1.Upon sale of shares of an investment company with variable capital the provisions of the Law on Companies regulating subscription of and payment for shares of public limited liability companies shall not apply. Marketing of shares of investment companies with variable capital may be started when a company obtains an authorisation to pursue the activities of an investment company with variable capital and is authorised by the supervisory authority to approve the articles of association of an investment company with variable capital, to choose a depositary and where applicable the authorisation for a management company authorised in another Member State to manage an investment company with variable capital established in the Republic of Lithuania.
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2.Shares of an investment company with variable capital may be distributed for an indefinite period. The size of the issue of shares shall not be limited, with the exception of the case when the articles of association of the investment company with variable capital stipulate the maximum amount for which the shares may be distributed.
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3.An investment company with variable capital shall have no right to sell its shares in instalments or to defer their payment term.
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4.Only fully paid-up shares shall be deemed issued and may be entered in a personal account of transferable securities of a shareholder.
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SECTION THREE UMBRELLA COLLECTIVE INVESTMENT UNDERTAKINGS
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Article 50Instruments of incorporation of an umbrella collective investment undertaking
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1.The articles of association of an umbrella investment company shall contain the information indicated in points 2, 3, 5 and 7 of Article 72(1), points 1 and 2 of Article 126(2) and Article 152(2) of this Law provided separately for each sub-fund constituting it. The following information shall be additionally provided about each sub-fund in the articles of association of an investment company:
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1)the name of the sub-fund;
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2)the period for which the sub-fund has been established;
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3)the currency of the sub-fund;
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4)the information that for the purpose of addressing at the general meeting of shareholders of an investment company an issue related to the interests of participants of only one sub-fund, the voting right shall be awarded only to the participants of that sub-fund.
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2.The information indicated in points 3, 7, 9, 12, 14, 15, 17, 18 of Article 66(2) and points 1 and 2 of Article 126(2) of this Law shall be provided in the rules of an umbrella investment fund in respect of each sub-fund constituting it. The information specified in points 1, 2 and 3 of paragraph 1 of this Article shall be additionally provided in respect of each sub-fund in the rules of an umbrella investment fund.
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3.The instruments of incorporation of an umbrella collective investment undertaking must also indicate:
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1)procedure of conversion of the sub-fund’s units or shares into units or shares of another sub-fund of the same collective investment undertaking;
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2)procedure of establishment of new sub-funds.
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Article 51Requirements applicable to collective investment undertakings and their management companies
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1.A management company of an umbrella collective investment undertaking or an investment company that has not designated a management company must comply with the requirements laid down in this Law and other legal acts applicable to collective investment undertakings of a respective category and type and to their management companies.
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2.Provisions of this Law and other legal acts regulating the activities of a collective investment undertaking, with the exception of provisions of 134 of this Law shall apply to each sub-fund separately. Provisions of Section One of Chapter II of this Law shall not apply to each sub-fund separately, except for the provisions of Articles 6 and 7 thereof, which apply mutatis mutandis to each sub-fund separately.
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3.The safekeeping of assets of sub-funds constituting an umbrella collective investment undertaking must be entrusted to a single depositary.
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4.Assets constituting each sub-fund shall be accounted for separately from assets of other sub-funds constituting the same collective investment undertaking.
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5.Assets constituting one sub-fund may not be used for discharging the liabilities to participants of another sub-fund constituting the same collective investment undertaking or to third parties.
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6.An umbrella collective investment undertaking shall have a common prospectus. The key investor information document shall be drawn up for each sub-fund separately.
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7.The list of participants of a collective investment undertaking shall be managed by a management company or an investment company that has not designated a management company in respect of each sub-fund separately. The name(s) of a particular sub-fund(s) shall be specified in the documents supporting the ownership.
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8.A management company or an investment company shall be prohibited from making any deductions from assets of a collective investment undertaking in respect of the transactions concluded between its sub-funds.
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9.Merger of sub-funds of an umbrella collective investment undertaking shall be subject to the requirements set forth by this Law for the merger of collective investment undertakings.
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Article 52Specifics of an umbrella investment company
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When addressing at the general meeting of shareholders of an umbrella investment company an issue related to the interests of participants of only one sub-fund of the company, the voting right shall be awarded only to the participants of that sub-fund.
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Article 53Conversion of units or shares of a sub-fund
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A participant of a collective investment undertaking may exchange the units or shares of a sub-fund held by him into the units or shares of another sub-fund of the same collective investment undertaking, unless the instruments of incorporation of a collective investment undertaking provide otherwise. Conversion of units or shares of a sub-fund shall be carried out without any charges relating to the distribution or redemption of units or shares of the collective investment undertaking, with the exception of charges directly linked to the cost of exchange of the units or shares.
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SECTION FOUR MERGER OF SPECIAL COLLECTIVE INVESTMENT UNDERTAKINGS AND HARMONISED COLLECTIVE INVESTMENT UNDERTAKINGS ESTABLISHED IN THE REPUBLIC OF LITHUANIA WHICH MARKET THEIR UNITS OR SHARES ONLY IN THE REPUBLIC OF LITHUANIA
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Article 54Principles of merger of collective investment undertakings
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1.Provisions of this Section shall apply to merger of special collective investment undertakings and harmonised collective investment established in the Republic of Lithuania which market their units or shares only in the Republic of Lithuania.
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2.For the purposes of this Section the term of a ‘collective investment undertaking’ shall also include its sub-funds.
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3.Having regard to the requirements provided for in this Section, the merger of collective investment undertakings may be effected in accordance with the procedure laid down by legal acts, irrespective of the form of activities of collective investment undertakings.
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4.Collective investment undertakings may be merged either by way of formation of a new undertaking or by way of absorption.
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5.The merger of collective investment undertakings by way of formation of a new undertaking – means transfer of all assets and liabilities of two or more collective investment undertakings merging into a new collective investment undertaking.
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6.The merger of collective investment undertakings by way of absorption – means transfer of all assets and liabilities of one or more merging collective investment undertakings to a receiving collective investment undertaking.
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7.The merger of collective investment undertakings shall be subject to obtaining an advance authorisation of the supervisory authority.
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8.It shall be prohibited to merge:
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1)a special and a harmonised collective investment undertakings, if after merger only a special collective investment undertaking will continue its operations;
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2)special collective investment undertakings of different types;
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3)special collective investment undertakings of different categories.
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Article 55Procedure of authorisation of mergers of collective investment undertakings
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1.In order to obtain authorisation for merger of collective investment undertakings a management company or an investment company that has not designated a management company shall submit to the supervisory authority:
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1)the common draft terms of merger duly approved by the merging and the receiving collective investment undertakings or by their management companies;
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2)the most up-to-date version of the instruments of incorporation, prospectus and key investor information document of the receiving collective investment undertaking;
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3)a statement by each of the depositaries of the merging and the receiving collective investment undertakings drawn up in observance of requirements laid down in Article 56 of this Law;
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4)the information on the proposed merger that the merging and the receiving collective investment undertakings or their management companies intend to provide to their respective participants.
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2.If the supervisory authority considers that it has been provided with incomplete documents and information referred to in paragraph 1 of this Article, it may require, within ten working days of receipt of the incomplete documents or information that a management company or an investment company that has not designated a management company provides all missing documents and information.
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3.The supervisory authority may require in writing that a management company or an investment company that has not designated a management company clarifies and (or) modifies the information to be provided to the participants of a collective investment undertaking. The supervisory authority may exercise this right no later than within 15 working days of receipt of the complete documents and information referred to in paragraph 1 of this Article.
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4.The supervisory authority shall authorise the merger of collective investment undertakings, if:
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1)the proposed merger complies with all of the requirements of this Section and legal acts of the supervisory authority implementing it;
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2)the supervisory authority is satisfied with the proposed information to be provided to the merging and the receiving collective investment undertakings.
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5.A management company or an investment company that has not designated a management company shall inform the supervisory authority whether or not the merger of collective investment undertakings has been authorised, within 20 working days of submission of the complete documents and information referred to in paragraph 1 of this Article.
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6.Provisions of temporary exemption from investment rules laid down in Article 82(2) of this Law apply mutatis mutandis to the investment portfolio of the receiving collective investment undertaking. The term of temporary exemption from investment rules shall be calculated from the day on which the merger of the collective investment undertakings is completed.
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7.Detailed requirements for the content of the common draft terms of merger of the merging and the receiving collective investment undertakings or their management companies shall be laid down by the supervisory authority.
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Article 56Additional obligations of depositaries of merging and receiving collective investment undertakings
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Depositaries of the merging and of the receiving collective investment undertakings must confirm that they have verified the conformity of the type of merger specified in the common draft terms of merger, the merging and the receiving collective investment undertakings, the proposed date of completion of the merger and the proposed rules for the disposal of assets and exchange of units or shares with the requirements of legal acts of the Republic of Lithuania and of the instruments of incorporation a respective collective investment undertaking and have not found any irregularities.
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Article 57
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Additional obligations of an auditor of a merging collective investment undertaking and of merging and receiving collective investment undertakings or their management companies 1. An auditor of a merging collective investment undertaking shall approve:
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1)the assessment criteria of assets and liabilities that will arise on the day of calculation of the exchange ratio of units or shares as specified in Article 62(2) of this Law;
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2)the method of calculation of the exchange ratio of units or shares and the actual calculation of the exchange ratio of units or shares laid down on the day of calculation of the exchange ratio of units or shares as specified in Article 62(2) of this Law.
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2.The merging and the receiving collective investment undertakings or their management companies must ensure that copies of audit reports are provided to the supervisory authority and issued free of charge to the participants of the merging and the receiving collective investment undertakings on their request.
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Article 58Procedure of providing information to merging and receiving collective investment undertakings
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1.The merging and the receiving collective investment undertakings or their management companies shall provide appropriate and accurate information on the merger to the participants of the merging and of the receiving collective investment undertakings such as to enable them to make an informed judgement of the impact of the merger on their investment with regard to exercising the right specified in Article 60 of this Law.
