trustee, the trustor shall be held a depositor. Where a group of persons has rights of claim to the funds under contracts, each person of the group shall be held a depositor and the funds shall be divided among them in equal portions unless the contracts under which their rights of claim arise or court rulings provide otherwise.
8. Deposit shall mean the amount of the funds held with a bank, a branch of a bank or a credit union under a bank deposit and/or a bank account agreement, and of other funds to which a depositor has the rights of claim arising from the obligation of a credit institution to perform transactions with the depositor's funds or to provide to him investment services (including the accrued interest).
9. Deposit Insurance Fund shall mean a fund containing the assets accumulated for payment of insurance compensations to depositors.
10. The insured of deposits and/or liabilities to investors (hereinafter referred to as the “insured”) shall mean a bank, a foreign bank which has set up a branch in the Republic of Lithuania (hereinafter referred to as “a foreign bank”), a credit union or an undertaking or a foreign undertaking licensed to provide investment services which pays, in accordance with the procedure established by this Law, insurance premiums to the Deposit Insurance Fund or the Fund of Insurance of Liabilities to Investors administered by the state company Deposit and Investment Insurance.
11. Insurance premium for deposits and/or liabilities to investors (hereinafter referred to as an “insurance premium”) shall mean the amount of funds paid by the insured in accordance with the procedure laid down by this Law to the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors administered by the state company Deposit and Investment Insurance.
12. Insurance compensation for deposits and/or liabilities to investors (hereinafter referred to as “insurance compensation”) shall mean the amount of funds prescribed by this Law to which a depositor or an investor is entitled in the event of occurrence of a insured event.
13. Insured amount of deposits and/or liabilities to investors (hereinafter referred to as the “insured amount”) shall mean the amount of an insured deposit or liabilities to investors which is calculated in accordance with the procedure laid down by this Law.
14. Investment services shall mean the investment and ancillary services referred to in paragraphs 13 and 22 of Article 3 of the Republic of Lithuania Law on Markets in Financial Instruments.
15. Investor shall mean a natural and legal person who has entrusted funds or securities to the insured with the aim of availing himself of the investment services provided by the insurer. Where a group of persons had, under contracts, a right of claim to the funds and/or securities, each person thereof shall be regarded as an investor, and the securities and funds shall be divided among them in equal portions unless the contracts from which the rights of claim arise or court rulings provide otherwise. Where a person who has entrusted funds or securities (with the exception of a management company managing collective investment undertakings and pension funds) acted as a trustee, the trustor shall be regarded as the investor.
16. Liabilities to investors shall mean the liabilities of the insured providing investment services to the investor concerning repayment of the funds owned by the investor and/or return of the securities held by the investor.
17. Fund of Insurance of Liabilities to Investors shall mean a fund containing the assets accumulated for paying insurance compensations to the investors.
18. Collective investment undertaking shall be interpreted as defined in the Republic of Lithuania Law on Collective Investment Undertakings.
19. Pension fund shall be interpreted as defined in the Republic of Lithuania Law on the Supplementary Voluntary Accumulation of Pensions, the Republic of Lithuania Law on the Accumulation of Pensions, also the fund of occupational pensions as defined in the Republic of Lithuania Law on the Accumulation of Occupational Pensions.
20. Supervisory authority: 1) the Bank of Lithuania; 2) the Securities Commission; 3) an institution in a foreign state performing the functions analogous to those of the Bank of Lithuania and the Securities Commission.
21. Management company shall be interpreted as defined in the Republic of Lithuania Law on Collective Investment Undertakings, and a pension fund management company shall be interpreted as defined in the Republic of Lithuania Law on the Supplementary Voluntary Accumulation of Pensions.
22. Securities shall mean the financial instruments indicated in paragraph 4 of Article 3 of the Republic of Lithuania Law on Markets in Financial Instruments. CHAPTER TWO INSURANCE PREMIUMS Article
23. Object of Insurance
24. Deposit insurance coverage shall be provided for depositors’ deposits in Litas and in a foreign currency - the US dollars, euros, and national currencies of the Member States of the European Union and states of the European Economic Area (hereinafter referred to as the “European states”) (hereinafter referred to as the “foreign currency”).
