1.Heads of the operator of a regulated market must be of sufficiently good repute and sufficient experienced as to ensure the sound and transparent management of the regulated market. The operator of a regulated market must inform the Securities Commission of the identity and subsequent changes of heads of the regulated market.
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2.The Securities Commission shall have the right to oppose candidatures of heads of the operator of a regulated market where there is a ground for believing that the proposed candidatures of the heads pose a threat to the transparent and sound management and operation of the regulated market.
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3.Heads of the operator of a licensed regulated market shall be deemed to comply with the requirements set forth in paragraph 1 of this Article until proven otherwise.
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Article 50Requirements for Persons Exercising Significant Influence over the Management of a Regulated Market
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1.The persons who exercise, directly or indirectly, significant influence over the management of a regulated market must be suitable for the post held and performance of the functions assigned to them taking into account their repute, education, knowledge, experience and other important features, also the possible influence over the management of the regulated market.
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2.The operator of a regulated market must:
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1)provide the Securities Commission with, and to make public, information regarding shareholders of the regulated market and the market operator, and information regarding other persons exercising significant influence over the management of the regulated market, including disclosure of the identity of the persons and scale of interests in exercising such an influence;
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2)inform the Securities Commission of and make public information about changes in the ownership of shareholders of the regulated market which gives rise to a change in the persons exercising significant influence over the management of the regulated market.
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3.The Securities Commission shall have the right to oppose proposed changes in the persons exercising significant influence over the management of a regulated market and/or the market operator where there is a ground for believing that such changes pose a threat to the transparent and sound management and operation of the regulated market.
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Article 51Acquisition of the Qualifying Holding of the Operator of a Regulated Market
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1.The qualifying holding of the operator of a regulated market shall be acquired in accordance with the same procedure as is laid down in this Law for acquisition of the qualifying holding of a financial brokerage firm.
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2.The Securities Commission shall not grant consent to acquire or increase the qualifying holding of the operator of a regulated market where:
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1)a person (or, the heads and controllers of a legal person) is not of sufficiently good repute;
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2)the person is an employee of another operator of a regulated market, the Securities Commission or the Central Securities Depository of Lithuania;
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3)the person has not supplied any information about its activities and financial position;
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4)the legal person has not supplied any information about its participants;
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5)the person has not submitted the documents evidencing that the funds to pay for the shares have been obtained legitimately;
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6)the person’s financial situation is not sound and stable;
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7)the granting of the consent would result in such a close link which would constitute a ground for the refusal to issue the licence as a regulated market;
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8)there are other grounds raising justified doubts that the persons intending to acquire or increase the qualifying holding of the regulated market will be capable of ensuring the sound and transparent management of the regulated market.
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Article 52Organisational Requirements Imposed on the Operator of a Regulated Market
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The operator of a regulated market must:
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1)have proper arrangements and procedures to identify and manage the potential adverse consequences for the operation of the regulated market or for its participants, also conflicts of interest between the regulated market, its shareholders or the market operator and the sound functioning of the regulated market, in particular where such conflicts of interest might prove prejudicial to the accomplishment of functions delegated to the regulated market;
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2)be adequately equipped to manage the risks typical for the functioning of the regulated market, implement arrangements and systems to identify risks to operation, and put in place effective arrangements in order to reduce the potential risk;
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3)have arrangements for the smooth management of the technical operations of the system, including the establishment of effective contingency arrangements to cope with system disruptions;
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4)have transparent and non-discretionary rules and procedures that provide for fair and continuous trading and establish objective criteria for the effective execution of orders;
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5)have effective arrangements or required agreements to facilitate an the efficient and timely finalisation of the transactions executed under the systems of the regulated market;
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6)have available sufficient financial resources ensuring the proper functioning of the regulated market, having regard to the nature and extent of the transactions concluded on the regulated market, also the nature and degree of the risks typical for the functioning of the regulated market.
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SECTION TWO TRADING IN A REGULATED MARKET. TRANSPARENCY REQUIREMENTS
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Article 53Rules of a Regulated Market and Ensuring of Compliance Therewith and Other Duties Specified in Legal Acts
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1.A regulated market must have in place the explicit, transparent and non-discriminatory rules based on objective criteria, which shall be drawn up and approved by the operator of the regulated market. Prior to approving such rules, the operator of the regulated market must co-ordinate them with the Securities Commission. The rules of the regulated market may be contained in a single document or several separate documents.
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2.A regulated market must adopt and implement effective arrangements and procedures to monitor on a continuous basis the compliance of members of the regulated market with rules of the regulated market. The regulated market must monitor the transactions undertaken by its members through a trading facility of the regulated market in order to identify possible breaches of the rules of the regulated market, disorderly trading conditions or conduct that may involve market abuse.