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2.The information provided to the merging and to the receiving collective investment undertakings shall specify:
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1)the reasons of merger;
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2)the possible impact of the proposed merger on the participants of the merging and of the receiving collective investment undertakings, including but not limited to any material differences in respect of investment policy and strategy, costs, expected outcome, periodical reporting, possible dilution in performance, and, where relevant, a prominent warning to investors that their tax treatment may be changed following the merger;
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3)the period after expiration of which the units or shares of a merging collective investment undertaking will no longer be issued;
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4)all merger-related rights of participants of collective investment undertakings, including but not limited to the right to obtain additional information, the right to obtain a copy of the report on audit on request, the right to exercise the right specified in Article 60(1) and the time limit for exercising that right;
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5)other relevant procedural aspects and the planned effective date of the merger, including but not limited to the procedure of deciding on merger of an investment company and notification of participants about the technique of effecting the merger, as well as information about the proposed suspension of the issue and (or) redemption of units or shares for the purpose of effective merger;
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6)a copy of the key investor information of the receiving collective investment undertaking.
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3.The information on the merger shall be provided to participants of the merging and of the receiving collective investment undertakings only after the supervisory authority has authorised the proposed merger of the collective investment undertakings and at least 30 days before the last date for exercising the right specified in Article 60(1) of this Law.
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4.During the period from the date of providing the information on the merger to participants of the merging and of the receiving collective investment undertakings until the effective date of the merger a management company or an investment company that has not designated a management company must provide the information referred to in paragraph 2 of this Article to all individuals who intend to acquire units or shares of any of the merging or of the receiving collective investment undertakings or who have requested the copies of the instruments of incorporation, prospectus or key investor information document of any of these undertakings.
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5.The supervisory authority shall lay down detailed requirements for the content, form and procedure of provision of the information to participants of the merging and of the receiving collective investment undertakings.
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Article 59Decision on merger of an investment company
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A decision on merger of an investment company shall be adopted by a general meeting of shareholders by a qualified majority vote of at least two-thirds of the awarded by shares held by all shareholders attending the meeting. It shall be prohibited to establish that such decision may be adopted by more than 75 per cent of the votes awarded by shares held by all shareholders attending the meeting.
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Article 60Right of merging and receiving collective investment undertakings and procedure of exercising this right
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1.Participants of the merging and of the receiving collective investment undertakings shall have the right to request, without any charge other than those retained by the collective investment undertaking or its management company to meet disinvestment costs, the redemption of their units or shares or, where possible, to convert them into units in another collective investment undertaking with similar investment policy and managed by the same management company or by any other company with which the management company is linked by common management or control, or by a substantial direct or indirect holding.
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2.The right referred to in paragraph 1 of this Article may be exercised by the holders of units or shares from the moment of informing the holders about the merger and shall cease to exist five working days before the date for calculating the exchange ratio of units or shares referred to in Article 62(2) of this Law.
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3.Without prejudice to paragraphs 1 and 2 of this Article, the supervisory authority shall have the right to require or to allow the management company or the investment company the temporary suspension of the subscription and (or) redemption of units or shares provided that such suspension is justified for the protection of the holders of units or shares.
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Article 61Charging the costs of merger
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It shall be prohibited to charge any costs, including legal, advisory, administrative, etc. costs associated with the preparation, effecting and completion of the merger to the merging or to the receiving collective investment undertakings, or to any of their participants. This prohibition shall not apply to a merging investment company that has not designated a management company and to its shareholders.
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Article 62Entry into effect of the merger
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1.The merger of collective investment undertakings shall be considered as having taken effect when the final entries are made in the personal accounts of units or shares following the conversion of the units or shares of the merging collective investment undertaking into the units or shares of the receiving collective investment undertaking.
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2.The exchange ratio of the units or shares of the merging collective investment undertaking into the units or shares of the receiving collective investment undertaking shall be established on the day of the completion of merger specified in paragraph 1 of this Article.
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3.The dates referred to in paragraphs 1 and 2 of this Article may not be earlier than the date of approval of the merger by the shareholders of the merging and the receiving investment companies.
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4.The receiving collective investment undertaking or its management company must notify about the entry into effect of the merger without delay, but no later than within five working days:
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1)in writing the supervisory authority and provide thereto the instruments of incorporation of the merging investment fund and the application for their cancelling;
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2)on the website(s) of the receiving collective investment undertaking indicated in the instruments of incorporation thereof.
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5.The merging investment company shall either register with the Register of Legal Entities the respective amendments to the articles of association or be liquidated in accordance with the procedure laid down by laws of the Republic of Lithuania.
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Article 63Consequences of the effected merger
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1.A merger which has taken effect as provided for in this Section shall not be declared null and void.
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2.Consequences of an effected merger:
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1)all the assets and liabilities of the merging collective investment undertaking are transferred to the receiving collective investment undertaking or, where applicable, transferred for management on fiduciary basis to the depositary of the receiving collective investment undertaking;
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2)the participants of the merging collective investment undertaking become participants of the receiving collective investment undertaking;
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3)the merging collective investment undertaking ceases to exist as a collective investment undertaking on the entry into effect of the merger.
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Article 64Procedure for confirming the effected transfer of assets and liabilities
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A management company of the receiving collective investment undertaking or an investment company that has not designated a management company must confirm to its depositary in accordance with the procedure laid down by the supervisory authority that transfer of assets and liabilities of the collective investment undertaking has been effected.
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CHAPTER V
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SECTION ONE Investment fund
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Article 65Establishment of an investment fund
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A decision of the board of a management company regarding the formation of an investment fund must indicate:
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1)the name of the investment fund;
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2)the name and registered office of a depositary;
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3)the initial amount allocated for the formation of the investment fund.
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Article 66Rules of an investment fund
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1.The rules of an investment fund shall be approved by decision of the board of a management company.
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2.The rules of an investment fund shall define the relations between a management company and participants of an investment fund. The rules shall specify:
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1)the name of an investment fund enabling to identify the category of a special fund and information allowing to determine whether the fund is a harmonised or a special collective investment undertaking;
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2)the names and registered offices of a management company and a depositary;
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3)the policy of investment of assets constituting the investment fund, investment restrictions and specialisation in the geographical area or economic branch, information that the fund has a benchmark and places where the procedure of the formation of the benchmark can be obtained;
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4)rights and duties of participants;
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5)rights and duties of the management company in the management of the investment fund, transactions which the management company may conclude and carry out on account and for the benefit of the investment fund;
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6)the calculation methodology, amount and procedure of payment of the remuneration to the management company, depositary and distributor;
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7)a complete list and calculation methodology of other costs covered with assets comprising the investment fund;
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8)conditions of and procedure of replacement of the management company and the depositary;
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9)conditions of and procedure of sale and redemption of units;
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10)grounds and procedure for suspending the redemption of units;
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11)the procedure of valuation of assets, calculation and making public the unit value;
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12)the procedure for establishing the redemption and sale price;
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13)the procedure for publishing information about the investment fund;
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14)frequency and methods of distribution and procedure of disbursement of the investment fund’s income;
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15)grounds and procedure for winding-up the investment fund;
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16)the procedure of amendment of the investment fund’s rules;
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17)the duration of working day, if it is of the fixed-term;
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18)the unit lasses and (or) series (if applicable), the rights and obligations awarded by them and applicable restrictions.
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3.The investment fund’s rules may also contain other provisions that do not contradict this Law and other legal acts.
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4.Upon change of the information specified in the investment fund’s rules the rules shall be amended and presented to the supervisory authority no later than within seven days of the day of such changes.
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5.The requirement to obtain an advance authorisation of the supervisory authority for updating the investment fund’s rules shall not apply, however, the management company shall in due time, but no later than within seven days of updating the rules, present to the supervisory authority the updated rules of an investment fund. The cases considered as the updating of the investment fund’s rules shall be laid down by the supervisory authority.
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Article 67Rights of participants of an investment fund
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1.A participant of an investment fund shall have the following rights:
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1)to receive a portion of the investment fund’s income in accordance with the procedure laid down by this Law and rules of an investment fund;
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2)to receive the remaining part of an investment fund being wound-up;
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3)to obtain information about the fund as specified by legal acts;
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4)other rights established by this Law and rules of an investment fund.
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2.A participant of an open-ended type investment fund shall have the right to require the management company at any time to redeem the investment fund’s units held by him.
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Article 68Remuneration and other costs covered from assets comprising an investment fund
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1.Remuneration to a management company for the management of an investment fund, to a depositary for its services and other costs related to the investment fund shall be paid from assets comprising an investment fund.
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2.Only the costs related to the management of an investment fund and provided for in the rules of the investment fund may be paid from assets comprising an investment fund. The amount of these costs may not exceed the limits of provided for in the rules of an investment fund. All other costs not provided for in the rules of an investment fund rules or exceeding the established limits shall be covered on account of the management company.
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Article 69Distribution of profit of an investment fund
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1.A part of investment income (payments in cash) shall be disbursed to participants of an investment fund only when such disbursement is provided for in the rules of an investment fund. In addition, the rules of an investment fund rules shall also provide for the periodicity of such payments, the share of investment income (profit) to be allocated for such payments, and the disbursement procedure.
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2.The profit of an investment fund shall be distributed through its depositary.
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Article 70Cessation of the management company’s right to manage an investment fund
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The management company‘s right to manage an investment fund shall cease:
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1)upon transfer of management to another management company;
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2)upon revocation of the management company’s authorisation;
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3)upon initiation of a forced liquidation procedure of the management company;
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4)upon institution of bankruptcy proceedings against the management company;
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5)in other cases specified by legal acts or the rules of the investment fund.
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Article 71Dissolution of an investment fund
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1.Upon dissolution of an investment fund the assets comprising it shall be divided in cases and in accordance with the procedure laid down in the investment fund’s rules and in this Law. A decision on dissolution of an investment fund may be passed by the management company’s board, the supervisory authority and a depositary on the grounds stipulated in this Law and in the investment fund’s rules.
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2.Having adopted a decision on dissolution of an investment fund, redemption and distribution of units shall be terminated.
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3.When during dissolution of an investment fund it appears that the assets constituting an investment fund are insufficient for discharging the liabilities assumed on its account, the management company shall not be required to discharge the outstanding liabilities in those cases when, on request of the supervisory authority, the management company confirms that there is no information showing that management company improperly fulfilled the obligations laid down for it in this Law and in the investment fund’s rules.
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4.After satisfying the claims of creditors, the proceeds received from sale of the assets constituting an investment fund shall be divided among participants of the investment fund proportionately to their holdings.
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5.If there are any claims pending in court regarding the obligations to be discharged on account of an investment fund, the investment fund may be cancelled only after enforcement of court orders in such cases.
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6.After dissolution of an investment fund, the management company must in due time provide to the supervisory authority the instruments of incorporation of such investment fund alongside the application to repeal them, a set of financial statements prepared on the basis of data of the day of dissolution of an investment fund, an auditor’s opinion about such set of financial statements and an audit report containing information referred to in Article 14(6) of this Law.
