Įstatymas skelbtas: Žin

Įstatymas skelbtas: Žin REPUBLIC OF LITHUANIA Law on markets in Financial Instruments 18 January 2007 No X-1024 (As last amended on 22 December 2011 – No XI-1881) Vilnius CHAPTER I GENERAL PROVISIONS Article 1. Purpose of the Law 1. The purpose of this Law is to regulate public relations with a view to ensuring a fair, open and efficient functioning of markets in financial instruments, protection of investor interests and prudential treatment of systemic risk. 2. This Law has the objective of harmonising regulation of markets in financial instruments with the EU legal acts listed in the Annex to this Law. Article 2. Scope of the Law 1. This Law shall set forth the requirements which financial brokerage firms and regulated markets must comply with. 2. Some requirements of this Law shall, in the cases specified by this Law, mutatis mutandis apply to licensed credit institutions providing investment services and/or performing investment activities (hereinafter referred to as “credit institutions”). 3. Chapter IV of this Law shall apply to all natural and legal persons. 4. The requirements set forth in Chapter II and III of this Law shall not apply to: 1) insurance undertakings, also the undertakings performing reinsurance or retrocession activities; 2) the persons who provide investment services solely for their parent undertakings, for their subsidiaries, or for other subsidiaries of their parent undertakings; 3) the persons who provide investment services on an accidental basis in the course of professional activity as regulated by legal acts or codes of ethics which do not prohibit the provision of investment services; 4) the persons who enter into transactions solely on own account and do not provide other investment services. The exception shall not apply to market makers and the persons who enter into transactions on own account outside a regulated market or a multilateral trading facility on an organised, regular and systematic basis simultaneously providing technical possibilities for third parties to enter into transactions therewith; 5) the persons who provide investment services consisting exclusively in the administration of employee-participation investment schemes; 6) the persons who provide investment services consisting exclusively in the administration of employee-participation investment schemes and provision of investment services for the parent undertakings of that person, for subsidiaries of that person, or for other subsidiaries of the parent undertakings of the person; 7) members of the European System of Central Banks, other national bodies performing similar functions and other public bodies charged with or intervening in the management of the public debt; 8) collective investment undertakings and pension funds whether coordinated at EU level or not, also their depositaries and managers; 9) persons dealing on own account in financial instruments, or providing investment services in commodity derivatives or derivative contracts indicated in subparagraph 10 of paragraph 4 of Article 3 of this Law to the clients of their main business, provided this is an ancillary activity to their main business, when considered on a group basis, and that main business is not the provision of investment services or banking services; 10) persons providing investment advice in the course of providing another professional activity not covered by this Law provided that the provision of such advice is not specifically remunerated; 11) persons whose main business consists of dealing on own account in commodities and/or commodity derivatives. This exception shall not apply where the persons that deal on own account in commodities and/or commodity derivatives are part of a group of persons the main business of which is the provision of other investment services or banking services; 12) firms which provide investment services and/or perform investment activities consisting exclusively in dealing on own account on markets in financial futures, options or other derivatives and on cash markets for the sole purpose of hedging positions on derivatives markets, also firms which deal for the accounts of other market participants indicated in this subparagraph or make prices for them and which are guaranteed by clearing members of the same markets, where responsibility for ensuring the performance of contracts entered into by such firms is assumed by clearing members of the same markets; 13) associations set up by Danish and Finnish pension funds with the sole aim of managing the assets of pension funds that are members of those associations; 14) “agenti di cambio”, whose activities are governed by Article 201 of Italian Legislative Decree No 58 of 24 February 1998. 5. The rights conferred by this Law shall not extend to the provision of investment services as counterparty in transactions carried out by public legal persons performing the functions of public debt management, also members of the European System of Central Banks performing the functions as provided for by the Treaty on the Functioning of the European Union and the Statute of the European System of Central Banks and of the European Central Bank or performing equivalent functions under national provisions. 6. Provisions of paragraph 5 of this Article shall apply mutatis mutandis to licensed credit institutions. Article 3. Definitions 1. Home Member State: 1) in the case of a financial brokerage firm, the Member State in which the registered office of the firm is registered.  Where a financial brokerage firm established in another Member State has, under the law of that Member State, no registered office or a natural person acts in the capacity of a financial brokerage firm, the Member State in which the registered office of the firm or the natural person is situated; 2) in the case of a regulated market, the Member State in which the registered office of the regulated market is registered. Where under the law of that Member State, a regulated market in another Member State has no registered office, the Member State in which the registered office of the regulated market is situated; 3) in the case of a multilateral trading facility, the Member State in which the registered office of the operator of the multilateral trading facility is registered.  Where under the law of that Member State, the operator of the multilateral trading system in another Member State has no registered office, the Member State in which the registered office of the operator of the multilateral trading system is situated. 2. Multilateral trading facility – a multilateral system, operated by a financial brokerage firm or a market operator, which brings together third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in a contract in financial instruments. 3. Subsidiary – as defined in the Law of the Republic of Lithuania on Consolidated Accounts of Groups of Undertakings (hereinafter referred to as the “Law on Consolidated Accounts of Groups of Undertakings”). 