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3.The operator of a regulated market must report significant breaches of rules of the regulated market, disorderly trading conditions or conduct that may involve market abuse to the Securities Commission. Moreover, the operator of the regulated market must supply the entire available information relating to possible breaches of rules of the regulated market without delay to the Securities Commission, also co-operate in investigating and prosecuting the cases of market abuse.
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Article 54Admission of Financial Instruments to Trading on a Regulated Market
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1.Financial instruments may be admitted to trading on a regulated market according to rules regarding the admission of the financial instruments to trading on the regulated market.
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2.These rules must ensure that the transferable securities admitted to trading on a regulated market are not subject to transfer restrictions and determine:
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1)the conditions of, procedure for and time limits of admission of the financial instruments to trading on the regulated market and removal therefrom;
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2)the amounts of a fee for admission of the financial instruments to trading on the regulated market and of the annual quoting fee;
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3.An issuer whose financial instruments are admitted to trading on a regulated market must, in accordance with the procedure and within the time limits laid down by the operator of the regulated market, supply thereto the information provided for in this Law and other laws.
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4.A regulated market must establish and maintain effective arrangements to verify that issuers of transferable securities that are admitted to trading on the regulated market comply with the requirements for initial, ongoing and ad hoc disclosure of information as set forth by the Law on Securities.
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5.A regulated market must have in place arrangements which facilitate members of the regulated market in obtaining access to information which has been made public according to requirements of legal acts of the European Union.
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6.A regulated market must have arrangements to review regularly the compliance of a financial instrument admitted to trading on the regulated market with the admission requirements of a specific type of financial instruments.
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7.The transferable securities that have been admitted to trading on a regulated market can additionally be admitted to trading on other regulated markets, regardless of whether the issuer of these securities has granted consent in respect of such admission, provided that the requirements for admission of transferable securities to trading on a regulated market as set forth in other legal acts are complied with. The regulated market must inform the issuer of securities that it securities are traded on this regulated market. The issuer shall not be subject to an obligation to provide information indicated in paragraphs 3 and 4 of this Article directly to a regulated market where securities were admitted to trading on this regulated market without the issuer’s consent.
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8.The requirements set forth in this Article shall be implemented in compliance with the rules specified by Commission Regulation (EC) No 1287/2006 of 10 August 2006.
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Article 55Suspension and Removal of Financial Instruments from Trading
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1.Without prejudice to the right of the Securities Commission as specified in subparagraph 11 of paragraph 1 of Article 72 of this Law to demand suspension or removal of a financial instrument from trading, the operator of a regulated market shall have the right to suspend or remove the financial instrument from trading on the regulated market operated by it where the financial instrument no longer complies with the requirements set forth in the rules of the regulated market, unless suspension or removal from trading could cause significant damage to the investors’ interests or orderly functioning of the market.
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2.The operator of a regulated market who suspends or removes a financial instrument from trading on that regulated market must make public this decision and communicate the information relating to this decision to the Securities Commission, which must inform thereof supervisory institutions of other Member States.
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3.Paragraph 2 of this Article shall not prevent the operator of a regulated market from directly informing operators of other regulated market about suspension or removal of a financial instrument from trading.
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4.Where the Securities Commission demands the suspension or removal of a financial instrument from trading on one or several regulated markets, such a decision of the Securities Commission must immediately be made public and supervisory institutions of other Member States must be informed.
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5.On receipt of a communication of the supervisory institution of another Member State about suspension or removal of a financial instrument from trading on a regulated market of that Member State, the Securities Commission shall take a decision on suspension or removal of this financial instrument from trading on a regulated market operating in the Republic of Lithuania and a multilateral trading facility supervised by the Securities Commission, unless this could cause significant damage to the investors’ interests or orderly functioning of the market.
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Article 56Membership of a Regulated Market
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1.Membership of and access to a regulated market shall be governed by rules.
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2.These rules must specify:
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1)requirements for members of the regulated market;
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2)a procedure for and conditions of granting, suspension of the right of participation in trading on a regulated market, exclusion from members thereof;
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3)the duties of the members of the regulated market arising from the constitution and administration of the regulated market, transactions on the market; professional standards imposed on the staff of the financial brokerage firms and credit institutions that are operating on that market; the requirements established for other members of the regulated market as indicated in paragraph 3 of this Article; the clearing and settlement of transactions concluded on that regulated market;
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4)liability for non-fulfilment of the duties;
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5)rights of members of the regulated market;
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6)the amount of the annual contribution of a member.
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3.Financial brokerage firms, credit institutions and other persons shall have the right to become members of a regulated market, provided they:
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1)are fit and proper;
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2)have a sufficient level of trading ability and competence;
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3)have adequate organisational arrangements;
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4)have sufficient resources to ensure the performance of their functions, taking into account the financial arrangements and procedures that the regulated market has established in order to guarantee the adequate settlement of the transactions entered into;
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5)have the right provide investment services in the Republic of Lithuania as provided for in subparagraph 2 or 3 of paragraph 13 of Article 3 of this Law.