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SECTION TWO INVESTMENT COMPANY WITH VARIABLE CAPITAL
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Article 72Articles of association of an investment company with variable capital
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1.In addition to the requirements laid down for a company’s articles of association by the Law on Companies, the articles of association of an investment company with variable capital shall indicate:
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1)the name of a company enabling to identify the category of a special investment company with variable capital and information on the basis of which it shall be possible to determine whether this company is a harmonised or a special collective investment undertaking;
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2)the procedure of sale, redemption and settlement for shares;
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3)investment policy, the information that the company has a benchmark and places where the procedure if its formation can be accessed;
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4)grounds and procedure for suspending the redemption of share;
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5)the procedure of distribution of income (including dividends) to shareholders (periodicity of payments, profit share allocated for dividends));
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6)rules for the calculation of net assets and valuation of shares;
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7)the structure of costs and their covering procedure, the amount of remuneration to a depositary, also possible maximum amount of costs covered from assets of the company;
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8)conditions of and procedure for replacing a management company and a depositary.
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2.It shall not be required to specify the authorised capital amount and the number of shares in the articles of association. The articles of association may indicate the maximum amount for which shares may be distributed. The par value of shares shall be indicated only if they have the par value.
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3.The procedure of election and removal from office of the head of the administration and management bodies of an investment company with variable capital shall be specified only when it has designated a management company.
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4.The articles of association of an investment company with variable capital and their amendments or supplements shall be registered in the Register of Legal Entities after they are approved by the supervisory authority.
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5.If the information specified in the articles of association of an investment company with variable capital changes, the articles of association shall be amended and presented to the supervisory authority no later than within seven days of the day on which such amendments are made.
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6.The requirement to obtain an advance authorisation from the supervisory authority to update the articles of association of an investment company with variable capital shall no apply, however, the management company or an investment company that has not designated a management company shall forthwith, but no later than within seven days of updating the articles of association, present the updated articles of association to the supervisory authority. The cases to be considered as the updating of articles of association of an investment company shall be laid down by the supervisory authority.
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Article 73Redeemable shares of an investment company with variable capital
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1.All shares of an investment company with variable capital may be only ordinary registered shares.
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2.An investment company with variable capital shall be prohibited from issuing preference shares, bonds or shares that do not award their holder the right to require their redemption.
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3.An investment company with variable capital shall be prohibited from holding its own shares.
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Article 74Agreement on management of an investment company with variable capital
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1.An agreement on management concluded between a management company and an investment company with variable capital shall specify:
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1)the purposes and techniques of investment activities;
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2)the methodology of calculation and procedure of payment of remuneration to a management company;
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3)the functions of the board which a management company undertakes to perform;
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4)the powers of a management company in its relations with a depositary and other institutions;
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5)the information to be provided by a management company to an investment company with variable capital;
\n
6)the composition and market value of the investment portfolio transferred for management;
\n
7)the liability for the non-fulfilment of obligations;
\n
8)the conditions of and procedure for terminating the agreement.
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2.A copy of the agreement on management of an investment company with variable capital shall be presented to the supervisory authority and a depositary.
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CHAPTER VI
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HARMONISED COLLECTIVE INVESTMENT UNDERTAKINGS SECTION ONE Investment Rules of HARMONISED Collective Investment Undertakings
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Article 75Investment objects
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1.Assets of a harmonised collective investment undertaking may comprise only:
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1)transferable securities and money market instruments admitted to trading on a market that is considered regulated and operating in the Republic of Lithuania or another Member State pursuant to the Law on Markets in Financial Instruments, and (or)
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2)transferable securities and money market instruments admitted to trading in another Member State on a market operating according to the established rules, recognised, supervised and accessible to the public, provided this market is indicated in the instruments of incorporation, and/or
\n
3)transferable securities and money market instruments admitted to trading in another state (with the exception of Member States) on a market operating according to the established rules, recognised, supervised and accessible to the public, if such market is specified in the instruments of incorporation of a collective investment undertaking, and (or)
\n
4)newly issued transferable securities where the conditions of issue provide for a commitment to admit these securities to trading on a regulated market and where the securities will be admitted to trading not later than within one year of their issue (if such market is situated in the state indicated in point 3 of this paragraph, it shall be indicated in the instruments of incorporation of a collective investment undertaking), and (or)
\n
5)units or shares of the collective investment undertakings indicated in Article 79(1) of this Law, and (or)
\n
6)deposits with maturity of up to 12 months which may be withdrawn on demand at a credit institution whose registered office is in a Member State or another state in which prudential supervision is not less stringent than in the European Union, and (or)
\n
7)derivative financial instruments referred to in Article 80(1) of this Law, and (or)
\n
8)money market instruments referred to in paragraph 2 of this Article.
\n
2.Investment in money market instruments which are not admitted to trading on a regulated market may be allowed only when the issue or issuing body of such instruments is itself regulated for the purpose of protecting investors and their savings, and these instruments are:
\n
1)issued or guaranteed by the government, regional or local authority or central bank of a Member State, the European Central Bank, the European Union or the European Investment Bank, the government of a non-Member State or one of the constituent entities of a federal state or an international organisation to which at least one Member State belongs, or
\n
2)issued by an undertaking whose securities are admitted to trading on the regulated markets referred to in points 1, 2 and 3 of paragraph 1 of this Article, or
\n
3)issued or guaranteed by an undertaking subject to prudential supervision in accordance with the requirements set forth by the European Union law or the requirements which are not less stringent than in the European Union, or
\n
4)issued by a company meeting the criteria approved by the supervisory authority, whose capital and reserves amount to at least EUR 10 million and which draws up consolidated financial statements and carries out the function of financing of the group of companies, where transferable securities of at least one company belonging to its group are admitted to trading on a regulated market, or which is used for issuing securities financed with bank loans, and investment in such money market instruments are protected at least to the extent referred to in points 1, 2 and 3 of paragraph 2 of this Article.
\n
3.An investment company with variable capital may acquire only such movable and immovable property which is necessary for its direct working day.
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4.Up to 10% of the net assets may be invested in transferable securities and money market instruments not captured by paragraph 1 of this Article.
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5.Assets of a collective investment undertaking may not be invested in precious metals or securities entitling to them, but may be invested in money.
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6.Where a collective investment undertaking comprises more than one sub-fund, provisions of this section shall apply to each sub-fund separately.
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7.The supervisory authority shall have the right to define in detail the requirements applicable to investment objects of harmonised collective investment undertakings.
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Article 76Diversification of an investment portfolio
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1.Up to 5% of the net assets comprising the assets of a harmonised collective investment undertaking may be invested in transferable securities or money market instruments issued by the same body, with the exception of the cases specified in paragraphs 2, 5 and 6 of this Article.
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2.More than 5%, but not more than 10% of the net assets may be invested in transferable securities or money market instruments issued by the same body, provided that the total value of such investments does not exceed 40% of the net assets (this limitation shall not apply to deposits or OTC derivative transactions made with the issuer subject to prudential supervision).
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3.Investments in deposits with the same credit institution shall not exceed 20% of the net assets comprising assets of a collective investment undertaking.
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4.The total amount of investments in transferable securities or money market instruments of the same body, deposits and liabilities arising from derivative transactions undertaken with the same body may not exceed 20% of the value of net assets of a collective investment undertaking.
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5.Investments in transferable securities or money market instruments of a single body issued or guaranteed by a Member State, by its local authorities, by a third country or by a public international body to which one or more Member States belong may not exceed 35% of the net asset value of a collective investment undertaking. The supervisory authority may raise the limit of the net asset value laid down in this paragraph for investment in transferable securities or money market instruments, if in such case the interests of investors are adequately safeguarded, investments are made in transferable securities or money market instruments of at least six issues, and investments in transferable securities or money market instruments of a single issue does not exceed 30% of net assets.
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6.Investments in bonds issued by a credit institution which has its registered office in a Member State and is subject to a special supervision of that state in accordance with legal acts designed to protect bond-holders, where sums deriving from the issue of those bonds are invested in accordance with the law in assets which, during the whole period of validity of the bonds, are capable of covering claims attaching to the bonds and which, in the event of failure of the issuer, would be used on a priority basis for the reimbursement of the principal and payment of the accrued interest, may not exceed 25% of net assets. Where a more than 5%, but not more than 25% of net assets are invested in such bonds issued by a single issuer, the total value of these investments shall not exceed 80 % of the net assets.
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7.The transferable securities and money market instruments referred to in paragraphs 5 and 6 of this Article shall not be taken into account for the purpose of calculating investments subject to the maximum limit of 40 % referred to in paragraph 2 of this Article. The limits provided for in paragraphs 1, 2, 3, 4, 5 and 6 of this Article shall not be combined, and thus investments in transferable securities or money market instruments issued by the same body or in deposits or derivative instruments made with this body shall not exceed in total 35% of net assets of a collective investment undertaking.
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8.Up to 20% of the net assets may be invested in transferable securities and money market instruments issued by companies which are included in the same group for the purposes of consolidated accounts.
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Article 77Prohibition to acquire significant influence over a body issuing securities or money market instruments
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1.Shares of a body issuing shares held by a management company or an investment company with variable capital together with shares of the same issuing body held by harmonised collective investment undertakings managed by the management company may award not more than 1/10 of all voting rights at a general meeting of shareholders of the issuing body.
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2.A collective investment undertaking may acquire no more than:
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1)10% of all non-voting shares of an issuing body;
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2)10% of the bonds and other forms of non-equity securities of an issuing body;
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3)25% of the units or shares of another collective investment undertaking;
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4)10% of the money market instruments of a single body issuing money market instruments.
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3.The prohibition laid down in points 2, 3 and 4 of paragraph 2 of this Article may be disregarded at the time of acquisition if the gross amount of such transferrable securities or money market instruments cannot be calculated.
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4.The limits laid down in points 2 and 4 of paragraph 2 of this Article shall not apply to the transferrable securities or money market instruments issued or guaranteed by the state or local authorities.