4. Financial instrument – any of the instruments listed below: 1) transferable securities; 2) money-market instruments; 3) securities of collective investment undertakings; 4) options, futures, swaps, forward rate agreements and other derivative contracts relating to securities, currencies, interest rates or yields, also other derivatives instruments, financial indices and the measures which may be settled in cash or physically; 5) options, futures, swaps, forward rate agreements and other derivative contracts relating to commodities  that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of insolvency and termination events); 6) options, futures, swaps, and other derivate contracts relating to commodities and admitted to trading on a regulated market and/or a multilateral trading facility, which can be physically settled; 7) options, futures, swaps, forwards and other derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in subparagraph 6 of this paragraph and not being for commercial purposes, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and settled through a recognised clearing house or are subject to regular margin calls. Definition of the financial instruments as provided for in this subparagraph is specified in Commission Regulation (EC) No 1287/2006 10 August 2006 implementing Directive 2004/39/EC of the European Parliament and of the Council as regards record-keeping obligations for investment firms, transaction reporting, market transparency, admission of financial instruments to trading, and defined terms for the purposes of that Directive (hereinafter referred to as “Regulation (EC) No 1287/2006”); 8) derivative instruments for the transfer of credit risk; 9) financial contracts for differences; 10) options, futures, swaps, forward rate agreements and other derivative contracts relating to climatic variables, freight rates, emission allowances, inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of insolvency and termination events), as well as other derivative contracts relating to assets, rights, obligations, indices and other measures not otherwise mentioned in this Section, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are admitted to trading on a regulated market or a multilateral trading facility, are cleared and settled through recognised clearing houses or are subject to regular margin calls. Definition of the financial instruments as provided for in this subparagraph is specified in Commission Regulation (EC) No 1287/2006. 5. Management of a financial instrument portfolio – managing client portfolios including one or more financial instruments in accordance with mandates given by clients on a discretionary client-by-client basis. 6. Financial instrument portfolio – a set of the financial instruments held an investor. 7. Financial brokerage firm – a legal person whose regular business is the provision of one or more investment services to third parties and/or the performance of one or more types of investment activities on a professional basis. It shall be possible that the financial brokerage firms established in other Member States do not have the status of a legal person. 8. Qualifying holding of a financial brokerage firm – a proportion of the authorised capital or voting rights of a financial brokerage firm which is managed directly or indirectly and represents at least 1/10 of the authorised capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the financial brokerage firm.  When determining whether a proportion of the authorised capital or voting rights of the firm represents at least 1/10 of the authorised capital, account shall be taken of the duties and the procedure for calculating votes specified in Articles 23 and 24 of the Law of the Republic of Lithuania on Securities. 9. Branch of a financial brokerage firm – a division of a financial brokerage firm other than the location of the registered office which has no legal personality and which provides only the investment services and/or performs the investment activities and may provide only the ancillary services whose provision is permitted by the licence of a financial brokerage firm. All the divisions which the financial brokerage firm has set up in the same host Member State shall be regarded as a single branch. 10. Heads of a financial brokerage firm: 1) the head of administration; 2) members of the board; 3) members of the supervisory board. 11. Close links – a situation in which two or more natural or legal persons are linked by: 1) participation – at least 1/5 of the capital or voting rights of an undertaking is held directly or by way of control; 2) control – covers the relationships between a parent undertaking and a subsidiary arising on the basis of control, also other similar relationships between a natural or a legal person and an undertaking, a subsidiary undertaking of an undertaking’s subsidiary undertaking also being considered a subsidiary of the previous undertaking;  3) permanent control links with the same person – a situation in which two or more natural or legal persons are permanently linked to one and the same person by a control relationship shall be regarded as constituting a close link between all of these persons. 12. Investment advice – a personal recommendation provided to a client at the initiative of a financial brokerage firm or the client, in respect of one or more transactions relating to financial instruments. 13. Investment services and investment activities (hereinafter referred to as “investment services”) – the following services and activities related to one or several financial instruments: 1) reception and transmission of orders; 2) execution of orders on behalf of clients; 3) dealing on own account; 4) management of a financial instrument portfolio; 5) provision of investment advice; 6) underwriting and/or placing of financial instruments on a firm commitment basis; 7) placing of financial instruments without a firm commitment basis; 8) operation of a multilateral trading facility. 14. Investor – a person holding financial instruments by the right of ownership or intending to acquire them. 15. Supervision on a consolidated basis – as defined in the Law of the Republic of Lithuania on Financial Institutions (hereinafter referred to as the “Law on Financial Institutions”). 16. Client – a natural or legal person to whom a financial brokerage firm provides investment services and/or ancillary services. 17. Management company of a collective investment undertaking (hereinafter referred to as “management company”) – as defined in the Law of the Republic of Lithuania on Collective Investment Undertakings (hereinafter referred to as the “Law on Collective Investment Undertakings”). 18. Control – a director and/or indirect dominant influence on an undertaking as defined in the Law on Consolidated Accounts of Groups of Undertakings. 19. Credit institution – as defined in the Law on Financial Institutions. 20. Credit rating agency – as defined by Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 (hereinafter referred to as “Regulation (EC) No 1060/2009”). 21. Persons of sufficiently good repute – natural and legal persons, where they are: 1) the persons convicted of a grave or serious crime or a crime against the financial system, economy and business practice, against property, property rights and property interests; 2) the persons who have not been convicted in a crime or offence not provided for in subparagraph 1 of this paragraph or whose conviction has expired or has been annulled; 3) the persons not abusing alcohol, narcotic, toxic or psychotropic substances; 4) members of management bodies and the natural and legal persons controlling this legal person are of sufficiently good repute; 5) in the absence of other important reasons why the person may not be regarded to be of good repute. 