REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA Official translation REPUBLIC OF LITHUANIA LAW ON THE STATE PROPERTY FUND November 4 1997 No. VIII-482 Vilnius Article

1. Definitions In this Law:
2. Enterprise controlled by the state means an enterprise in which over 1/2 of the voting shares are owned by the state.
3. Privatisation transaction means a transaction concluded pursuant to the Law on the Privatisation of State-Owned and Municipal Property, under which the holder of the privatisation object obligates itself to transfer the privatisation object into the ownership of the potential buyer, whereas the potential buyer obligates itself to pay the amount of money agreed in the contract and/or fulfil other obligations stipulated in the contract.
4. Holder of a privatisation object means the State Privatisation Fund or any other state institution, enterprise or organisation of the Republic of Lithuania which holds state-owned shares in trust or owns them, uses and disposes of the state shares or other property. Article
5. Purpose of the Law This Law shall prescribe the setting up, management, activities, reorganisation and liquidation of the State Property Fund. Article
6. State Property Fund
7. The State Property Fund (the Property Fund hereinafter) is a state enterprise which, in the manner prescribed by this Law, the Law on the Privatisation of State-Owned and Municipal Property and other laws, holds in trust, uses and disposes of the securities and other state-owned property transferred to it by the Government of the Republic of Lithuania.
8. Provisions of the Law on the Privatisation of State-Owned and Municipal Property shall be applied to the Property Fund unless otherwise provided by this Law. Article
9. Setting up of the Property Fund
10. The Property Fund shall be set up and its statutes shall be approved and amended by the Government.
11. The Government shall form and increase (reduce) the authorised capital of the Property Fund through property (premises, equipment) and non-property contributions.
12. Under the decisions of the Government and in the manner prescribed by the Government, state-owned buildings, structures, equipment and shares shall be transferred to the Property Fund. The Property Fund shall hold them in trust, use them and dispose of them, with the exception of: 1) the shares in public and private companies owing buildings and their parts, structures and equipment which are used by public authorities; 2) state-owned enterprises, other objects owned by the state, the disposal whereof is limited by laws or Government decisions, also other property which, pursuant to the Constitution of the Republic of Lithuania and other laws, may belong by the right of ownership only to the state.
13. The Government shall prescribe the procedure of representation of the interests of the state at the enterprises the shares in which are owned by the state. Article
14. Functions of the Property Fund
15. The main functions of the Property Fund shall be: 1) to privatise state-owned property in accordance with the Law on the Privatisation of State-Owned and Municipal Property; 2) to represent the interests of the state by holding and using the state-owned shares, buildings, structures and facilities transferred to it in trust and by disposing of them; 3) to make a record, in the manner prescribed by the Government, of the state-owned shares transferred to it in trust and report to the Government about the condition of the state-owned property held, used and disposed of by the Property Fund, also about the proposals to set up new enterprises controlled by the state, to reorganise, liquidate and change the status of the existing enterprises; 4) to take over and hold the buildings, structures and facilities owned by the state, the shares in public and private companies; 5) to perform other functions prescribed by laws.
16. The shares and other property held, used and disposed of may be transferred by the Property Fund into the ownership of other natural or legal persons in accordance with the Law on the Privatisation of State-Owned and Municipal Property. Article
17. Board and Administration of the Property Fund
18. The activities of the Property Fund shall be headed by the board the chairperson and members whereof shall be appointed and dismissed by the Government. There must be no fewer than 5 and no more than 9 members of the board. The chairperson and members of the board shall have no labour relations with the Property Fund.
19. The board of the property Fund shall: 1) develop the strategy of the development for the Property Fund, supervise the activities and the organisation of the management of the Property Fund; 2) decide upon the structure of the Property Fund, appoint and dismiss its chief financial officer (the accountant) and, upon the approval of the Prime Minister, appoint and dismiss chief of the administration of the Property Fund; 3) approve the regulations for the participation of the Fund in the management of the enterprises controlled by the state; 4) approve the expenditure estimate of the Property Fund; 5) control the use of the financial resources of the Property Fund; 6) approve the half-yearly and annual reports of the activities of the Property Fund and announce them in the “Valstybės žinios”; 7) adopt decisions on the establishment of subsidiaries (branches) of the Property Fund in Lithuanian towns (regions); 8) perform other functions prescribed by the Government and the statutes of the Property Fund.
20. The activities of the administration of the Property Fund shall be headed by chief of the administration. His rights and duties, also his powers to represent the interests of the Property Fund, including the right to enter into agreements on behalf of the Property Fund and to represent the Fund in relations with the third parties shall be specified by the statutes of the Property Fund.
21. A member of the board of the Property Fund, chief of its administration and the chief financial officer (accountant) may not be members of the board or shareholders (directly or through another person) of a public or private company in which the property Fund holds more than 1/5 of the shares; they may not have any other covenants formally contained in the contracts with such companies.
22. If a member of the board of the Property Fund, the spouse, parents, children, brothers and sisters of chief of the administration are members of the board or shareholders (directly or through another person) of a public or private company in which the Property Fund holds more than 1/5 of the shares or if they have any covenants formally contained in contracts, the said member or chief of the administration have no right to vote when adopting decisions or to adopt decisions in his own right with regard to the above public or private companies.