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Article 78Specifics of an index-based investment fund or an index-based investment company with variable capital
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1.An index-based investment fund or an index-based investment company with variable capital is a fund or company when the only aim specified in their instruments of incorporation is to replicate the composition of a certain index of stocks, bonds or other forms of non-equity securities, which is recognised by the supervisory authority, including the use of derivative financial instruments or other instruments or techniques provided for in Article 80(3) of this Law, by directly or indirectly investing in the investment instruments forming the index. The supervisory authority shall have the right to recognise only the indices which meet all of the following conditions:
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1)the composition of the securities portfolio replicating the index is sufficiently diversified;
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2)the index represents an adequate benchmark of the market to which it refers, and the provider thereof uses a recognised methodology which generally does not result in the exclusion of a major issuer (the issuer comprising the largest part of the index) of the market to which it refers;
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3)the index and its calculation procedure are published in an appropriate manner, and the index provider is independent from the undertaking replicating the index, however, they may belong to the same closely linked group of undertakings where that group has in place an efficient system for management of the conflicts of interest.
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2.Investment in shares, bonds or non-equity securities of other forms of a single issuing body may not exceed 20% of the net assets of an index-based fund or an index-based investment company with variable capital. With the consent of the supervisory authority and where that proves to be necessary due to exceptional market conditions in a regulated market where a single issuing body is dominant, up to 35% of the net assets may be invested in its shares, bonds or non-equity securities of other forms. In this case, a simplified prospectus of a collective investment undertaking must contain the information justifying such exceptional conditions.
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Article 79Investment in other collective investment undertakings
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1.The following investments shall be allowed in units or shares of harmonised collective investment undertakings and in units or shares of collective investment undertakings that satisfy the following conditions:
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1)the sole object of which is raising capital from the public by offering units or shares and making collective investment in transferable securities and (or) in other liquid assets referred to in this Section by spreading the risk; units or shares of the undertakings are redeemable at any time at the request of their holder, the undertakings are authorised in the Republic of Lithuania and their supervision is not less stringent than that established in the European Union or authorised in a state where the supervision is not less stringent than that established in the European Union, and the supervisory authority co-operates with the respective supervisory authority of other Member State or third country;
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2)protection of rights of the undertakings’ participants, including the regulation of segregation, borrowing, lending and gratuitous transfer of assets, is not less stringent than laid down by this Law for the harmonised collective investment undertakings;
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3)the undertakings publish half-yearly and annual reports about their activities enabling to assess their assets and liabilities, profit and activities during the reporting period;
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4)in accordance with instruments of incorporation up to 10% of their net assets may be invested in units or shares of other collective investment undertakings.
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2.Up to 10% of the net assets of a collective investment undertaking may be invested in each of the undertakings referred to in paragraph 1 of this Article.
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3.The total amount of investments in undertakings other than harmonised collective investment undertakings may not exceed 30 of the net assets.
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4.A close link shall exist between collective investment undertakings which are managed by the same management company or such management companies in which more than a half of members of management bodies are the same persons or which are controlled by the same person or one of which holds more than 10% of votes at a general meeting of shareholders of the other management company. Units or shares of the collective investment undertakings which are linked by close links may be acquired only for the value of net assets.
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Article 80Investment in derivative financial instruments
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1.Investments shall be allowed only in the derivative financial instruments (including exclusively cash-settled instruments) which meet the following conditions:
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1)are admitted to trading on the markets referred to in points 1, 2 and 3 of Article 75(1) of this Law or are traded outside the abovementioned markets;
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2)are linked to the investment instruments referred to in Article 57(1) of this Law, financial indices, interest rates, currencies or exchange ratios in which a collective investment undertaking has the right to invest according to its instruments of incorporation;
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3)the counterparty to the transactions concluded outside the markets referred to in points 1, 2 and 3 of Article 75(1) of this Law complies with the criteria laid down by the supervisory authority and is subject to the prudential supervision;
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4)the instruments traded outside the markets referred to in points 1, 2 and 3 of Article 75(1) of this Law can be verified and reliably and accurately valued on a daily basis and can be sold or otherwise disposed for consideration at any time at their fair value.
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2.A management company or an investment company with variable capital must:
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1)manage risk in the manner which enables to monitor and measure at any time the risk of exposures and its impact on the general risk of the portfolio of investment instruments;
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2)accurately and independently assess the risk of non-standard derivative financial instruments;
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3)communicate to the supervisory authority, in accordance with the procedure laid down by it, the types of derivative financial instruments, the underlying risks, the quantitative limits and techniques chosen to assess the risk of each collective investment undertaking associated with transactions in derivative financial instruments.
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3.The supervisory authority shall lay down a procedure following which a management company or an investment company with variable capital shall be entitled to use the investment and other instruments related to transferable securities or money market instruments for the purpose of efficient management of investment instruments. Under no circumstances shall the use of such techniques or investment instruments mean authorisation to diverge from the investment objectives laid down in the instruments of incorporation.
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4.A collective investment undertaking shall ensure that its global exposure relating to derivative financial instruments does not exceed the value of its net assets. The exposure must be calculated taking into account the current value of a derivative financial instrument, the counterparty risk, future market movements and the time available to liquidate the positions and the circumstance that the derivative financial instrument is embedded in a transferable security or money market instrument. Investment in derivative financial instruments may not exceed 35% of the value of net assets of a collective investment undertaking, provided that the limits laid down in Article 76 of this Law are not exceeded. When calculating compliance with the limits laid down in Article 76 of this Law, investment in index-linked financial derivative instruments shall be computed separately.
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5.The risk of transactions in derivative financial instruments concluded outside the markets referred to in points 1, 2 and 3 of Article 75(1) of this Law may not exceed 5% of the value of net assets of a collective investment undertaking, and where the counterparty is a credit institution referred to in paragraph 6 of Article 76 of this Law – 10% of the net asset value.
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Article 81Informing about the investment policy
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1.A prospectus and marketing information the investment policy and any other promotional literature must include a prominent statement drawing attention to the investment policy, where:
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1)the net assets are principally invested in any category of assets other than transferable securities and money market instruments or where the investment policy is index-based;
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2)the value of net assets is likely to have a high volatility due to the portfolio composition or the investment policy.
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2.Upon the request of an investor, a management company or an investment company with variable capital must also provide supplementary information relating to the quantitative limits that apply in the risk management of a collective investment undertaking, the methods chosen to this end and to the most recent evolution of the main instruments’ risk.
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Article 82Temporary derogation from investment rules
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1.A collective investment undertaking or its management company may derogate from the investment limits laid down in this Section when it exercises the pre-emptive rights attaching to the transferable securities or money market instruments held by it. In such cases and also when provisions of investment rules are violated for the reasons beyond control of a management company or an investment company with variable capital, the derogation must be eliminated without delay, but in any case not later than within six months.
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2.The investment portfolio of a newly established collective investment undertaking may derogate from the requirements laid down in Articles 76, 78 and 79 of this Law for six months following the authorisation issued by the supervisory authority for approval of its instruments of incorporation, a choice of depositary and, where applicable, an authorisation to manage a collective investment undertaking issued to a management company authorised in other Member State.
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3.A management company or an investment company with variable capital that has not designated a management company and that has infringed the requirements established in this Section must, without undue delay, give written notice of the infringement to the supervisory authority specifying the reasons of the infringement, the measures to be taken to remedy the situation and the anticipated time limit for elimination of the infringement.
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SECTION TWO MASTER-FEEDER STRUCTURES
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Article 83Scope of master-feeder structures
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1.A collective investment undertaking or its sub-fund may be a master or feeder undertaking, as specified in this Section.
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2.At least 85% of the net assets of a feeder harmonised collective investment undertaking shall be invested in units or shares of another harmonised collective investment undertaking – a master undertaking.
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3.Provisions of this Section shall apply mutatis mutandis to special collective investment undertakings and their management companies.
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Article 84Specifics of master and feeder undertakings
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1.A feeder undertaking investing at least 85% of its net assets in a master undertaking shall be allowed with regard to these investments to derogate from the only feature of its objective specified in the concept of a harmonised collective investment undertaking defined in Article 2(41) of this Law, from the requirements for investment objects and diversification of investment portfolio of harmonised collective investment undertakings laid down in Articles 75 and 76 of this Law and from the requirement for investment in other collective investment undertakings laid down in Article 77(2)(3) and Article 79 of this Law.
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2.If a master undertaking has at least two feeder undertakings, it shall not be subject to the only feature of its objective specified in the concept of a harmonised collective investment undertaking defined in Article 2(41) of this Law and to the restriction laid down in Article 1(3) of this Law for harmonised collective investment undertakings the units or shares of which are not publicly offered in the Republic of Lithuania and other Member States.
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3.If a master undertaking does not raise capital from the public through public offering of its units in a Member State other than its home Member State, but has in that Member State one or more feeder undertakings, requirements laid down in Articles 115 or 120 of this Law for distribution of units or shares of collective investment undertakings in another Member State or in the Republic of Lithuania shall not apply to such undertakings.
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Article 85Procedure of authorising a feeder undertaking to invest in a master undertaking
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1.A collective investment undertaking established in the Republic of Lithuania intending to become a feeder undertaking, or its management company must obtain beforehand an authorisation from the supervisory authority to exceed the investment limit laid down in Article 79(2) of this Law (hereinafter in this Article: ‘authorisation’).
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2.A collective investment undertaking or its management company specified in paragraph 1 of this Article shall be informed by the supervisory authority within 15 working days following the submission of all documents and information referred to in paragraph 4 of this Article.
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3.The supervisory authority shall grant the authorisation if the feeder undertaking, its depositary and its auditor, as well as the master undertaking, comply with all the requirements set out in this Section.
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4.For such purposes a collective investment undertaking or its management company shall provide to the supervisory authority the following documents and information:
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1)the instruments of incorporation of the master and the feeder undertakings;
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2)the prospectuses and the key investor information of the master and the feeder undertakings;
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3)the agreement on the provision of documents and information between the master and the feeder undertakings or the internal conduct of business rules of a management company, as specified in Article 86 of this Law;
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4)where applicable, the information to be provided to holders units or shares referred to in Article 92(1) of this Law;
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5)if the master and the feeder undertakings have different depositaries, the information-sharing agreement referred to in Article 98(1) of this Law;
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6)if the master and the feeder undertakings have different auditors – the information-sharing agreement referred to in Article 99(1) of this Law between their respective auditors.
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5.Where the master undertaking is established in another Member State, the feeder undertaking or its management company shall also provide to the supervisory authority the attestation by the supervisory authority of the master undertaking’s home Member State that the harmonised master undertaking or its sub-fund fulfils the conditions set out in points 2 and 3 of Article 2(7) of this Law. These documents shall be provided by the feeder undertaking or its management company to the supervisory authority in the Lithuanian or English language.