25. Insurance coverage for liabilities to investors shall be obligations provided for liabilities to investors to repay the securities irrespective of their denomination or money in Litas or the foreign currency.
26. The deposits and liabilities to investors indicated in paragraphs 1 and 2 of this Article must be insured at an insurance undertaking by banks, credit unions, undertakings as well as foreign banks or the undertakings having established branches in the Republic of Lithuania with which deposits are held or whose liabilities to investors have no insurance coverage (are not subject to compensation) or which are not covered by any other protection schemes under the legislation of a foreign state exercising jurisdiction over the bank having a branch or the undertaking.
27. Insurance coverage may not be provided to the debt securities (deposit certificates) issued by the same insured or the liabilities arising out of own acceptances and promissory notes, the mortgage bonds issued under the Republic of Lithuania Law on Mortgage Bonds and Mortgage Loans, also the deposits of or liabilities to the following entities: 1) the Bank of Lithuania; 2) insurance undertakings; 3) credit institutions; 4) financial brokerage firms; 5) the insurance undertakings operating under the Law on Insurance; 6) pension funds; 7) management companies; 8) the undertakings engaged in leasing (financial lease); 9) collective investment undertakings. Article
28. Supplementary Insurance
29. Where the deposits held with or the liabilities to investors assumed by a branch established in the Republic of Lithuania by a foreign bank or an undertaking not falling under the jurisdiction of a European state are insured (compensated) or their protection is ensured in any other way under the legislation of a foreign state, however the council of the insurance undertaking determines that these insurance (compensation) conditions of the deposits or liabilities to investors or any other conditions ensuring their protection are less favourable than in this Law, the foreign bank or the undertaking which has established the branch must, in accordance with the procedure established by the council of the insurance undertaking and published in the official gazette Valstybės žinios, provide supplementary coverage for the depositors’ deposits held with and the liabilities of the foreign bank or the undertaking to investors assumed by the branch. A foreign bank or an undertaking having a branch in the Republic of Lithuania and falling under the jurisdiction of a European state shall, in this case, have the right to provide a supplementary insurance coverage to the deposits held with and the liabilities to investors assumed by the branch.
30. Supplementary insurance coverage shall be provided only to the deposits or liabilities to investors who, under the legislation of a foreign state, have less favourable conditions of insurance (compensation) or any other conditions of ensuring their protection than those provided by this Law.
31. The deposits or liabilities to investors which are not provided insurance coverage (compensation) or any other protection under the legislation of a foreign state must be insured in accordance with this Law. Article
32. Insured Amount
33. The insured sum shall be equal to the depositor’s deposit kept with a bank, a branch of a bank or a credit union on the day of the insured event, however it may not exceed: 1) LTL 45 000 – from the day of entry into force of this Law; 2) LTL 50 000 – from 1 January 2004; 3) LTL 60 000 – from 1 January 2007; 4) the amount in Litas equivalent to EUR 22 000 – from 1 January 2008; 5) the amount in Litas equivalent to EUR 100 000 – from 1 November 2008 until 31 October
35. The insured amount of a deposit under supplementary coverage shall be equal to the difference between the deposit and the amount payable under the legislation of a foreign state, however, it may not exceed the insured amounts specified in paragraph 1 of this Article.
36. The insured amount of liabilities to an investor shall be equal to the liabilities of a bank or an undertaking to the investor on the day of the insured event, however, it may not exceed: 1) LTL 45 000 – from the day of entry into force of this Law; 2) LTL 50 000 – from 1 January 2004; 3) LTL 60 000 – from 1 January 2007; 4) the amount in Litas equivalent to EUR 22 000 – from 1 January
38. The insured amount of liabilities to an investor under supplementary coverage shall be equal to the difference between the liabilities to the investor and the amount payable to the investor under the legislation of a foreign state, however, the insurance amount may not be in excess of the insurance amounts specified in paragraph 3 of this Article. Article
39. Insurance Premium of Banks, Branches of Banks and Credit Unions
40. The insurance premium for banks, branches of banks and credit unions shall be calculated from the amount of the Litas-denominated and/or foreign currency-denominated balance of money on the depositors’ accounts opened under bank deposit and/or bank account agreements at credit unions, banks and branches of banks where the deposits held with them are not compensated or protected in any other way under the legislation of a foreign state having jurisdiction over the foreign bank which has established the branch. When providing, in the case provided for by this Law, supplementary cover for deposits, the insurance premium shall be calculated from the amount which consists the difference between the balance of money on the accounts of deposits under supplementary coverage opened under bank deposit and/or bank account agreements and the compensations payable to depositors under the legislation of a foreign state.