22. Non-professional client – a customer who is not attributed either to professional clients or to eligible counterparties. 23. Central counterparty – as defined in the Law of the Republic of Lithuania on Settlement finality in Payment and Securities Settlement Systems. 24. Ancillary services: 1) safekeeping, accounting and administration of financial instruments for the account of clients, including custodianship and related services such as cash or collateral management; 2) granting a credit or a loan to an investor to allow him to carry out a transaction in one or more financial instruments, where the undertaking granting the credit or loan is involved in the transaction; 3) advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to reorganisation and the purchase of undertakings; 4) foreign exchange services where these are connected to the provision of investment services; 5) investment research, financial analysis or other forms of general recommendation relating to transactions in financial instruments; 6) services related to underwriting; 7) investment services, investment activities as well as ancillary services related to financial instruments, assets or other objects to which the derivatives indicated in subparagraphs 5, 6, 7 and 10 of paragraph 4 of this Article are related where the investment services or ancillary services provided or the investment activities performed are connected to these derivatives. 25. Parent undertaking – as defined in the Law on Consolidated Accounts of Groups of Undertakings. 26. Execution of orders on account of customers – acting to conclude agreements to buy and sell one or more financial instruments on  behalf of a client. 27. Transferable securities – the securities which are negotiable on the capital market, with the exception of instruments of payment, including, but not limited to, the following securities: 1) shares in companies and other securities equivalent to shares in companies, the societies operating on the basis of partnership and other entities, and depositary receipts in respect of shares; 2) bonds and other forms of non-equity securities, including depositary receipts in respect of such non-equity securities; 3) other securities giving the right to acquire or transfer transferable securities or giving rise to cash settlements determined by reference to transferable securities, currencies, interest rates, yields, commodities or other indices or measures. 28. Money-market instruments – the instruments which are normally dealt in on the money market, such as treasury bills, certificates of deposit, commercial papers and others, excluding instruments of payment. 29. Supervisory institution – the Bank of Lithuania performing the functions of supervision of markets in financial instruments in accordance with the procedure laid down by this Law and other laws.   30. Host Member State – the Member State other than the home Member State, in which a financial brokerage firm has a branch or provides investment services and/or performs investment activities without establishing a branch or the Member State in which a regulated market provides appropriate arrangements so as to facilitate access to trading on its system by remote members or participants established in that same Member State. 31. Professional customer – a client who possesses the knowledge, expertise and experience to make its own justified investment decisions, can properly assess the risks that it incurs and complies with the criteria set forth for professional customers as indicated in Section Three of Chapter II of this Law. 32. Regulated market – a multilateral system managed and/or operated by a market operator, which is licensed and functions regularly and which brings together or facilitates the bringing together of third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in contracts, in respect of the financial instruments admitted to trading and/or traded in this system under its rules. 33. Operator of a regulated market (hereinafter referred to as the “market operator”) – a person or persons who manages and/or operates the business of a regulated market. Rinkos operatorius gali būti pati reguliuojama rinka. 34. Limit order – an order to buy or sell a financial instrument indicated in the order at the price limit indicated in the order or better and for the size indicated in the order. 35. Market maker – a person who holds himself out on the financial markets on a continuous basis as being willing to deal on own account and at own expense by buying and selling financial instruments at prices defined by him. 36. Dealing on own account – conclusion of transactions in one or more financial instruments on own account. 37. Financial brokerage firm engaged in systematic trade – a financial brokerage firm which, on an organised, frequent and systematic basis, deals on own account by executing client orders outside a regulated market or a multilateral trading facility. 38. Systemic risk – the likelihood of insolvency of a financial brokerage firm, a credit institution or an investor to prejudice the interests of the majority of financial brokerage firms, credit institutions or investors. 39. Harmonised collective investment undertaking – as defined in the Law on Collective Investment Undertakings. 40. Third country – a non-Member State of the European Union or a country not belonging to the European Economic Area. 41. Supervisory institution of a third country – an institution performing the functions of supervision of markets in financial instruments in a country other than a Member State equivalent to the functions of a supervisory institution indicated in this Law. 42. Member State shall mean a Member State of the European Union as well as a state of the European Economic Area. 43. Supervisory institution of a Member State – an institution performing the functions of supervision of markets in financial instruments in a Member State equivalent to the functions of a supervisory institution indicated in this Law. 44. Inside information – information of a precise nature relating, directly or indirectly, to one or more issuers or financial instruments about the major events planned or occurred and other information whose disclosure, if it were not made public, would be likely to have a significant effect on the price of these financial instruments or related derivatives. In relation to derivatives on commodities, inside information shall mean information of a precise nature which has not been made public, relating, directly or indirectly, to one or more such derivatives and which users of a market on which such instruments are traded would expect to receive in accordance with well-established market practices. For persons executing orders concerning financial instruments, inside information shall also mean information conveyed by a client and related to the client’s orders, which is of a precise nature, which relates directly or indirectly to one or more issuers or financial instruments, and which, if it were made public, would be likely to have a significant effect on the price of these financial instruments or related derivatives. 