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6.The feeder undertaking shall not invest in excess of the limit applicable under Article 79(2) of this Law in units or shares of the master undertaking until the agreement between the master and the feeder undertakings or their management companies on the provision of documents and information referred to in Article 86 of this Law has become effective.
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7.The feeder undertaking may invest in units or shares of the master undertaking only when:
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1)the information-sharing agreement between the depositaries (where the master and the feeder undertakings have different depositaries) referred to in Article 98 of this Law has become effective;
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2)the information-sharing agreement between the auditors (where the master and the feeder undertakings have different auditors) referred to in Article 99 of this Law has become effective.
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Article 86Agreement between master and feeder undertakings on the provision of documents and information
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1.The feeder undertaking or its management company must conclude with the master undertaking or its management company an agreement guaranteeing that the master undertaking or its management company will provide to the feeder undertaking or to its management company all documents and information necessary for the performance of the functions of the feeder undertaking laid down in this Law and other legal acts.
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2.In the event that both the master and the feeder undertakings are managed by the same management company, the agreement may be replaced by internal conduct of business rules of a management company ensuring compliance with the requirements set out in this paragraph.
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3.The agreement between the master and the feeder undertakings or their management companies on the provision of documents and information or internal conduct of business rules of a management company shall be made available, on request and free of charge to the participants of these undertakings.
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4.The supervisory authority shall lay down the requirements for the content of the agreement of the master and feeder undertakings or their management companies on the provision of documents and information or internal conduct of business rules of a management company.
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Article 87Prospectuses, annual and half-yearly reports of master and feeder undertakings
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1.The supervisory authority shall establish additional requirements for the content of the feeder undertaking’s prospectus.
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2.In addition to other required periodical information, the annual report shall include a statement on the aggregate charges of the master and the feeder undertakings or their management companies, and the annual and the half-yearly reports shall indicate how the annual and the half-yearly report of the master undertaking can be obtained.
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3.In addition to the requirements laid down in Article 24(6), Article 25(2) and Article 27(6) of this Law, the feeder undertaking established in the Republic of Lithuania shall send to the supervisory authority the master undertaking’s prospectus, key investor information document and any amendments thereto, as well as the annual and half-yearly reports.
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4.A paper copy of the prospectus, and the annual and half-yearly reports of the master undertaking shall be delivered by the feeder undertaking or its management company to investors on request and free of charge.
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Article 88Obligation to provide information to a depositary
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A management company of a feeder undertaking, and where a feeder undertaking has not designated a management company – the feeder undertaking itself shall be responsible for providing the feeder undertaking’s depositary with all information related to the master undertaking and necessary for the proper performance of duties of the feeder undertaking’s depositary.
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Article 89Obligation to coordinate the timing of calculation and publication of net asset value
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The master and feeder undertakings or their management companies must take appropriate measures to coordinate the timing of their net asset value calculation and publication in order to avoid market timing in their units, preventing arbitrage opportunities.
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Article 90Requirements for the feeder undertaking or its management company
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1.The feeder undertaking or its management company shall monitor effectively the activity of the master undertaking. In performing that obligation, the feeder undertaking or its management company may rely on information and documents received from the master undertaking, its management company, depositary and auditor, unless there is reason to doubt the accuracy of such information and documents.
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2.Where, in connection with an investment in the units or shares of the master undertaking, a distribution fee, commission or other monetary benefit is received by the feeder undertaking, its management company, or any person acting on behalf of either the feeder undertaking or the management company of the feeder undertaking, the fee, commission or other monetary benefit shall be paid into the assets of the feeder undertaking.
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Article 91Requirements for the master undertaking or its management company
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1.The master undertaking established in the Republic of Lithuania or its management company shall immediately inform the supervisory authority of the identity of each feeder undertaking which invests in its units or shares. If the feeder undertaking is established in a different Member State, the supervisory authority shall immediately inform the supervisory authority of the feeder undertaking’s home Member State of such investment.
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2.The master undertaking shall not charge subscription or redemption fees for the investment of the feeder undertaking into its units or shares or for the divestment thereof.
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3.The master undertaking or its management company must ensure the timely availability of all information that is required in accordance with this Law, other legal acts and the instruments of incorporation to the feeder undertaking or, where applicable, its management company, the supervisory authority of a home Member State (where a feeder undertaking is established in another Member State), the depositary and the auditor of the feeder undertaking.
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Article 92
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Information provided to participants of a collective investment undertaking intending to become a feeder undertaking and of a feeder undertaking intending to become a feeder undertaking of another master undertaking 1. A collective investment undertaking intending to become a feeder undertaking or its management company, or a feeder undertaking intending to become a feeder undertaking of another master undertaking or its management company shall provide the following information to the participants of such undertaking:
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1)a statement that the supervisory authority (where the feeder undertaking is established in the Republic of Lithuania) or the supervisory authority of the feeder undertaking’s home Member State (where a feeder undertaking is established in another Member State) granted the approval referred to in Article 85(1) of this Law;
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2)the key investor information concerning the feeder and the master undertakings;
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3)the date when the feeder undertaking is to start to invest in the master undertaking or, if it has already invested therein, the date when its investment will exceed the investment limit applicable under Article 79(2) of this Law;
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4)a statement that the participants of a respective undertaking have the right to request within 30 days the repurchase or redemption of their units or shares without any charges other than those retained by the undertaking or its management company to cover disinvestment costs.
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2.The information referred to in paragraph 1 of this Article shall be provided at least 30 days before the date referred to in point 3 of paragraph 1 of this Article.
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3.The feeder undertaking or its management company shall not invest into the units or shares of the given master undertaking in excess of the limits applicable under Article 79(2) of this Law before the period of 30 days referred to in paragraph 2 of this Article has elapsed.
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4.In the event that the feeder undertaking or its management company has been notified in accordance with Article 115(4) of this Law by the supervisory authority about the communication of documents to the supervisory authority of the feeder undertaking’s host Member State, the information referred to in paragraph 1 of this Article shall also be provided in the official language, or one of the official languages, of the feeder undertaking’s host Member State or in a language approved by the supervisory of the host Member State.
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5.In the event that the feeder undertaking established in another Member State or its management company has been notified in accordance with Article 120(1) of this Law by the supervisory authority of another Member State or third country about the communication of documents to the supervisory authority, the information referred to in paragraph 1 of this Article shall be provided in the Lithuanian or English languages.
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6.The feeder undertaking’s management company shall be responsible for producing the translation of the information provided to the participants of the feeder undertaking and if the undertaking has not designated a management company – the feeder undertaking itself. That transaction shall faithfully reflect the content of information produced in the language of in the official language, or one of the official languages, of the feeder undertaking’s home Member State or in a language approved by the supervisory of the home Member Stat.
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7.The supervisory authority shall establish the procedure for the provision of information referred to in paragraph 1 of this Article to the holders of units or shares.
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Article 93The right of a feeder undertaking or its management company to temporarily suspend the subscription or redemption of units or shares
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1.If a master undertaking established in the Republic of Lithuania temporarily suspends the subscription or redemption of its units or shares, whether at its own or its management company’s initiative or at the request of the supervisory authority, each of participants established in the Republic of Lithuania of the master undertaking’s feeder undertaking or its management company shall become entitled to suspend the subscription or redemption of the feeder undertaking’s units or shares notwithstanding the requirements laid down in Article 47 of this Law within the same period of time as the master undertaking.
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2.If a master undertaking established in another Member State temporarily suspends the subscription or redemption of its units or shares, whether at its own or its management company’s initiative or at the request of the supervisory authority of the master undertaking’s home Member State, each participant established in the Republic of Lithuania of the master undertaking’s feeder undertaking or its management company shall become entitled to suspend the subscription or redemption of the feeder undertaking’s units or shares notwithstanding the requirements laid down in Article 47 of this Law within the same period of time as the master undertaking.
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Article 94Marketing communications of a feeder undertaking
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The feeder undertaking or its management company shall specify in the marketing communications that the feeder undertaking continuously invests at least 85% of its net assets in units or shares of the particular master undertaking.
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Article 95Winding-up or liquidation of a master undertaking
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1.If a master undertaking is dissolved or liquidated, its feeder undertaking shall also be dissolved or liquidated, unless at the request of the feeder undertaking or its management company the supervisory authority (where the feeder undertaking is established in the Republic of Lithuania) or the supervisory authority of the feeder undertaking’s home Member State (where the feeder undertaking is established in another Member State) approves:
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1)the investment of at least 85% of the assets of the feeder undertaking in units or shares of another master undertaking;
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2)the amendment of the feeder undertaking’s instruments of incorporation in order to enable the feeder undertaking to convert into an undertaking which is not a feeder undertaking.
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2.Without prejudice to specific provisions regarding compulsory liquidation of companies laid down in legal acts of the Republic of Lithuania, the winding-up or liquidation of a master undertaking shall take place no sooner than three months after the master undertaking or its management company has informed all of the participants and the supervisory authority of the undertaking and where the feeder undertaking is established in another Member State – also the supervisory authority of the feeder undertaking’s home Member State.
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3.The supervisory authority shall establish the procedure of winding-up of the master undertaking – an investment fund and of liquidation of the master undertaking – an investment company.
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Article 96Merger or division of a master undertaking
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1.If a master undertaking merges with another collective investment undertaking or is divided into two or more collective investment undertakings, the feeder undertaking shall be dissolved or liquidated, unless the supervisory authority (where the feeder undertaking is established in the Republic of Lithuania) or the supervisory authority of the feeder undertaking’s home Member State (where the feeder undertaking is established in another Member State) grants one of the following approvals at the request of the feeder undertaking or its management company:
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1)continue to be a feeder undertaking of the master undertaking or another feeder undertaking resulting from the merger or division of the master undertaking;
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2)invest at least 85% of the assets of the feeder undertaking in units or shares of another master undertaking not resulting from the merger or division;
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3)amend the instruments of incorporation of the feeder undertaking in order to convert into a collective investment undertaking, which is not a feeder undertaking.
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2.No merger or division of a master undertaking shall become effective, unless the master undertaking or its management company has provided all of the participants of the given undertaking and the supervisory authority (where the feeder undertaking is established in the Republic of Lithuania) or the supervisory authority of the feeder undertaking’s home Member State (where the feeder undertaking established in another Member State) with the information referred to in Article 106 of this Law. That information shall be provided no later than 60 days before the effective date of the merger or division.
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3.Unless the supervisory authority of the feeder undertaking’s home Member State has granted approval pursuant to paragraph 1 of this Article, the master undertaking or its management company shall enable the feeder undertaking to request the redemption of all units or shares in the master undertaking before the merger or division of the master undertaking becomes effective.