41. The annual rate of an insurance premium shall, with the exception of the case provided for in paragraph 3 of this Article, be as follows: 1) 0.45 per cent for banks and branches of banks; 2) 0.2 per cent for credit unions.
42. The council of the insurance undertaking shall have the right to change the rate of the insurance premium in the following cases: 1) when the ratio between the Deposit Insurance Fund and all the deposits covered by insurance becomes higher than 3 per cent, but does not exceed 4 per cent. In this case, the annual rate of the insurance premium for the insured indicated in subparagraph 1 of paragraph 2 of this Article may not be lower than 0.045 per cent, and for the insured indicated in subparagraph 2 of paragraph 2 of this Article – not lower than 0.0025 per cent; 2) when the ratio between the Insurance Fund and all the deposits covered by insurance becomes higher than 4 per cent. In this case, the annual rate of the insurance premium for the insured specified in subparagraph 1 of paragraph 2 of this Article may not be lower than 0.001 per cent, and for the insured specified in subparagraph 2 of paragraph 2 of this Article – not lower than 0.0005 per cent.
43. The banks which have acquired the right to accept deposits, in the cases provided for in paragraph 1 of Article 4 the foreign banks which have established the branches entitled to accept deposits shall, in accordance with the procedure laid down by the council of the insurance undertaking, pay to the account of the insurance undertaking the first (advance) insurance premium in the amount of LTL
44. The credit unions which have the right to accept deposits and the newly established credit units which have acquired the right to accept deposits shall, in accordance with the procedure laid down by the council of the insurance undertaking, pay to the account of the insurance undertaking the first (advance) insurance premium in the amount of LTL
45. Other insurance premiums shall be calculated by the insured and shall be paid by it to the account of the insurance undertaking each month.
46. The insurance premium of banks and branches of banks shall not depend on the investment services provided by them. Article
47. Insurance Premium of Undertakings
48. The annual premium for the undertakings which are not entitled to provide a supplementary service of safekeeping of the securities and funds belonging to clients shall amount to LTL
49. The annual premium for the undertakings which are entitled to provide a supplementary service of safekeeping of the securities and/or funds belonging to clients shall amount to LTL
51. The undertakings which execute orders on account of clients shall additionally pay a portion of the annual premium – 0.01 per cent of the total value of the orders executed over the previous calendar year, however, this portion may not be lower than LTL 1000 and not higher than LTL
52. Article
53. Procedure for Paying Insurance Premiums
54. The procedure for and time limits of the calculation and payment of the insurance premium, as well as changes to the rate of the insurance premium shall be established by the council of the insurance undertaking and published in the official gazette Valstybės žinios.
55. If the insured fails to pay the insurance premium or a portion thereof to the account of the insurance undertaking within the time limit laid down by the council of the insurance undertaking, a default interest shall be charged for each day of delay. The amount of the default interest shall be determined by the council of the insurance undertaking taking into account the average interest rate of the previous calendar quarter payable on the bonds of the Government in Litas with maturity of up to one year. Default interest shall be calculated and paid according to the procedure for calculating default interest for a failure to timely pay the insurance premium as approved by the council of the insurance undertaking. Where the insured fails to pay insurance premiums, the amount due and default interest shall be recovered therefrom in accordance with the procedure laid down by laws of the Republic of Lithuania. Default interest shall be recovered where costs of recovery thereof does not exceed the amount to be recovered.
56. From the day when an insured event occurs for the insured or when the council of the insurance undertaking terminates a deposit insurance for the insured, insurance premiums shall cease to be paid. In this case, the part of the insurance premium unpaid by the day of the insured event or by the day of termination of insurance shall be deemed a debt of the insured, and the default interest laid down in paragraph 2 of this Article shall not be calculated from the day of the insured event or from the day of termination of insurance. CHAPTER III INSURANCE COMPENSATIONS Article
57. Amount of an Insurance Compensation
58. A depositor shall become entitled to an insurance compensation from the day of an insured event. An investor shall become entitled to an insurance compensation from the day of an insured event only where the insured has transferred or used the investor's securities and/or funds without the consent of the investor. When calculating an insurance compensation for liabilities to investors, only those securities and funds of the investor shall be included into the liabilities to the investor which the insured is not able to repay to the investor.