45. Publication – announcement, provision of information on the website of the supervisory institution, unless this Law provides otherwise. 46. European Banking Authority – an institution established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ 2010 L 331, p. 12). 47. European Systemic Risk Board – an institution established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (OJ 2010 L 331, p. 1). 48. European Securities and Markets Authority – an institution established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ 2010 L 331, p. 84). CHAPTER II LICENSING OF FINANCIAL BROKERAGE FIRMS AND THE REQUIREMENTS SET FORTH FOR THEIR ACTIVITIES SECTION ONE LICENSING OF FINANCIAL BROKERAGE FIRMS. REQUIREMENTS FOR OBTAINING OF A LICENCE Article 4. Provision of Investment Services – Licensed Activities 1. Only the financial brokerage firms holding the licence of a financial brokerage firm as issued by the supervisory institution or the supervisory institution of another Member State, also the credit institutions licensed in the Republic of Lithuania or another Member State, where the licence of a credit institution grants the right to provide investment services, and the financial adviser undertakings holding the licence of a financial adviser undertaking as issued by the supervisory institution may provide investment services in the Republic of Lithuania as a regular occupation or business on a professional basis. 2. A company holding the licence of a financial brokerage firm shall be referred to as a financial brokerage firm. Only the undertakings which have the right to provide investment services may use the words “financial brokerage firm” or other combinations of these words or their derivatives in their name and advertising. The undertakings which specialise in the management of financial instrument portfolios of other persons may use in their name the words “investment management undertaking” or other combinations and derivatives of these words. 3. Paragraph 1 of this Article shall not apply to a market operator operating a multilateral trading facility and not proposing to provide other investment services. In such a case, the licence shall not be issued to the market operator, however it shall have the right to operate a multilateral trading facility only after the supervisory institution ascertains that the market operator meets the requirements specified in this section (with the exception of Article 11 of this Law) and inform the market operator thereof. 4. A financial brokerage firm established in the Republic of Lithuania and a financial adviser undertaking must have the registered office in the Republic of Lithuania. 5. The supervisory institution shall accumulate data and information about the entities indicated in paragraph 1 of this Article as well as investment and ancillary services which they have the right to provide in the Republic of Lithuania. This information shall be updated on a continuous basis and published on the website of the supervisory institution. 6. A company holding the licence of a financial advisor company shall be referred to as a financial advisor company. Only the undertakings which have the right to engage in the activities of a financial advisor company may use the words “financial advisor company” or other combinations of these words or their derivatives in their name or advertising. 7. A financial advisor company shall have the right to provide in the Republic of Lithuania the investment services provided for in subparagraphs 1 and 5 of paragraph 13 of Article 3 of this Law regarding transferable securities and securities of collective investment undertakings, provided the company does not store funds and financial instruments of clients and cannot become a debtor of the clients due to this, and may transmit orders of clients only to: 1) the financial brokerage firms licensed in a Member State; 2) the credit institutions licensed in a Member State; 3) branches of financial brokerage firms and credit institutions established in third countries, which are subject to the requirements not less stringent than set forth in legal acts of the European Union; 4) collective investment undertakings which, in compliance with the legal acts of the Member State of their registered office, have the right to distribute to the public securities of a collective investment undertaking, also managers thereof; 5) investment companies with fixed capital as defined in paragraph 4 of Article 15 of Council Directive 77/91/EEC of 13 December 1976, the securities of which are admitted to trading on a regulated market.   8. A financial advisory company shall mutatis mutandis be subject to the requirements specified in Chapter II of this Law as applied to financial brokerage firms, with the exception of the cases provided for in this Law and the legal acts adopted by the supervisory institution. 9. A financial advisor company shall not be subject to requirements of Articles 12 and 15 of this Law, however it must insure its professional civil liability. The amount of insurance must be not less than LTL 100 000 per one insured event and LTL 500 000 for all insured events over a year.  A financial advisor company must possess insurance coverage for the entire period of its activities. 10. A financial advisor company shall have the right to provide the investment services indicated in a licence and advertise them only in the Republic of Lithuania. A financial advisor company shall not be granted the rights as specified in Section Five of Chapter II of this Law. Article 5. Scope of the Licence of a Financial Brokerage Firm 1. The licence of a financial brokerage firm shall indicate the investment services which the financial brokerage firm has the right to provide. The licence may also indicate one or several ancillary services. The licence of a financial brokerage firm shall not be issued solely for the provision of ancillary services. 2. The supervisory institution shall issue the licence of a financial brokerage firm to: 1) the undertakings established in the Republic of Lithuania and intending to take up the activities of a financial brokerage firm; 2) the financial brokerage firms licensed in a country other than a Member State and intending to provide investment services in the Republic of Lithuania. 3. The credit institutions established in the Republic of Lithuania shall be granted the right to provide investment services by the licence of a credit institution, unless this activity is restricted therein. A credit institution established in the Republic of Lithuania may provide investment services solely upon establishing a specialised internal structural division. The supervisory institution must assess the preparedness of a credit institution which has established a specialised internal structural division to provide investment services. 