REPUBLIC OF LITHUANIA Official Translation REPUBLIC OF LITHUANIA LAW ON THE FREE ECONOMIC ZONE OF ÐIAULIAI July 2, 1996. No I - 1415 Vilnius ARTICLE 1. Purpose of the Law 1. The Free Economic Zone of Ðiauliai (hereinafter referred to as “Zone”) shall be established by this Law, based on the Law on the Fundamentals of Free Economic Zones, on the recommendation of the Ðiauliai City Municipality. 2. The purpose of establishment of the zone, on the territory of the former Zokniai military base is: effective utilisation of the existing infrastructure of this base as well as the present Ðiauliai Airport, encouragement of foreign investments, creation of new jobs, instilling of new technologies, improvement of the city of Ðiauliai infrastructure and utilisation of highly qualified personnel. ARTICLE 2. Term of Activity of the Zone The zone shall be established for a term of 49 years. The term of activity of the zone may be extended only by law. ARTICLE 3. Territory of the Zone 1. The territory of the zone shall comprise 457.51 ha. The private company Ðiauliai Airport shall be an economic entity, providing the zone with transportation services, however it shall not be included within the territory of the zone. 2. The territory of the zone shall be leased to the zone administration company in accordance with the Law on the Lease of Land. ARTICLE 4. Boundaries of the Zone Territory The boundaries of the zone shall be established, as follows: 1) the northern boundary of the zone shall coincide with the boundary of the city of Ðiauliai municipality territory (bordering on the Aleksandrija, Bertuþiai and Proèiûnai village lands); 2) the eastern boundary of the zone shall coincide with the boundary of the city of Ðiauliai municipality territory (bordering on the Kirbaièiai and Bacioniai village lands); 3. the southern boundary of the zone shall coincide with the northern and western boundaries of Ðiauliai Airport. 4) the western boundary of the zone shall coincide with the reserve territory of the city, extending along Aerouosto St., coinciding with the western boundary of the public company of Ðiauliai Aviatsija and its extension, up to the projected main highway, following the right side of the projected main highway, coinciding with the territorial limit of the former military airport. ARTICLE 5. Types of Activity of the Zone Activities involving, the trade, manufacture, import, export, and business shall be developed in the zone. Types of activities in the zone shall be detailed in the zone statute. ARTICLE 6. Tender Conditions for Preparation of the Best Business Plan for the Zone and Preparation of a Zone Statute and Selection of Founders’ Group and Criteria for Selection of Winners 1. The city of Ðiauliai municipality shall organise the international tender, while the Government of the Republic of Lithuania shall approve the tender commission and regulations. The commission must include at least one each, a member of Ðiauliai City Council and a member appointed by the district governor of Ðiauliai. 2. The international tender must be published no later than within the term of one month from the coming into force of this Law. 3. Natural and legal persons of the Republic of Lithuania or of foreign countries may participate in the tender. 4. Winners of the tender shall be selected according to the following criteria: 1) basic criteria:
- a)feasibility of zone establishment and of economic justification of its future activity;
- b)actual prospect of investments, especially foreign investments, their size, their part in the development of the zone’s infrastructure, and duration of the recoupment of investment;
- c)justification of usefulness of zone activity to the Republic of Lithuania;
- d)number and validity of job openings created in the zone;
- e)rate of intensification in the use of Ðiauliai Airport;
- f)duration of adaptation of existing infrastructure, stages and terms of zone activity; 2) other (supporting) criteria:
- a)experience in drawing up business plans for zones in creation of free economic zones worldwide and comparison of proposed Ðiauliai zone model with the already existing zones and taking into consideration the specifics of Lithuania and Ðiauliai;
- b)validity of functional ties with other free economic zones being created in Lithuania;
- c)substantiation of the zone’s influence towards encouraging economic development within the city and region of Ðiauliai and a plan of measures encouraging local business within the zone, and its validity;
- d)cooperation with the municipality of Ðiauliai, district of Ðiauliai and associated structures of local business;
- e)legal validity of the zone statute. ARTICLE 7. Structure of the Free Economic Zone of Ðiauliai Administration Company, Functions, Authorisations and Liability of its Management Bodies 1. Management bodies of the zone administration company shall include the general meeting, board and administration. 2. A public company or a private company already in existence may be re-registered into a zone administration company, having changed and, in accordance with established procedure, registered the by-laws of the company. 3. The general meeting of shareholders of the zone administration company shall have the right to submit proposals to the Government of the Republic of Lithuania and the state institution in charge of the state supervision of free economic zones, concerning changes of the zone’s territorial limits and statute. 4. The administration of the zone company shall be comprised of 7 members. The administration shall include: 1) one member appointed by the Government of the Republic of Lithuania; 2) one member appointed by the City Council of Ðiauliai; 3) five members elected at the general meeting. 5.The zone administration company chief may also be the zone administration chief. A member of the zone administration company may be member of the board of the patron public company. 