59. Insurance compensations for deposits and insurance compensations for liabilities to investors shall be calculated and paid separately.
60. Amounts of insurance compensations for depositors or investors shall be as follows: 1) 100 per cent of the deposit or liabilities to the investors up to LTL 10 000 – from the day of entry into force of this Law until 31 December 2007; 2) 90 per cent of the deposit or liabilities to the investors from LTL 10 000 up to LTL 45 000 – from the day of entry into force of this Law until 31 December 2003; 3) 90 per cent of the deposit or liabilities to the investors from LTL 10 000 up to LTL 50 000 – from 1 January 2004 until 31 December 2006; 4) 90 per cent of the deposit or liabilities to the investors from LTL 10 000 up to LTL 60 000 – from 1 January 2007 until 31 December 2007; 5) from 1 January 2008 – 100 per cent of the deposit or liabilities to the investors up to the amount of Litas equivalent to EUR 3 000 and 90 per cent of the deposit or liabilities to the investors from the amount of Litas equivalent to EUR 3000 up to the amount of Litas equivalent to EUR 20 000; 6) from 1 November 2008 until 31 October 2009 – 100 per cent of the deposit up to the amount of Litas equivalent to EUR 100
62. Insurance compensations for deposits or liabilities to investors in a foreign currency shall be calculated on the basis of the exchange rate of Litas and the foreign currency determined by the Bank of Lithuania on the day of an insured event.
63. The amount of an insurance compensation to the investors shall be calculated according to the market value of the investor's securities on the day of an insured event. Article
64. Procedure for Paying an Insurance Compensation
65. Insurance compensations shall be paid in Litas within three months from the day of an insured event. The council of the insurance undertaking may extend this time limit for up to three months (in case of deposit insurance – not more than twice for up three months each time).
66. A depositor or an investor shall be entitled to an insurance compensation for a period of five years from the day of an insured event.
67. An insurance compensation shall be calculated and paid by the insurance undertaking on the basis of the data as of the day of an insured event about depositors or investors, their deposits or liabilities to the investors as well as about the amounts of deposits or liabilities to the investors covered by supplementary insurance. The procedure for calculating and paying insurance compensations shall be determined by the council of the insurance undertaking and published in the official gazette Valstybės žinios.
68. The amount of a supplementary insurance compensation shall be calculated by deducting from the insurance compensation calculated pursuant to provisions of Article 9 of this Law the insurance compensation (guarantee) calculated pursuant to the legislation of a foreign state.
69. Disputes over the right of a depositor or an investor to an insurance compensation shall be settled by court. Article
70. Impact of Payment of an Insurance Compensation
71. After the insurance undertaking pays insurance compensations to depositors or investors of the insured, the insured must, subject to an instruction of the insurance undertaking, reduce liabilities to the depositors or investors by the amounts indicated by the insurance undertaking and increase accordingly liabilities to the insurance undertaking.
72. From the day on which an insurance compensation was paid to the depositor or the investor, he shall forfeit any rights of claim to a sum of money in the amount of the insurance compensation from a bank, a credit union or an undertaking. Article
73. Limitations on Insurance Compensations
74. Insurance compensations shall not be paid in the following cases: 1) to the depositors or investors whose deposits or liabilities to the investors have been declared as illegally acquired by a court ruling; 2) to the depositors or investors whose deposits or liabilities to the investors have been transferred, under contracts or in any other way (with the exception of inheritance), after the day of an insured event; 3) to heads of the administration of a bank, a credit union or an undertaking, heads of branches of a credit union or an undertaking, members of the council (supervisory board) and the board; to the persons holding at least 5 per cent of a bank's share capital, or the persons holding more than 50 per cent of the capital of the undertakings holding at least 5 per cent of the bank's share capital; to the persons who are carrying out an independent audit of a bank, a credit union or an undertaking; to the children, adopted children, spouses, cohabitants living in registered partnership, parents and adoptive parents of the persons indicated in this subparagraph; 4) to borrowers of a bank, a credit union or an undertaking, where the deposits or liabilities to investors are not in excess of their liabilities (the outstanding loans and interest). If the deposit of a borrower of a bank, a credit union or an undertaking is in excess of the borrower’s liabilities (the outstanding loans and interest), the insured amount shall be calculated by deducting the borrower’s liabilities from the deposit or liabilities to the investor, however, it may not exceed the amount indicated in paragraph 3 of Article 9 of this Law; 5) for the deposits kept in anonymous and coded accounts; 6) for the deposits for which the insured has fixed an interest rate twice as high as the interest rate set for comparable deposits held with the same credit institution.