4. A financial brokerage firm or a credit institution intending to provide investment services and/or ancillary services which have not been provided in the licence issued to it must apply to the supervisory institution for supplementing the effective licence with the investment and/or ancillary services intended to be provided. 5. Peculiarities of the right of the credit institutions operating in the Republic of Lithuania to provide investment and ancillary services shall also be regulated by the laws regulating the activities of appropriate credit institutions. Article 6. Procedure for Issuing a Licence 1. An undertaking aiming to obtain the licence of a financial brokerage firm must file an application with the supervisory institution. Alongside with the application, a programme of the activities to be performed (business plan), which shall, inter alia, describe the spheres of activities to be performed and the organisational structure of an undertaking, also information about a legal person, members, heads thereof, activities, meeting of capital requirements and other information specified by the supervisory institution upon considering whereof the supervisory institution could state that the undertaking meets the requirements specified in this Section for obtaining of the licence of a financial brokerage firm, must be submitted Upon the request of the supervisory institution, state and municipal institutions must supply the entire information available to them on shareholders of a candidate, their financial position, activities, detected infringements of laws and other legal acts, conclusions of conducted inspections and other information required for the taking of a decision on the issuance of a licence. 2. The supervisory institution shall issue the licence of a financial brokerage firm only upon fully ascertaining that the firm meets the requirements for the obtaining of the licence as specified in this Section. 3. The supervisory institution shall give notice of a decision on the issuance of the licence to an undertaking which has filled an application not later than within six months from submission of all required documents and information. 4. The supervisory institution shall have the right to require submission of additional data or clarifications. In this case, a time period for the consideration of the application shall be calculated from the day of submission of the last documents or data. 5. The supervisory institution shall give notice of the issuance or revocation of a licence to the manager of the Legal Entities’ Register and the European Securities and Markets Authority and publish it in the website of the supervisory institution. Article 7. Grounds for a Refusal to Issue a Licence 1. The supervisory institution shall have the right to refuse to issue the licence of a financial brokerage firm where: 1) data (documents) do not meet specified requirements or the data submitted are not complete or are false; 2) heads of the firm are not of sufficiently good repute or sufficiently experienced; 3) proposed changes of heads of the firm pose a threat to the sound and transparent management of the undertaking; 4) the firm did not provide information about the firm’s shareholders, the qualifying holdings directly or indirectly managed by them and the size of these holdings; 5) there is a ground for believing that holders of the undertaking’s qualifying holding will not ensure a sound and transparent management of the company; 6) the close links of the firm with other natural or legal persons may prevent the supervisory institution from efficiently exercising supervisory functions; 7) at least one employee of the firm is an employee of a regulated market operating in the Republic of Lithuania or the Central Securities Depository of Lithuania (hereinafter referred to as the “Central Depository”); 8) the owned or rented premises or equipment are not suitable for performance of the activities of provision of investment services; 9) the place of location of the standing management body of the firm established in the Republic of Lithuania is not in the territory of the Republic of Lithuania; 10) requirements of laws or other legal acts regulating the status of a third country’s natural or legal persons closely linked to the firm or implementation of these requirements may prevent the supervisory institution from efficiently exercising supervisory functions; 11) the firm does not comply with the capital requirements specified by the supervisory institution; 12) the firm has not entered into a commitment to become a member of an authorised investor compensation scheme; 13) the firm has not approved the arrangements and procedures ensuring compliance with the organisational requirements set for a financial brokerage firm; 14) the firm, heads or shareholders thereof have been rated as unsuitable according to the evaluation criteria indicated in paragraph 10 of Article 10 of this Law. 2. The supervisory institution may refuse to issue a licence to a financial brokerage firm licensed in a country other than a Member State, where the supervisory institution has not concluded with the supervisory institution of a third country the agreements which would ensure a proper supervision of activities and supply of information. 3. A refusal to issue a licence must be motivated in writing and may be appealed against in court. Article 8. Grounds for Revocation of a Licence The supervisory institution shall have the right to revoke the licence of a financial brokerage firm issued by it where the financial brokerage firm: 1) has applied for the revocation of the licence; 2) within 12 months from the issuance of the licence, has not commenced provision of the services specified in the licence; 3) for the preceding six months, had not provided investment services and has not performed investment activities; 4) has obtained the licence by submitting false data or information or by other irregular means; 5) no longer complies with the requirements set forth for the issuance of the licence of a financial brokerage firm; 6) has seriously and systematically infringed the operating requirements for a financial brokerage firm as set forth in this Law; 7) is incapable of discharging duties according to its obligations or there is evidence that it will not be able to do that in the future; 8) in other cases specified by the law. Article 9. Heads of a Financial Brokerage Firm 1. Heads of a financial brokerage firm must be of sufficiently good repute and sufficiently experienced so as to ensure the sound and transparent management of the financial brokerage firm. 2. Where the market operator that seeks authorisation to administer a multilateral trading facility and the persons that direct the business of the multilateral trading facility to be administered by it are the same as those that direct the business of the regulated market, these persons shall be deemed to comply with the requirements laid down in paragraph 1 of this Article. 3. A financial brokerage firm licensed in the Republic of Lithuania must give advance notice to the supervisory institution of all future changes to the heads of the firm, along with submitting to the supervisory institution the specified information needed to assess whether the new heads elected or planned to be elected comply with the requirements of sufficiently good repute and sufficient experience. A financial brokerage firm’s new heads elected may assume office only upon approval of their candidatures by the supervisory institution. 