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4.The supervisory authority shall establish the procedure for merger and division of the master undertaking.
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Article 97Investment objects and calculation of exposure of a feeder undertaking
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1.A feeder undertaking may hold up to 15% of its assets in one or more of the following:
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1)liquid assets in accordance with requirements laid down by Article 75(4) and (5) of this Law;
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2)financial derivative instruments referred to in Article 80(1) of this Law, which may be used only for hedging purposes, in accordance with the procedure laid down in Article 80(3) and (4) of this Law;
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3)movable and immovable property which is essential for the direct pursuit of the business, if the feeder undertaking is an investment company.
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2.The feeder undertaking or its management company must calculate its global exposure related to transactions in financial derivative instruments in accordance with the procedure laid down in Article 80(4) of this Law by combining its own direct exposure to financial derivative instruments referred to in point 2 of paragraph 1 of this Article with either:
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1)the master undertaking’s actual exposure to financial derivative instruments in proportion to the feeder undertaking’s investment into the master undertaking; or
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2)the master undertaking’s potential maximum global exposure related to transactions in financial derivative instruments provided for in the master undertaking’s instruments of incorporation in proportion to the feeder undertaking’s investment into the master undertaking.
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Article 98Requirements for depositaries of master and feeder undertakings
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1.If the master and the feeder undertakings have different depositaries, those depositaries enter into an information-sharing agreement in order to ensure the fulfilment of the duties of both depositaries.
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2.The depositary of the master undertaking established in the Republic of Lithuania shall immediately inform the supervisory authority, the feeder undertaking and (where the master and the feeder undertakings have different management companies and depositaries) the feeder undertaking’s management company and the depositary about any irregularities it detects with regard to the master undertaking which are deemed to have a negative impact on the feeder undertaking.
\n
3.The supervisory authority shall establish the content of the information-sharing agreement between the depositaries of the master and feeder undertakings.
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Article 99Requirements for auditors of master and feeder undertakings
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1.If the master and the feeder undertakings have different auditors, those auditors shall enter into an information-sharing agreement in order to ensure the fulfilment of the duties of both auditors, including the arrangements taken to comply with the requirements of paragraphs 2 and 3 of this Article.
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2.In its audit report, the auditor of the feeder undertaking shall take into account the audit report of the master undertaking. If the feeder and the master undertakings have different accounting years, the auditor of the master undertaking shall make an ad hoc report on the closing date of the feeder undertaking.
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3.The auditor of the feeder undertaking shall, in particular, report on any irregularities revealed in the audit report of the master undertaking and on their impact on the feeder undertaking.
\n
4.The supervisory authority shall establish the content of the information-sharing agreement between the auditors of the master and feeder undertakings.
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Article 100Supervision of master and feeder undertakings
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1.The supervisory authority shall immediately inform of any decision, measure, observation of non-compliance with the conditions of this Section or of any information reported pursuant to Article 14 of this Law from the auditor of the master undertaking with regard to the master undertaking, its management company, depositary or auditor:
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1)the feeder undertaking or its management company, where the master and the feeder undertakings are established in the Republic of Lithuania;
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2)the supervisory authority of the feeder undertaking’s home Member State, where the master undertaking is established in the Republic of Lithuania, and the feeder undertaking – in another Member State.
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2.If the master undertaking is established in another Member State, and the feeder undertaking – in the Republic of Lithuania, the supervisory authority shall immediately communicate to the feeder undertaking any decision, measure, observation of non-compliance with the conditions of this Section or other information reported by the master undertaking’s auditor to the supervisory authority of the master undertaking’s home Member State with regard to the master undertaking, its management company, depositary or auditor.
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SECTION THREE merger of COLLECTIVE INVESTMENT UNDERTAKINGS established in the republic of lithuania with harmonised collective investment undertakings established in other member states and merger of harmonised collective investment undertakings established in the republic of lithuania which market their units or shares in another member state
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Article 101Principles of merger of harmonised collective investment undertakings
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1.For the purposes of this Section a harmonised collective investment undertaking shall also include its sub-funds.
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2.This Section shall apply to the merger of the following undertakings:
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1)merger of harmonised collective investment undertakings established in the Republic of Lithuania and in one or more Member States (hereinafter in this Section: ‘merger of harmonised collective investment undertakings established in different Member States’);
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2)merger of harmonised collective investment undertakings established in the Republic of Lithuania which market their units or shares in another Member State (hereinafter in this Section: ‘merger of harmonised collective investment undertakings established in the Republic of Lithuania’);
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3)merger involving at least one collective investment undertaking established in the Republic of Lithuania which will cease to exist after merger.
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3.Pursuant to requirements of this Section, merger of collective investment undertakings using the merger techniques specified in Article 102 of this Law may take place irrespective of the form of activities of collective investment undertakings.
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4.Merger of harmonised collective investment undertakings established in different Member States shall be the merger where:
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1)at least one of the collective investment undertakings is established not in the Republic of Lithuania;
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2)one or more collective investment undertakings established in the Republic of Lithuania are merged with a new collective investment undertaking established in another Member State;
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3)one or more collective investment undertakings established in another Member State are merged with a new collective investment undertaking established in the Republic of Lithuania.
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5.For the purposes of this Section the merger of the harmonised collective investment undertakings established in the Republic of Lithuania shall be the merger, where at least one collective investment undertakings participating in the merger or their management companies have been notified by the supervisory authority about the transfer of documents to the supervisory authority of the host Member State of the respective collective investment undertaking in accordance with Article 115(4) of this Law.
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Article 102Merger techniques of harmonised collective investment undertakings
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Harmonised collective investment undertakings may be merged using the following merger techniques:
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1)one or more harmonised collective investment undertakings or sub-funds thereof (the merging collective investment undertaking), on being dissolved without winding-up or going into liquidation, transfer all of their assets and liabilities to another existing harmonised collective investment undertaking or a sub-fund thereof (the receiving collective investment undertaking), in exchange for the issue to the participants of the merging collective investment undertaking of the units or shares of the receiving collective investment undertaking and, if applicable, a cash payment not exceeding 10 % of the net asset value of the units or shares of the merging collective investment undertaking’s participants;
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2)two or more harmonised collective investment undertakings or sub-funds thereof (the merging collective investment undertaking), on being dissolved without winding-up or going into liquidation, transfer all of their assets and liabilities to a collective investment undertaking which they form or a sub-fund thereof (the receiving collective investment undertaking), in exchange for the issue to the participants of the merging collective investment undertaking of the units or shares of the receiving collective investment undertaking and, if applicable, a cash payment not exceeding 10 % of the net asset value of the units or shares of the merging collective investment undertaking’s participants;
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3)one or more harmonised collective investment undertakings or sub-funds thereof (the merging collective investment undertaking) transfer their net assets to another sub-fund of a harmonised collective investment undertaking participating in the merger, to a new harmonised collective investment undertaking which they form on their basis or a sub-fund thereof, or to another existing harmonised collective investment undertaking or a sub-fund thereof (the receiving collective investment undertaking), and the merging collective investment undertaking continues to exist until the liabilities have been discharged.
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Article 103Procedure of authorising the merger of a merging collective investment undertaking established in the Republic of Lithuania
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1.Merger of the merging collective investment undertaking established in the Republic of Lithuania shall be subject to prior authorisation of the supervisory authority.
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2.For the purpose of obtaining the authorisation, an undertaking or its management company shall provide to the supervisory authority:
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1)the common draft terms of the merger approved by the merging collective investment undertaking and the receiving collective investment undertaking or by their management companies;
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2)an up-to-date version of the prospectus and the key investor information of the receiving collective investment undertaking, if such receiving collective investment undertaking is or will be established in another Member State;
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3)a statement of confirmation by each of the depositaries of the merging and the receiving collective investment undertakings in accordance with Article 104 of this Law;
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4)the information on the proposed merger that the merging and the receiving collective investment undertakings intend to provide to their respective participants.
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3.The information referred to in paragraph 2 of this Article shall be provided in the Lithuanian language and in the official language or one of the official languages of the home Member State of the receiving collective investment undertaking or in a language approved by the supervisory authority of such home Member State.
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4.If the supervisory authority considers that it has been provided with the incomplete set of documents and information referred to in paragraph 2 of this Article, the supervisory authority shall be entitled to require, within 10 working days of receipt of the incomplete set of documents or information, that the merging collective investment undertaking established in the Republic of Lithuania or its management company provides all of the missing documents or information.
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5.Having received the complete set of the required information the supervisory authority shall immediately transmit the copies of documents and information referred to in paragraph 2 of this Article to the supervisory authority of another Member State where the receiving collective investment undertaking is or will be established. In order to assess whether the information on merger provided to participants of the merging and the receiving collective investment undertakings is appropriate and sufficient the supervisory authority shall consider with the supervisory authority of another Member State the potential impact of the merger on the participants of the merging and the receiving collective investment undertakings.
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6.The supervisory authority shall have the right to:
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1)require, in writing, that the information to be provided to the participants of the merging collective investment undertaking established in the Republic of Lithuania is clarified;
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2)require, in writing, that the receiving collective investment undertaking established in the Republic of Lithuania or its management company supplements and (or) modifies the information to be provided to the collective investment undertaking’s participants. The supervisory authority may exercise this right no later than within 15 working days of receipt of the complete set of documents and information referred to in paragraph 2 of this Article (where the merging collective investment undertaking is established in the Republic of Lithuania), or no later than within 15 working days of transferring to the supervisory authority of the copies of the respective documents by the supervisory authority of the merging collective investment undertaking’s home Member State (where the merging collective investment undertaking is established in another Member State).
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7.The supervisory authority shall notify the supervisory authority of the home Member State of the merging collective investment undertaking established in another Member State about exercising the right referred to in point 2 of paragraph 6 of this Article. The supervisory authority shall notify the supervisory authority of the home Member State of the merging collective investment undertaking established in another Member State whether it is satisfied with the supplemented and (or) modified information to be provided to the participants of the receiving collective investment undertaking established in the Republic of Lithuania within 20 working days of receipt of the complete set of the supplemented and (or) modified information.