75. Payment of insurance compensations to the depositors and investors against whom an application has been filed with law enforcement or courts in respect to the legality of acquisition of their deposit funds or liabilities to the investors shall be suspended until the coming into effect of a ruling. CHAPTER FOUR PROVISION OF INFORMATION ABOUT INSURANCE AND TERMINATION OF INSURANCE Article
76. Provision of Information about Insurance
77. The insured must provide information to depositors and investors in the Lithuanian language about the terms and conditions of insurance. Moreover, where a depositor or an investor requests so, he must be provided information about the terms and conditions of and procedure for paying insurance compensations.
78. Terms and conditions of insurance may not become an instrument of competition used in advertising. Only an insurance undertaking which has provided insurance cover for deposits and for liabilities to the investors may be mentioned in advertisements. Article
79. Procedure for Terminating Insurance
80. Where the supervisory authority of the insured revokes, temporarily or permanently, the right of the insured to accept deposits, the council of the insurance undertaking shall, respectively temporarily or permanently and without giving an advance notice, terminate for the insured the insurance of deposits. Where the supervisory authority revokes, temporarily or permanently, the right of the insured to provide investment services, such a prohibition of liabilities of the insured to investors shall be terminated respectively temporarily or permanently.
81. The supervisory authority must forthwith notify the council of the insurance undertaking of withdrawal of the right to accept deposits or provide investment services.
82. Where the insured acts in breach of the procedure of insurance and/or where its activities pose a risk to the capability of the insurance undertaking to meet its liabilities, the council of the insurance undertaking shall, upon giving a prior notice to the supervisory authority, warn the insured of the likely termination of insurance at least 12 months in advance. If the insured fails to eliminate breaches in the procedure of insurance within 12 months following the warning, insurance of the deposits accepted by the insured or its liabilities to investors may be terminated by a decision of the council of the insurance undertaking agreed with the supervisory authority of the insured.
83. The insurance undertaking shall make public notification of termination of insurance of deposits and liabilities to investors in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios. Article
84. Impact of Termination of Insurance Where an insured event occurs to the insured for whom insurance has been terminated, the insurance undertaking shall pay insurance compensations only for the deposits and liabilities which had been accepted (assumed) prior to the coming into force of the decision about termination of insurance and had not been repaid or met before the day of the insured event. CHAPTER FIVE STATE COMPANY DEPOSIT AND INVESTMENT INSURANCE Article
85. Status of the Insurance Undertaking
86. The insurance undertaking shall be a state company established by the Government of the Republic of Lithuania on the basis of State-owned property under the Republic of Lithuania Law on the Insurance of Deposits of Individuals and registered in accordance with the procedure laid down by laws of the Republic of Lithuania, having its own seal with the state emblem of Lithuania and the name “state company Deposit and Investment Insurance”. Jos savininko teises ir pareigas įgyvendinanti institucija yra Finansų ministerija.