4. The supervisory institution shall have the right not to approve the candidatures of newly elected heads if the elected heads are not of sufficiently good repute, do not possess sufficient experience, or if there are other objective grounds for believing that the planned changes to the heads of the firm pose a threat to the sound and transparent management of the firm. The supervisory institution shall take a decision on the suitability of candidatures of the newly elected heads not later than within one month from the receipt of all required documents. 5. A financial brokerage firm must have in place a single-person management body – the head of a company and a collegial management body – the Board. Article 10. Acquisition and Transfer of Shares of a Financial Brokerage Firm 1. A natural or legal person or persons acting in concert, who have taken a decision either to acquire, directly or indirectly, or to further increase, directly or indirectly, the qualifying holding of a financial brokerage firm held thereby (hereinafter referred to in this Article as the “acquirer”), where in consequence of a proposed increase of the firm’s holding the proportion of the voting rights or of the authorised capital held would reach or exceed in the increasing order 20%, 33% or 50% or the firm would become a subsidiary of that legal person (hereinafter referred to in this Article as the “proposed acquisition”), must obtain a decision of the supervisory institution not to oppose the proposed acquisition. A failure to comply with this requirement shall not invalidate a transaction, however it shall give rise to the consequences specified in paragraph 23 of this Article. The persons acting in concert as referred to this Article shall be two or more persons that, on the basis of a verbal or written agreement concluded explicitly between them or anticipated to be concluded, exercise or seek to exercise their rights granted by the qualifying holding of the financial brokerage firm held. 2. When establishing compliance with the criteria applicable to the qualifying holding of a financial brokerage firm under this Article, no account shall be taken of the voting rights or shares which financial brokerage firms may hold as a result of the rendered investment service of underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis, provided that those rights are not exercised or otherwise used to intervene in the management of the issuer and that they are disposed of within one year of acquisition. 3. The acquirer must notify in writing the supervisory institution of a proposed acquisition indicating the size of the qualifying holding of a financial brokerage firm which he is seeking to acquire and submit supporting documents as well as other information and data specified by the supervisory institution. 4. A person who has taken a decision to directly or indirectly dispose of or reduce a qualifying holding in a financial brokerage firm held by him, where in consequence of a proposed loss of the firm’s share the proportion of the voting rights or of the authorised capital held by the person would reach or exceed in the decreasing order 20%, 33% or 50% or the firm would cease to be a subsidiary of that legal person must notify in writing the supervisory institution indicating the size of the qualifying holding in the financial brokerage firm which he is seeking to transfer or reduce. 5. The supervisory institution shall establish a list of the documents and data submitted together with the notification of the proposed acquisition and required for the assessment of the acquirer and the proposed acquisition. The documents and data indicated in this list must be proportionate to and adjusted for the acquirer and the proposed acquisition. The list may not contain the documents and data which are not necessary for the assessment of the acquirer and the proposed acquisition according to the criteria established in paragraph 10 of this Article. 6. The supervisory institution shall, promptly and in any event within two working days following receipt of the notification of the proposed acquisition, as well as following the subsequent receipt of the documents and data referred to in paragraph 8 of this Article, acknowledge receipt thereof in writing and notify the acquirer of the date of the expiry of the assessment period. 7.  The supervisory institution shall have a maximum of 60 working days as from the date of the written acknowledgement of receipt of the notification and all documents and data indicated in the list referred to in paragraph 5 of this Article to carry out an assessment (hereinafter referred to in this Article as the “assessment period”). 8. The supervisory institution may, during the assessment period, if necessary, and no later than on the 50th working day of the assessment period, request any additional documents and data that are necessary to complete the assessment Such request shall be made in writing and shall specify the additional information needed. For the period between the date of request for additional documents and data by the supervisory institution and the receipt of a response thereto by the acquirer, the assessment period shall be interrupted. The interruption of the assessment period may not exceed 20 working days.  Moreover, the supervisory institution shall have the right to request further completion or clarification of the documents and data at its own discretion, but this may not result in an interruption of the assessment period. 9. The supervisory institution may extend the interruption of the assessment period referred to in paragraph 8 of this Article up to 30 working days if the acquirer is situated or regulated in a third country or if the acquirer is not subject to supervision under the legal acts of the Member States regulating operation of financial brokerage firms, management companies of harmonised collective investment undertakings, credit institutions, insurance undertakings or reinsurance undertakings.   10. In assessing the notification of the proposed acquisition as provided for in paragraph 3 of this Article and the documents and data required for the assessment of the acquirer and the proposed acquisition, the supervisory institution shall, in order to ensure the sound and transparent management of the financial brokerage firm in which an acquisition or increase of the qualifying holding is proposed, and having regard to the likely influence of the acquirer on the financial brokerage firm, appraise the suitability of the acquirer and the financial soundness of the acquisition against all of the following criteria: 1)   the good repute of the acquirer; 2)   the good repute and experience of any person who will direct the business of the financial brokerage firm as a result of the proposed acquisition. When appraising the good repute and experience of the person who will direct the business of the financial brokerage firm as a result of the proposed acquisition, the supervisory institution shall have regard to provisions of Article 9 of this Law; 3)   the financial soundness of the acquirer, in