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8.The supervisory authority shall authorise the merger if the following conditions are met:
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1)the proposed merger complies with all of the requirements of this Article, Articles 104 and 105 of this Law and legal acts of the supervisory authority implementing these Articles;
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2)the receiving collective investment undertaking or its management company has been notified in accordance with Article 120(1) or Article 115(4) of this Law about marketing its units or shares in all Member States where the merging collective investment undertaking is authorised and (or) the merging collective investment undertaking or its management company has been respectively notified;
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3)the supervisory authority and, where applicable, the supervisory authorities of the home Member States of the merging and the receiving collective investment undertakings are satisfied with the proposed information to be provided to the participants of these undertakings or no indication of dissatisfaction with the proposed supplemented and (or) modified information to be provided to the participants of the receiving collective investment undertaking established in such Member State has been received from the supervisory authority of the home Member State of the receiving collective investment undertaking within 20 working days of receipt of the complete set of the supplemented and (or) modified information.
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9.The supervisory authority shall notify the merging collective investment undertaking established in the Republic of Lithuania or its management company about the decision to grant or refuse the authorisation for merger within 20 working days of receipt of the complete set of the documents and information referred to in paragraph 2 of this Article. The supervisory authority shall also communicate its decision to the supervisory authority of the receiving collective investment undertaking’s home Member State.
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10.The provisions of temporary derogation from investment rules enshrined in Article 82(2) of this Law shall apply mutatis mutandis to the investment portfolio of the receiving collective investment undertaking established in the Republic of Lithuania. The term of temporary derogation from investment rules shall be calculated from the effective date of merger of harmonised collective investment undertakings.
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11.The supervisory authority shall lay down detailed requirements for the content of the common draft terms of merger produced by the merging and the receiving collective investment undertakings or their management companies.
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Article 104Additional obligations of depositaries of merging and receiving collective investment undertakings
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Depositories of the merging and of the receiving collective investment undertakings must provide an attestation that they verified the compliance of the merger technique specified in the common draft conditions of merger, the merging and the receiving collective investment undertakings, planned effective date of merger and rules to be applied to the disposal of assets and exchange of the units or shares with the requirements of this Law or respective legal acts of another Member State (where a merging or a receiving collective investment undertaking is established in another Member State) and of the instruments of incorporation of a respective collective investment undertaking and did not find any irregularities.
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Article 105
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Additional obligations of a merging collective investment undertaking’s auditor and of merging and receiving collective investment undertakings or their management companies 1. An auditor of the merging collective investment undertaking established in the Republic of Lithuania shall validate:
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1)the criteria adopted for valuation of the assets and liabilities on the date for calculating the exchange ratio, as referred to in Article 110(2) of this Law;
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2)where applicable – the cash payments for units or shares of the undertaking and the justification of its calculation;
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3)the calculation method of the exchange ratio of units or shares determined at the date for calculating that ratio as specified in Article 110(2) of this Law.
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2.The merging and the receiving collective investment undertakings or their management companies must guarantee that the copies of reports of the auditor are made available to the supervisory authority and to the supervisory authorities of the home Member State of the merging and the receiving collective investment undertakings established in another Member State and also on request and free of charge to the participants of the merging and the receiving collective investment undertakings.
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Article 106Procedure for informing participants of merging and receiving collective investment undertakings
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1.The merging and receiving collective investment undertakings or their management companies shall provide appropriate and accurate information on the merger to the participants such as to enable them to take an informed decision on the possible impact thereof on their investment and to exercise their rights under Article 108 of this Law.
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2.The information provided to the participants of the merging and the receiving collective investment undertakings shall include the following:
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1)the background to and the rationale for the merger;
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2)the possible impact of the merger on the participants of the merging and the receiving collective investment undertakings, the possible impact of the proposed merger on unit-holders, including but not limited to any material differences in respect of investment policy and, costs, expected outcome, periodic reporting, possible dilution in performance, and, where relevant, a prominent warning to investors that their tax treatment may be changed following the merger;
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3)the period after expiration of which the subscription and redemption of the units or shares of a merging collective investment undertaking shall cease;
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4)any specific rights of the participants of collective investment undertakings in relation to the merger, including but not limited to the right to obtain additional information, the right to obtain a copy of the report of the independent auditor or the depositary on request, and the right to exercise the right specified in Article 108(1) of this Law, so indicating the last date for exercising that right;
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5)the relevant procedural aspects and the planned effective date of the merger, including but not limited to the procedure of deciding on merger of an investment company (where at least one of the merging or receiving investment companies is established in the Republic of Lithuania) and (or) the procedure of participants’ approval of the merger required according to the law of another Member State (where at least one of the merging or receiving collective investment undertakings is established in another Member State) and the method of notification of the participants about the completion of the merger, as well as the information about the proposed suspension of the subscription and (or) redemption of units or shares for the purpose of the effective completion of the merger;
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6)a copy of the key investor information of the receiving collective investment undertaking.
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3.The information about merger shall be provided to participants of the merging and the receiving collective investment undertakings only after the supervisory authority and the supervisory authority of the home Member State of the merging collective investment undertaking (where the merging collective investment undertaking is established in another Member State) have authorised the merger, but no later than 30 days before the last date for exercising the right of the participants referred to in Article 108(1) of this Law.
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4.During the period between the day of provision of information about merger to participants of the merging and the receiving collective investment undertakings and the effective date of the merger the collective investment undertaking or its management company must provide the information referred to in paragraph 2 of this Article to all persons who intend to acquire units or shares of any of the merging and the receiving collective investment undertakings or who have requested the copies of instruments of incorporation, a prospectus or key investor information of any of these undertakings.
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5.If at least one of the merging and the receiving collective investment undertakings established in the Republic of Lithuania or their management companies have received a notice as specified in Article 115(4) of this Law from the supervisory authority about the transmission of documents to the supervisory authority of the host member State of the respective collective investment undertaking, information referred to in paragraph 2 of this Article shall also be provided in the official language, or one of the official languages, of the host Member State of the undertaking or in a language approved by the supervisory authority of such Member State.
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6.If at least one of the merging and the receiving collective investment undertakings established in another Member State or their management companies have received a notice as specified in Article 120(1) of this Law from the supervisory authority of the home Member State of the respective collective investment undertaking about the transfer of documents to the supervisory authority, information referred to in paragraph 2 of this Article shall also be provided in the Lithuanian language.
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7.The management company and where an undertaking has not designated a management company – a collective investment undertaking itself shall be responsible for producing the translation of information provided to participants of a collective investment undertaking. The translation shall faithfully reflect the content of information drafted in the official language, or one of the official languages, of the host Member State of the collective investment undertaking or in a language approved by the supervisory authority of such Member State.
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8.The supervisory authority shall establish detailed requirements for the content, form and procedure of provision of information provided to participants of the merging and of the receiving collective investment undertakings.
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Article 107Decision on merger of an investment company
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Where one of the merging or receiving collective investment undertakings is an investment company established in the Republic of Lithuania, a decision on merger of the investment company shall be adopted at a general meeting of shareholders by a qualified majority vote accounting for at least 2/3 of votes awarded by shares of all shareholders attending the meeting. In any case it shall be prohibited to establish that the approval of such decision requires more than 75% of the votes awarded by shares held by all shareholders attending the meeting.
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Article 108Right of participants of merging and receiving collective investment undertakings and procedure of exercising it
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1.Participants of the merging and the receiving collective investment undertakings shall have the right to request the redemption of the units or shares held by them, or, where possible, their conversion into units or shares in another harmonised collective investment undertaking with similar investment policies and managed by the same management company or by any other company with which these management companies are linked by common management or control or by a substantial direct or indirect holding, without any charges other than those retained by the harmonised collective investment undertaking or its management company to meet disinvestment costs related to the above-mentioned requests.
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2.The holders of units or shares may exercise the right specified in paragraph 1 of this Article from the moment of having been informed about the merger. This right shall cease to exist five working days before the date of calculating the exchange ratio of units or shares referred to in Article 110(2) of this Law.
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3.Without prejudice to the requirements of paragraphs 1 and 2 of this Article, the supervisory authority shall be entitled to require or to allow a management company or an investment company to temporarily suspend the subscription and (or) redemption of units or shares provided that such suspension is justified for the protection of interests of holders of the units or shares.
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Article 109Charging the costs of merger
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It shall be prohibited to charge any costs, including legal, advisory, administrative, etc. costs associated with the preparation, effecting and completion of the merger to the merging or the receiving collective investment undertakings, or to any of their participants. This prohibition shall not apply to a merging collective investment undertaking that has not designated a management company and to its participants.
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Article 110Entry into effect of merger
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1.In the event of merger of harmonised collective investment undertakings established in the Republic of Lithuania and of harmonised collective investment undertakings established in different Member States (where the receiving collective investment undertaking is established in the Republic of Lithuania) shall be considered as having taken effect when the final entries are made in the personal accounts of units or shares following the conversion of the units or shares of the merging collective investment undertaking into the units or shares of the receiving collective investment undertaking and, where applicable, the cash payments specified in Article 102 of this Law are made.
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2.In the event of merger of undertakings referred to in paragraph 1 of this Article the exchange ratio of the units or shares of the merging collective investment undertaking into the units or shares of the receiving collective investment undertaking shall be established on the day of the completion of merger specified in paragraph 1 of this Article.
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3.The dates referred to in paragraphs 1 and 2 of this Article may not be earlier than the date of approval of the merger by the shareholders of the merging and the receiving investment companies.
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4.The entry into effect of the merger shall be notified in writing by the receiving collective investment undertaking or its management company to the supervisory authorities of the merging and the receiving collective investment undertakings and made public on the website (websites) specified in the instruments of incorporation of a receiving collective investment undertaking (where a receiving collective investment undertaking is established in the Republic of Lithuania) or in the manner prescribed by another Member State (where a receiving collective investment undertaking is established in another Member State).
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5.Where a merging investment fund is established in the Republic of Lithuania, its management company shall provide to the supervisory authority the notice of entry into effect of the merger, the instruments of incorporation of the investment fund and the application to repeal them.
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6.A merging investment company established in the Republic of Lithuania must either record the appropriate amendments to the articles of association in the Register of Legal Entities or must be liquidated in accordance with the procedure laid down by laws of the Republic of Lithuania.
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Article 111Consequences of the effected merger
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1.A merger which has taken effect as provided for in this Section shall not be declared null and void.
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2.A merger effected in accordance with Article 102(1) of this Law shall have the following consequences:
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1)all the assets and liabilities of the merging collective investment undertaking are transferred to the receiving collective investment undertaking or, where applicable, transferred for management on fiduciary basis to the depositary of the receiving collective investment undertaking;
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2)the participants of the merging collective investment undertaking become participants of the receiving collective investment undertaking and, where applicable, they are entitled to a cash payment referred to in Article 102(1) of this Law;
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3)the merging collective investment undertaking ceases to exist as a collective investment undertaking on the entry into effect of the merger.