87. In its activities, the insurance undertaking shall be guided by this Law, the Republic of Lithuania State and Municipal Enterprise Law and other legal acts, unless this Law provides otherwise, and by its by-laws. Article
88. By-laws of the Insurance Undertaking The by-laws of the insurance undertaking must lay down purposes of its activity, rights and duties of its council and the head as well as other requirements set out in the Republic of Lithuania State and Municipal Enterprise Law. Article
89. Functions of the Insurance Undertaking In implementing the purposes of activity specified by this Law, the insurance undertaking shall: 1) accumulate funds, in accordance with the procedure laid down by this Law, in the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors; 2) calculate and pay insurance compensations to the depositors and investors of the insured; 3) assess the terms and conditions of insurance (compensation) of deposits or liabilities to investors or other protection provided by the foreign states whose banks or undertakings are setting up branches in the Republic of Lithuania; 4) supervise compliance by the insured with the procedure of insurance laid down by this Law; 5) assess the risk of the insurance undertaking; 6) invest the funds administered by it and funds of the equity of the insurance undertaking into the securities of the governments and central banks of the states determined by the council of the insurance undertaking; 7) perform other functions indicated in this Law and the by-laws of the insurance undertaking relating to implementation of this Law and ensuring of the functioning of the insurance undertaking. Article
90. Purposes of the Activity of the Insurance Undertaking The insurance undertaking shall insure deposits of depositors and liabilities to investors, administer the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors as well as carry out other activities indicated in the by-laws of the insurance undertaking. Article
91. Rights of the Insurance Undertaking
92. The insurance undertaking shall have the right: 1) to have accounts with the Bank of Lithuania, banks and branches of banks; 2) to conclude agreements and assume obligations; 3) to dispose of the property it administers in accordance with the procedure prescribed by laws and its by-laws; 4) to terminate insurance of deposits and of liabilities to investors in the cases indicated in this Law; 5) to verify the accuracy of calculation and payment of insurance premiums by the insured; 6) to obtain from the insured the information necessary for the performance of its functions; 7) to obtain from the supervisory authorities of the insured the following information: the sanctions applied against the insured; the granting and withdrawal of authorisations for banks, credit unions, and branches of banks to accept deposits; the rights granted to banks, undertakings, credit unions and branches of banks; 8) to take loans in order to meet liabilities of the insurance undertaking; 9) to receive a share of the assets of the bank, undertaking or credit union in liquidation which provided insurance coverage for deposits of depositors or liabilities to investors under this Law; 10) to enter into property valuation agreements with the persons having the right to engage in securities valuation; 11) in the cases and in accordance with the procedure laid down by laws, to adopt a decision on the taking of a bank’s shares from shareholders of the bank for public needs, also in accordance with the procedure laid down by legal acts, to manage, use and dispose by the right of trust of the shares taken; 12) where a decision is adopted on the taking of a bank’s shares from shareholders of the bank for public needs, to obtain from the Central Depository a list of holders of the bank’s shares; 13) to engage in other activities provided for in the by-laws of the insurance undertaking.
93. The insurance undertaking shall have full control of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors.
94. The insurance undertaking must, in accordance with the procedure laid down by laws, insure the tangible fixed assets transferred to it in trust with an insurance undertaking registered in the Republic of Lithuania. Article
95. Bodies of the Insurance Undertaking
96. Bodies of the insurance undertaking shall be an institution exercising the rights and duties of the owner of the insurance undertaking, the council of the insurance undertaking and a single-person management body – the head of the insurance undertaking.
97. The council shall comprise six members appointed by the Government of the Republic of Lithuania. The Ministry of Finance shall nominate three candidates, the Bank of Lithuania – two candidates, and the Securities Commission – one candidate. With the approval of the council, one representative from each of the following – an association of banks, an association of financial brokers and an association of credit unions – may take part in meetings of the council with a deliberative vote. Members of the council shall be remunerated for their work by the institutions which have delegated them.
98. The term of office of members of the council shall be four years and the number of terms shall not be limited. The institution which has nominated its candidate to the members of the council may recall him and nominate another candidate to fill the vacancy.
99. The activities of the council shall be directed by the chairman of the council and in the absence thereof – by the deputy chairman of the council. The chairman and deputy chairman of the council shall be elected by the council of the insurance undertaking from among its members.