particular in relation to the type of business pursued and envisaged in the financial brokerage firm in which the acquisition or increase of the qualifying holding is proposed; 4)   whether the financial brokerage firm will be able to comply and continue to comply with prudential requirements and, in particular, whether the group of which the financial brokerage firm will become a part following the proposed acquisition has a structure that makes it possible to exercise effective supervision, effectively exchange information among the supervisory institution and supervisory institutions of other Member States and determine the allocation of responsibilities among the supervisory institution and the supervisory institutions of other Member States; 5)   whether there are reasonable grounds to suspect that, in connection with the proposed acquisition, money laundering or terrorist financing within the meaning of the Law of the Republic of Lithuania on Prevention of Money Laundering and Terrorist Financing (hereinafter referred to as the “Law on Prevention of Money Laundering and Terrorist Financing”) is being or has been committed or attempted, or that the proposed acquisition could increase the risk thereof. 11. The supervisory institution may neither impose any prior conditions in respect of the size of the qualifying holding in a financial brokerage firm that must be acquired nor examine the proposed acquisition in terms of the economic needs of the market. 12. The supervisory institution may oppose the proposed acquisition only on the basis of the criteria set out in paragraph 10 of this Article or if the documents and data specified in paragraph 5 or 8 of this Article and provided by the acquirer is incomplete. 13. The supervisory institution shall, prior to taking a decision on the proposed acquisition, work in consultation with the supervisory institutions of other Member States if the acquirer is a financial brokerage firm authorised in a Member State, the management company of harmonised collective investment undertakings, a credit institution, an insurance undertaking, a reinsurance undertaking or the parent undertaking or a person controlling any of these entities. 14. The supervisory institution shall, in consultation according to paragraph 13 of this Article, request other supervisory institutions to provide all information which is relevant for the assessment of suitability of the acquirer and the financial soundness of the proposed acquisition and shall communicate without delay to other supervisory institutions upon their request the information relevant for the assessment being conducted and shall communicate on its own initiative all information essential for the assessment being conducted. 15. If the supervisory institution does not take a decision on opposing the proposed acquisition within the assessment period indicated in paragraph 7 of this Article, it shall be deemed that the supervisory institution does not oppose the proposed acquisition. If the supervisory institution takes a decision not to oppose the proposed acquisition prior to expiry of the assessment period, it shall notify the acquirer thereof in writing within two working days from the taking of the decision. 16. Where the supervisory institution takes a decision not to oppose the proposed acquisition, it may lay down, and where necessary extent, a time limit for implementation of a person’s intention to acquire or increase the qualifying holding in financial brokerage firm. 17. If the supervisory institution, upon completion of the assessment, decides to oppose the proposed acquisition, it shall, within two working days from the taking of the decision and not exceeding the assessment period, inform the acquirer in writing and provide the reasons for that decision. 18. A decision of the supervisory institution on the proposed acquisition shall indicate all opinions and reservations received from other supervisory institutions following consultation according to paragraphs 13 and 14 of this Article. A decision of the supervisory institution to oppose the propose acquisition may be appealed against to court. The supervisory institution shall make the decision and reasons therefor accessible to the public regardless of whether the acquirer’s consent has been obtained.  The supervisory institution shall have the right not to make the decision and reasons for that decision accessible to the public when such a disclosure would incur damage to the market or would incur disproportionate damage to interested persons. 19. Where two or more proposals to acquire a qualifying holding in the same financial brokerage firm have been notified to the supervisory institution, the latter shall consider all notifications in accordance with the same procedure treating the acquirers in a non-discriminatory manner. 20. Where a financial brokerage firm becomes aware of the acquisition or disposal of its shares that cause the qualifying holdings held by shareholders of the firm to exceed the thresholds specified in paragraph 1 of this Article in the increasing or decreasing order, it must give notice thereof to the supervisory institution without delay. 21. A financial brokerage firm must, at least once a year, inform the supervisory institution of the shareholders of the firm that have a qualifying holding in the firm and the amounts of the qualified holdings held by them. The information shall be submitted according to the data available on the day of the annual general meeting of shareholders, and where shares of the firm are admitted to trading on a regulated market – as a result of compliance with the requirements of legal acts applicable to companies whose securities are traded on a regulated market. 22. Where the influence exercised by the persons referred to in paragraph 1 of this Article poses a threat to the sound and transparent management of a financial brokerage firm, the supervisory institution must take measures to put an end to this situation. To this end, the supervisory institution shall have the right to issue compulsory instructions and impose the sanctions specified in this Law against the heads and other persons responsible for management of the firm. 23. All the shares held by a person who has acquired the qualifying holding in a financial brokerage firm or increased the qualifying holding exceeding the thresholds provided for in this Article without a decision of the supervisory institution not to oppose the proposed acquisition or prior to expiry of the time limit laid down on the basis of paragraph 7 of this Article (with the exception of the case when the supervisory institution takes a decision not to oppose the proposed acquisition prior to expiry thereof) shall be divested of the voting right at the general meeting of shareholders.  The voting right shall be acquired anew upon receipt of a decision of the supervisory institution not to oppose the proposed acquisition or where the supervisory institution fails to state opposition to the proposed acquisition within the assessment period. Article 11. Membership of an Authorised Investor Compensation System 1. An undertaking seeking to obtain the licence of a financial brokerage firm must insure the undertaking’s liabilities to investors in accordance with the procedure laid down by the Law of the Republic of Lithuania on Insurance of Deposits and Liabilities to Investors. 