6. The board of the zone administration company shall perform the following functions: 1) establish procedure of issuing permits for activity in the zone; 2) establish taxation of zone enterprises; 3) establish in contracts of zone enterprise and zone administration companies financial and other conditions of land and immovable property leasing and rendering of mutual services; 4) establish internal order in the zone; 5) establish service enterprises in the zone 6) adopt resolution concerning fund cooperation for development of the general infrastructure of the zone and maintenance of surroundings; 7) analyse statistical accounting data established by the Government of the Republic of Lithuania, obtained from economic entities active in the zone, relevant to their activity; 8) confirm the accounting of the zone administration company and activity of the zone, submitted to the Government of the Republic of Lithuania; 9) form a commission for examining disputes between economic entities; 10) establish the procedure of invitations by the zone administration company, to foreign nationals and stateless persons, permanently residing abroad, who wish to enter the zone; also, establish procedure regarding mediation in issuance of visas to foreign nationals for transit of Lithuanian territory between the border crossing posts and the territory of the zone; 11) upon coordination with the Border Police at the Ministry of Internal Affairs and the Customs Department at the Ministry of Finance, establish the procedure for allowing entrance to citizens of the Republic of Lithuania and other persons, into the zone and confirms permit examples. 7. The zone administration company shall organise and implement economic activity in the zone, in accordance with the regulations confirmed by the board. 8. Authorisations and responsibilities of the zone administration company shall be as follows: 1) to sublease land and immovable property, leased to the zone administration company, to zone enterprises, in accordance with sublease contract terms established by the board; 2) to form contracts on mutual services rendering, with zone enterprises in accordance with the financial and other conditions established by the board; 3) to issue permits for entry into the zone, established by the board of the zone administration company and based upon the permit example, coordinated with the Border Police Department at the Ministry of Internal Affairs and the Customs Department at the Ministry of Finance; 4) to ensure, that the economic entities registered in the zone, shall abide by the statute of the zone, shall not engage in activities prohibited by the laws of the Republic of Lithuania, shall act in accordance with the conditions established by the contract, shall abide by the Law On Environmental Protection and other legal acts, linked with the requirements of environmental protection; 5) to ensure protection of the boundaries of the zone and to create working conditions for work at the customs control posts of the Customs of the Republic of Lithuania; 6) to ensure physical protection of the territory of the zone: 7) to create conditions for law and order institutions and international control organisations to perform their functions in the zone; 8) to perform other activity assigned by the board. 9. The bodies of the zone administration company board shall implement management functions in accordance with the Company Law and other laws. ARTICLE 8. Liquidation of the Zone Administration Company and Formation of New Company 1. The zone administration company may be liquidated in instances established by the Company Law. 2. With the existence of basis established by law, to liquidate the zone administration company, and in order to form a new zone administration company, the Government of the Republic of Lithuania shall adopt a decision to select a group of international tender founders. This tender shall be organised by the municipality of the city of Ðiauliai, while the new commission and regulations shall be confirmed by the Government of the Republic of Lithuania. 3. The principal conditions of the tender: 1)continuity of the activity of the zone; 2) implementation of activity stages of the zone; 3) opportunity to assume long-term financial, economic, legal and other obligations of the zone administration company undergoing liquidation, linked with the general activity of the zone. 4. The zone administration company under liquidation, shall act as the administrator of the zone until such time, as a new zone administration company shall be formed. ARTICLE 9. Principles of the Relations of Ðiauliai Airport with the Zone Administration Company 1. The area occupied by Ðiauliai Airport (hereinafter referred to as “the Airport”), shall be leased from the state land lessor, in accordance with the land lease agreement. 2. The airport shall not be registered as a zone enterprise however, all tax, customs, financial and currency conditions, established for zone enterprises, shall be applied to it. 3. The enterprises of the free economic zone and other economic entities of the Republic of Lithuania and also the economic entities of other countries shall utilise airport services on a like basis. 4. Customs inspection of goods brought into the zone and goods taken out of the zone through the airport, shall be conducted on airport territory. 5. The internal order within the zone, established by the zone administration company, linked to airport activity, must be coordinated with the Ðiauliai Airport and the Aviation Inspectorate of the Civil Aviation Direction of the Republic of Lithuania. 6. Physical and technical protection of the general boundaries of the airport and of the zone, may be conducted by the zone administration company and Ðiauliai Airport on a contract basis. 7. The establishment, exploitation and utilisation of the common facilities of the infrastructure and area maintenance of the airport and the zone, shall be established per agreement of the airport and the zone administration company. ARTICLE 10. Procedure of Taxation of the Zone Enterprises 1. The zone administration company, in implementing the rights, obligations and liability established for it by law, may establish taxes for enterprises in the zone in accordance with the procedure established in the zone statute. 2. The zone administration company, in accordance with the procedure established in the statute of the zone, shall establish the tariff amounts of taxes levied for common zone affairs, the entities from whom taxes shall be collected and conditions of the payment of such. I promulgate this Law adopted by the Seimas of the Republic of Lithuania. President of the Republic Algirdas Brazauskas