23. Members of the board of the Property Fund must compensate jointly and severally to the Fund for all the damage caused because of the decisions of the board adopted in violation of the laws and other legal acts of the Republic of Lithuania. A member of the board who voted against such a decision shall be released from the obligation to pay the compensation. Article
24. Statutes of the Property Fund The statutes of the Property Fund (in addition to the provisions stipulated in the Law on State-Owned and Municipal Enterprises) shall define: 1) the number of members of the board of the Property Fund; 2) the competence of the board and of the directors of the subsidiaries (branches) of the Property Fund also the procedure of concluding contracts of the Property Fund; 3) the procedure of adopting decisions of the board of the Property Fund and of the manner of their implementation; 4) the principles of the participation of the Property Fund in the management of an enterprise controlled by the state; 5) the system of incentives for the employees of the Property Fund; 6) other issues which the Government decides to regulate. Article
25. Financial Resources of the Property Fund and their Use
26. The income of the Property Fund shall consist of the following: 1) a part of the privatisation receipts under the Law on the Privatisation of State-Owned and Municipal Property; 2) the rent for the buildings, structures and facilities owned by the state which were leased by the Property Fund, and the default interest for the overdue rent; 3) bonuses; 4) allocations the appropriations from the national budget; 5) assistance from foreign and international organisations and funds; 6) other income (for services, the use of the data base).
27. The receipts referred to in subparagraph 1 of paragraph 1 of this Article shall be accumulated and entered in the Privatisation Fund account opened for the Ministry of Finance. For the purpose of managing and disposing of the state-owned property the Property Fund shall be allocated from all the receipts a part, the amount whereof in percentage from the receipts listed in subparagraph 1, paragraph 1 of this Article shall be established by the Government every six months. The Government must establish the funds expressed in percentage which it is going to allocate to the Property Fund, taking into account the dividends received into the state budget on the shares held by the Property Fund in trust during the business year.
28. The Property Fund shall directly receive and register the income referred to in subparagraphs 2, 3, 4, 5, 6 of paragraph 1 of this Article, also other targeted subsidies or grants directly extended to the Property Fund.
29. The financial resources of the Property Fund shall be used: 1) to pay the expenses of representation of state interests at the public and private companies; 2) to pay for the purchase of services, goods and equipment needed by the Property Fund and for the work performed; 3) to accumulate a reserve of the Property Fund to pay the expenses referred to in paragraph 1 of article 9 of this Law; 4) to pay the experts hired for the purpose of implementing the Law on the Privatisation of State-Owned and Municipal Property; 5) to pay for the work of the administrative staff; 6) to provide incentives to the members of the board and the administrative staff of the Property Fund.
30. The annual financial report shall be audited by the auditors and approved by the board of the Property Fund. The said report shall be submitted to the Government. Article
31. Liability of the Property Fund
32. For the period of one year after the conclusion of the privatisation transaction, the Property Fund shall be liable for the guarantees and warranties provided by the enterprises controlled by the state, for the damage caused to the environment and other obligations arising prior to the day of the conclusion of the transaction and whose value exceeds 5 percent of the privatisation transaction value provided: 1) the buyer was not notified about the emergence of such obligations; 2) the said obligations shall be binding under the laws of the Republic of Lithuania and if they have not been transferred to the buyer pursuant to the concluded privatisation transaction.
33. If the total value of the obligations determined in paragraph 1 of this Article under one transaction exceeds 1/3 of the proceeds received by the Property Fund from the transaction, a decision with regard to the obligor shall be taken by the Government.
34. The Property Fund is not liable for the obligations of the privatised state-controlled enterprises which arose after the day of concluding the contracts of sale-purchase of the shares in those enterprises.
35. Under its obligations the Property Fund shall be liable only by the part of its property which may be recovered in the manner prescribed by laws. Article
36. Persons Representing the Property Fund The Property Fund shall have the right to sign agreements of agency with the persons who shall be instructed to take part in the shareholders’ meetings. Such an agreement may be concluded with the persons irrespective of whether they have or have not labour relations with the Property Fund. For the persons who have no labour relations with the Property Fund the Fund shall establish qualifications requirements. Article
37. Remuneration and Incentives for the Board of the Property Fund and Its Administrative Staff
38. The manner of remuneration and incentives for Chairman of the board and the administrative staff of the Property Fund shall be established by the Government.
39. The manner of remuneration and incentives for the chief of the administration and his deputies shall be established by the board of the Property Fund.
40. Remuneration and supplements to the remuneration for the staff of the Property Fund shall be established by chief of the administration of the Fund in accordance with the norms and conditions of remuneration for work approved by the board of the Fund. Article
41. Reorganisation and Liquidation of the Property Fund The Property Fund shall be reorganised and liquidated by a decision of the Government. Article
42. Final Provisions
43. The Property Fund shall be established by liquidating a state enterprise, the Lithuanian State Securities Fund ( the Securities Fund hereinafter), and by reorganising the Lithuanian State Privatisation Agency at the Government of the Republic of Lithuania. The procedure for liquidation of the Securities Fund and the reorganisation of the Lithuanian State Privatisation Agency at the Government of the Republic of Lithuania shall be established by the Government.
44. The procedure of transfer to the Property Fund in trust of the property owned by the state (including the shares held by the Securities Fund and by other state institutions) and the time limit shall be established by the Government, nevertheless: 1) the shares held by the Securities Fund as well as the shares in the public and private companies included in the privatisation programmes and the other state property must be transferred to the Property Fund not later than within six months from the day of the entry into force of this Law; 2) the shares in enterprises of social infrastructure whose prices of services and goods are regulated by the state shall not be transferred to the Property Fund. Article
45. Entry into Force To advise the Government to draft and adopt legal acts necessary for the implementation of this Law by January 1,
46. I promulgate this Law passed by the Seimas of the Republic of Lithuania. PRESIDENT OF THE REPUBLIC ALGIRDAS BRAZAUSKAS