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3.A merger effected in accordance with Article 102(2) of this Law shall have the following consequences:
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1)all the assets and liabilities of the merging collective investment undertaking are transferred to the newly constituted receiving collective investment undertaking or, where applicable, transferred for management on fiduciary basis to the depositary of the receiving collective investment undertaking;
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2)the participants of the merging collective investment undertaking become participants of the receiving collective investment undertaking and, where applicable, they are entitled to a cash payment referred to in Article 102(2) of this Law;
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3)the merging collective investment undertaking ceases to exist as a collective investment undertaking on the entry into effect of the merger.
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4.A merger effected in accordance with Article 102(3) of this Law shall have the following consequences:
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1)the net assets of the merging collective investment undertaking are transferred to the receiving collective investment undertaking, or, where applicable, transferred for management on fiduciary basis to the depositary of the receiving collective investment undertaking;
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2)the participants of the merging collective investment undertaking become participants of the receiving collective investment undertaking;
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3)the merging collective investment undertaking continues to exist until the liabilities have been discharged.
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Article 112Procedure of confirming the effected transfer of assets and liabilities
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A management company of the receiving collective investment undertaking established in the Republic of Lithuania and where the undertaking has not designated a management company – by the collective investment undertaking itself must confirm to its depositary in accordance with the procedure laid down by the supervisory authority that transfer of assets and liabilities of the collective investment undertaking has been effected.
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CHAPTER VII
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SECTION ONE ACTIVITIES PURSUED IN OTHER MEMBER STATES OR THIRD COUNTRIES BY MANAGEMENT COMPANIES AND INVESTMENT COMPANIES WITH VARIABLE CAPITAL AUTHORISED IN THE REPUBLIC OF LITHUANIA
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Article 113Right of management companies authorised in the Republic of Lithuania to provide services in other Member States or third countries
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1.Requirements of this Article shall apply to a management company establishing a branch in another Member State or providing services in such Member State without the establishment of a branch. A management company shall have the right to establish a branch or to provide services without the establishment of a branch in accordance with the procedure laid down in this Article, provided the agreements concluded between the supervisory authority and the supervisory authority of a third country are sufficient to ensure adequate supervision of activities and provision of information and requirements established by legal acts of a third country are not less stringent than the requirements laid down by this Law for the activities of management companies. Where the management company already has at least one branch in another Member State or third country, the procedure laid down in this Article shall not apply to the establishment of its other branches in that state.
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2.A management company wishing to establish a branch within the territory of another Member State or in a third country shall notify the supervisory authority accordingly and provide the following documents and information:
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1)the programme of operations setting out the activities and services envisaged;
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2)the envisaged organisational structure of the branch;
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3)the description of the risk management process put in place by the management company;
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4)the description of the procedures and arrangements taken in accordance with Article 116(2) of this Law;
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5)the state within the territory of which the management company plans to establish a branch, the address in a host Member State of a management company or in a third country from which documents may be obtained, forenames and surnames of the branch managers.
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3.The supervisory authority shall within two months communicate the information specified in paragraph 2 of this Article to the supervisory authority of another Member State or third country attaching to it the information regarding the compensation scheme intended to protect investors. The supervisory authority shall have the right to refuse to grant authorisation for the establishment of a branch and to refuse, within two months, to communicate the specified information only where the structure of the proposed branch or financial situation of a management company does not meet the requirements set forth by the supervisory authority for the pursuit of such activities. A management company shall be notified of the communication of information or the refusal to communicate it.
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4.A management company wishing to provide within the territory of another Member State or in a third country the services specified in the authorisation granted to it without the establishment of a branch shall notify the supervisory authority accordingly and provide the following documents and information:
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1)the state within the territory of which it intends to provide services;
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2)the programme of operations setting out the activities and services envisaged;
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3)the description of the risk management process put in place by the management company;
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4)the description of the procedures and arrangements taken in accordance with Article 116(2) of this Law.
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5.The supervisory authority shall, within one month, communicate the notice referred to in paragraph 4 of this Article to the supervisory authority of another Member State or third country alongside the details of the compensation scheme intended to protect investors and shall inform the management company accordingly. As from that moment the management company shall acquire the right to start business in its host Member State and having complied with the requirements laid down in Article 115 of this Law or with the requirements laid down by legal acts of the management company’s host Member State with regard to the authorisation to manage harmonised collective investment undertakings established in that Member State – to market the units or shares of its managed collective investment undertakings established not in the host Member State of the management company or to manage a harmonised collective investment undertaking established the management company’s host Member State, respectively.
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6.Where a management company wishes to pursue the activity of management of harmonised collective investment undertakings in another Member State, the supervisory authority shall enclose with the information referred to in paragraph 2 or 4 of this Article sent to the supervisory authority of the management company’s host Member State an attestation that the management company has been authorised pursuant to the provisions of the European Union Directive referred to in paragraph 4 of Annex to this Law, a description of the scope of the management company’s authorisation and, where applicable, details of any restriction on the types of harmonised collective investment undertakings that the management company is authorised to manage.
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7.In the event of change of any particulars communicated by a management company alongside the notice of establishment of a branch, a management company shall give a prior written notice of that change to the supervisory authority and to the supervisory authority of another Member State or third country at least one month before implementing the change. In that case the supervisory authority shall have the right to terminate the activities of a branch under paragraph 3 of this Article. The supervisory authority shall notify the supervisory authority of another Member State or third country about any changes in the applicable compensation scheme intended to protect investors or in other communicated information. In the event of change of any particulars referred to in paragraph 4 of this Article communicated by the supervisory authority, a management company pursuing activities in another Member State or third country without the establishment of a branch must give a prior written notice of that change to the supervisory authority and to the supervisory authority of the respective other Member State or third country.
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8.The supervisory authority must update the information contained in the attestation referred to in paragraph 6 of this Article and inform the supervisory authority of the management company’s host Member State wherever there is a change in the scope of the management company’s authorisation or, where applicable, in the details of any restriction on the types of harmonised collective investment undertakings that the management company is authorised to manage.
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Article 114Supervision of activities pursued in another Member State or third country by management companies authorised in the Republic of Lithuania
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1.A management company authorised in the Republic of Lithuania which pursues activities in another Member State or third country by establishing a branch must comply with the requirements for its activities laid down by legal acts of the management company’s host Member State or third country. The supervisory authority of the management company’s host Member State or third country shall be responsible for supervising compliance with these requirements. A management company authorised in the Republic of Lithuania which pursues the activity in another Member State or third country without the establishment of a branch must comply with the requirements for its activities laid down in Article 11 of this Law.
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2.The supervisory authority shall be responsible for supervising compliance with prudential requirements by management companies authorised Republic of Lithuania providing investment services in another Member State or third country. If the supervisory authority of another Member State or third country notifies about infringements made by a management company, the supervisory authority shall have the right to impose sanctions accordingly informing the supervisory authority of the respective other Member State or third country.
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3.The supervisory authority shall immediately inform the supervisory authority of the respective other Member State or third country about the withdrawal of authorisation of a management company providing services in another Member State or third country, authorisation.
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4.The supervisory authority having been notified by the supervisory authority of another Member State or third country in which a management company authorised in the Republic of Lithuania is pursuing activities by establishing or without the establishment of a branch about the management company’s refusal to communicate to the supervisory authority of another Member State or third country the information requested by it or about the failure to eliminate the irregularities within the established time, shall immediately take all required measures provided for by this Law to ensure that the management company carries out the actions specified by the supervisory authority of its host Member State or third country. The supervisory authority shall communicate information about the measures taken to the supervisory authority of the management company’s host Member State or third country.
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Article 115Marketing of units or shares in another Member State or third country by a collective investment undertaking established in the Republic of Lithuania
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1.A management company or an investment company that has not designated a management company intending to market units or shares of a collective investment undertaking in another Member State must submit to the supervisory authority in accordance with the procedure laid down by it a notification letter drafted pursuant to Annex I to Commission Regulation (EU) No 584/2010 of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards the form and content of the standard notification letter and UCITS attestation, the use of electronic communication between competent authorities for the purpose of notification, and procedures for on-the-spot verifications and investigations and the exchange of information between competent authorities (hereinafter: ‘Regulation (EU) No 584/2010’). The notification, inter alia, shall include information on arrangements made for marketing units or shares of a collective investment undertaking in its host Member State, including, where relevant, in respect of marketing of separate classes and (or) series of unit or shares.
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2.A collective investment undertaking shall enclose with the notification letter, as referred to in paragraph 1 of this Article, the latest version of the following:
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1)instruments of incorporation, its prospectus, latest annual report and any subsequent half-yearly report, translations thereof submitted in accordance with the procedure laid down in point 3 of paragraph 11 and paragraph 12 of this Article;
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2)its key investor information document together with its translation submitted in accordance with the procedure laid down in point 2 of paragraph 11 and paragraph 12 of this Article.
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3.A management company or an investment company, that has not designated a management company intending to market units or shares in another Member State must publish electronic versions of documents referred to in paragraph 2 of this Article and their amendments on the website of a management company, an investment company that has not designated a management company, or on any other website specified in the notification letter referred to in paragraph 1 of this Article and ensure the access to the respective website for the host Member State of a collective investment undertaking.
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4.The supervisory authority shall verify whether the documentation submitted in accordance with paragraphs 1 and 2 of this Article is complete and within 10 working days of submission of all the required documents transmit these documents in accordance with the procedure laid down by Regulation (EU) No 584/2010 to the supervisory authority of the collective investment undertaking’s host Member State. The supervisory authority shall enclose with the documentation an attestation drawn up in accordance with Annex II of Regulation (EU) No 584/2010 that the collective investment undertaking fulfils the conditions imposed by the European Union Directive referred to in paragraph 4 of the Annex to this Law. The supervisory authority, upon receipt of the confirmation of receipt of all the documentation referred to in this paragraph from the supervisory authority of the collective investment undertaking’s host Member State shall immediately notify about the receipt a management company or an investment company that has not designated a management company. Upon receipt of such notification a management company or an investment company that has not designated a management company may start the marketing of units or shares in the host Member State of the collective investment undertaking.
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5.The notification letter referred to in paragraph 1 of this Article and the attestation referred to in paragraph 4 of this Article shall be provided in the English language.