100. The council shall: 1) submit conclusions, comments and proposals to the institution exercising the rights and duties of the owner of the insurance undertaking regarding the operating strategy and management structure of the insurance undertaking; 2) submit proposals to the institution exercising the rights and duties of the owner regarding amendments of the by-laws of the insurance undertaking; 3) establish the procedure for and time limits of calculation and payment of insurance premiums, the rate of default interest for late payment of an insurance premium and the procedure for calculating and paying the default interest; 4) lay down the procedure for calculating and paying insurance compensations; 5) approve the policy of investment of funds of the equity of and funds administered by the insurance undertaking; 6) adopt decisions on the termination of insurance of deposits or insurance of liabilities to investors; 7) adopt decisions on the change of the rate of the insurance premium, determine the amount of the loan to be taken by the insurance undertaking for meeting its liabilities; 8) establish the procedure for providing supplementary insurance coverage for deposits or liabilities to investors; 9) submit to the institution exercising the rights and duties of the owner of the insurance undertaking an annual report about its activities; 10) in the cases and in accordance with the procedure laid down by laws as well as upon agreement with the institution exercising the rights and duties of the owner of the insurance undertaking, adopt a decision on the taking of a bank’s shares from shareholders of the bank for public needs and determine the payment for these shares and the amount of the funds allocated for restoration of the safety and soundness of activities of the bank; 11) perform other functions provided for in this Law and the by-laws.
101. The head of the insurance undertaking shall be accountable to the institution exercising the rights and duties of the owner of the insurance undertaking. Article
102. Confidentiality of Commercial Secrets of the Insurance Undertaking The information which is a commercial secret of the insurance undertaking may be supplied only to the institutions specified by laws and in accordance with the procedure laid down by laws. Article
103. Separateness of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors
104. The insurance premiums paid by banks, branches of banks and credit unions, insurance compensations and earnings from the investments of the Deposit Insurance Fund, also the funds recovered from the insured in liquidation which had paid insurance premiums to the Deposit Insurance Fund and other income and costs of the Deposit Insurance Fund shall be accounted and accumulated separately from the insurance premiums paid by undertakings, the insurance compensations and earnings from the investments made by the Fund of Insurance of Liabilities to Investors, also the funds recovered from the insured in liquidation who had paid insurance premiums to the Fund of Insurance of Liabilities to Investors and other income of the Fund of Insurance of Liabilities to Investors.
105. Insurance compensations for deposits and liabilities of banks and branches of banks to investors shall be paid from the Deposit Insurance Fund, while insurance compensations for the liabilities of undertakings to the investors shall be paid from the Fund of Insurance of Liabilities to Investors.
106. Where one of the funds lacks resources for payment of insurance compensations while the other has such resources, insurance compensations may be paid from the fund which has the resources, however prior to using the other fund the mandatory reserve shall be used first. Afterwards, the insurance premiums paid into the fund which lacked resources for the payment of insurance compensations shall be used primarily for repayment of resources to the other fund. Article
107. Equity of the Insurance Undertaking
108. The equity of the insurance undertaking shall consist of the capital of the owner of the insurance undertaking, mandatory reserve, revaluation reserve (result) and retained profit (loss) of the current year. The capital of the owner of the insurance undertaking shall be indicated in the by-laws of the insurance undertaking.
109. The capital of the owner of the insurance undertaking may be used for the payment of insurance compensations only where both funds and the mandatory reserve lack resources for this purpose.
110. The portion of the capital of the owner of the insurance undertaking used pursuant to paragraph 2 of this Article shall be restored up to the level of the owner’s capital specified in the by-laws of the insurance undertaking from resources of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors. Both the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors used to restore the owner’s capital must correspond to the amounts by which the owner’s capital has been reduced for the payment of insurance compensations of each of these funds. Resources of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors shall be used for restoration of the owner’s capital prior to repayment of resources to the other fund in accordance with the procedure laid down in paragraph 3 of Article 23 of this Law. Article
111. Income and Costs of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors
112. The income of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors shall consist of insurance premiums, the amounts recovered, in accordance with the procedure laid down by laws, from the insured in liquidation, earnings from the investments made by the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors, the funds obtained upon the sale of the shares or assets of a bank whose shares have been taken from shareholders for public needs, also other amounts.
113. The costs of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors shall consist of insurance compensations, the administration costs of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors, the amounts payable for the shares of a bank taken from shareholders of the bank for public needs, also the amounts intended for restoration of the safety and soundness of activities of a bank whose shares have been taken from shareholders for public needs.
114. The amount of administrative costs of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors shall be determined, upon assessment of the expected administrative costs of each of the funds and the amounts of the funds, by the council of the insurance undertaking when approving the estimate of administrative costs of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors. Article 25