2. Provisions of paragraph 1 of this Article shall apply mutatis mutandis to licensed credit institutions. Article 12. Capital Requirements An undertaking seeking to obtain the licence of a financial brokerage firm must meet capital requirements. Capital requirements shall be set forth by the supervisory institution. Article 13. Organisational Requirements 1. A financial brokerage firm must establish adequate business organisation policies and procedures sufficient to ensure compliance of the financial brokerage firm, heads, employees and agents thereof with the requirements set forth by this Law and the rules governing personal transactions by the heads, employees and agents of the financial brokerage firm. 2. A financial brokerage firm must maintain and operate effective organisational and administrative arrangements designed to prevent conflicts of interest from adversely affecting the interests of its clients. 3. A financial brokerage firm must take appropriate steps to ensure continuity and regularity in the provision of investment services. To this end a financial brokerage firm must employ and use appropriate systems, resources and procedures. 4. A financial brokerage firm must, when relying on a third party for the performance of such functions of the firm which are critical for the continuous and satisfactory provision of investment services and the performance of investment activities on a continuous and satisfactory basis, take reasonable steps to avoid undue additional operational risk. Outsourcing of important functions of the firm may not undertaken where this could impair materially the quality of the internal control of the financial brokerage firm or the possibilities of the supervisory institution to exercise efficient supervision. 5. A financial brokerage firm must have sound administrative and accounting procedures, an internal control mechanism, effective procedures for risk assessment, effective control and safeguard arrangements for information processing systems. 6. A financial brokerage firm must ensure the storage of the documents of investment services and transactions undertaken to enable the supervisory institution to exercise efficient supervision, and in particular in the cases when it must be ascertained that the financial brokerage firm has complied with the duties as specified in this Law with respect to the firm’s clients and potential clients.   7. A financial brokerage firm must, when holding the financial instruments belonging to clients, make arrangements so as to safeguard clients’ ownership tights, especially in the event of the financial brokerage firm’s insolvency. A financial brokerage firm must keep separate accounts of its own and each client’s financial instruments.  A financial brokerage firm shall not have the right to use a client’s financial instruments except with the client’s express consent. 8. A financial brokerage firm must, when holding funds belonging to clients, make arrangements so as to safeguard the clients’ ownership rights and prevent the unlawful use of client funds. The prohibition to use a client’s funds shall not apply to licensed credit institutions. A financial brokerage firm must hold clients’ funds in a credit institution on grounds of trust separately from own funds. The clients’ funds transferred to a financial brokerage firm for the buying of financial instruments and the clients’ funds upon selling of a client’s financial instruments shall be the property of the client against which no execution may be levied according to debts of the financial brokerage firm.   9. When investment services are provided by a branch of a financial brokerage firm established in another Member State, the supervisory institution shall, without prejudice to the right of the supervisory institution of the home Member State of the firm to have direct access to the documents indicated in paragraph 6 of this Article, supervise compliance of the branch with the duties specified in paragraph 6 of this Article. 10. The requirements set forth in paragraph 6 of this Article shall be implemented in compliance with the rules specified by Regulation (EC) No 1287/2006. 11. The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions. Article 14. Brokers 1. One or more operations provided for financial brokers (hereinafter referred to as a “broker”) may be effected by a natural person holding the licence of a broker issued by the supervisory institution or another qualification recognised by the supervisory institution. 2. A person applying for the licence of a broker must pass the examinations organised by the supervisory institution. The supervisory institution shall have the right to set forth education and professional requirements for the candidates. The broker’s licence may not be issued to a person who is not of good repute. 3. The supervisory institution shall have the right to withdraw the broker’s licence where: 1) at the broker’s written request; 2) in the event of the broker’s decease; 3) where the broker did not commenced, during 12 months, the professional activities provided for in the rules for issuance of financial brokers’ licences as approved by the supervisory institution and related to the market in financial instruments or supervision thereof or where it no longer performs the activities for over 12 months; 4) if the facts that would have precluded the issuance of the licence transpire after the issuance of the licence; 5) where the conditions that preclude the broker from being considered as of good repute arise; 6) where the broker does not comply with this Law or the legal acts adopted by the supervisory institution. 4. Revocation of the broker’s licence shall allow to revoke the licence of a financial brokerage firm in which this broker works where the firm no longer satisfies the conditions according whereto the licence was issue to it. 5. The supervisory institution shall, on a periodical basis, but not more than once per year, have the right to organise re-evaluation of a broker where his clients’ complaints prove to be justified or verification data raise doubts regarding the appropriateness of his qualification. Based on the results of the re-evaluation, the number of the operations which may be effected by the broker may be reduced, and where it is established that the broker has completely lost his qualification or does not participate in the re-evaluation – his licence may be revoked. 6. The supervisory institution shall publish the fact of the issuance or revocation of the broker’s licence not later than within three working days. Article 15. Accounting, Audit and Appropriation of Profit of Financial Brokerage Firms 1. A financial brokerage firm must keep accounts and draw up financial statements in accordance with laws of the Republic of Lithuania, other legal acts and international accounting standards. 2. The procedure for performing the audit of financial brokerage firms, requirements for the auditor and audit firm, duties and responsibility of the auditor and the audit firm shall be regulated by the Law of the Rep …