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4.Members of a regulated market are not obliged to apply to each other the duties specified in Articles 22, 24 and 25 of this Law with respect to the transactions entered into on that regulated market. However, the members of the regulated market must apply the requirements set forth in Articles 22, 24 and 25 of this Law with respect to their clients when they, acting on behalf of their clients, execute their orders on that regulated market.
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5.The rules on membership of and access to a regulated market must provide for an opportunity for financial brokerage firms and credit institutions to become direct or remote members of the regulated market.
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6.A regulated market operating in another Member State shall have the right to provide in the Republic of Lithuania arrangements so as to facilitate remote membership of that regulated market of the entities established in the Republic of Lithuania and/or trading on that regulated market.
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7.The right specified in paragraph 6 of this Article may be exercised after the supervisory institution of another Member State communicates to the Securities Commission information about the intention of the regulated market operating in that Member State to provide appropriate arrangements in the Republic of Lithuania.
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8.A regulated market operating in the Republic of Lithuania shall have the right, without prejudice to requirements of legal acts of another Member State, to provide arrangements so as to facilitate membership of the entities established in that Member State of and/or trading on the regulated market.
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9.In order to exercise the right provided for in paragraph 8 of this Article, a regulated market must communicate to the Securities Commission the Member State in which it intends to provide the arrangements indicated in paragraph 8 of this Article. On receipt of such communication, the Securities Commission shall, not later than within one month, forward the information supplied in the communication to the supervisory institution of a Member State in which the appropriate arrangements are to be provided. The Securities Commission shall, on the request of the supervisory institution of another Member State, communicate to it the identity of members of a regulated market.
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10.The operator of a regulated market shall have the right to obtain information about the financial and economic activities of members of the regulated market, verify compliance of the requirements set forth by the operator of the regulated market by the members of the regulated market, and impose the sanctions provided for in rules of the regulated market for non-compliance with the requirements set forth.
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11.The operator of a regulated market operating in the Republic of Lithuania must, in accordance with the procedure laid down by the Securities Commission, communicate the identity of members of the regulated market operated by it.
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Article 57Trading in Financial Instruments on a Regulated Market
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1.Trading in financial instruments on a regulated market shall be governed by rules.
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2.These rules must ensure that trading in financial instruments on a regulated market is conducted a fair, orderly and efficient manner, also specify:
\n
1)a procedure for trading in financial instruments on the regulated market;
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2)the time of trading on the regulated market;
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3)a procedure for setting the price of financial instruments and/or derivatives;
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4)terms and conditions of settlement;
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5)the types of the transactions entered into on the regulated market;
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6)a procedure for making public the information about prices and scope of trading;
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7)the ways of settlement of the disputes arising from the transactions entered into on the regulated market;
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8)the amounts of fees for transactions on the regulated market.
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Article 58Pre-Trade Transparency Requirements for Regulated Markets
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1.A regulated market must make public about the offers made thereon to enter into transactions in the shares admitted to trading on that regulated market. A regulated market must on a continuous basis and throughout the trading hours on reasonable commercial terms, indicate the total number of orders and related shares according to each price level specifying five best bid and offer price levels.
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2.A regulated market shall have the right to give access, on reasonable commercial terms and on a non-discriminatory basis, to the arrangements the regulated market employs for making public the information indicated in paragraph 1 of this Article to the financial brokerage firms which are obliged to publish their quotes in accordance with the procedure laid down in Article 33 of this Law.
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3.Taking into account the model of a regulated market and/or type and size of submitted orders, the Securities Commission shall have the right to waive for the duty the regulated market to make public the information indicated in paragraph 1 of this Article. The Securities Commission shall have the right to waive from the duty specified in paragraph 1 of this Article also in respect of orders that are large in scale compared with normal market size for that share or that type of shares.
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4.The requirements set forth in this Article shall be implemented in compliance with the rules specified by Commission Regulation (EC) No 1287/2006 of 10 August 2006.
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Article 59Post-Trade Transparency Requirements for Regulated Markets
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1.A regulated market must make public the price, volume and time of the transactions executed in respect of shares admitted to trading on that regulated market. Details of the concluded transactions must be made public on a reasonable commercial basis and as close to real-time as possible.
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2.A regulated market shall have the right to give access, on reasonable commercial terms and on a non-discriminatory basis, to the arrangements the regulated market employs for making public the information indicated in paragraph 1 of this Article to financial brokerage firms which are obliged to publish the quotes committing to enter into a transaction in accordance with the procedure laid down in Article 33 of this Law.
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3.The Securities Commission shall have the right to allow to defer publication of the information indicated in paragraph 1 of this Article based on the type and size of the transactions entered into on a regulated market. The Securities Commission shall have the right to defer publication of information at least in respect of transactions that are large in scale compared with the normal market size for a specific share or type of shares. A regulated market must obtain the Securities Commission’s prior approval of proposed arrangements for deferred publication of information, and these arrangements must be disclosed in advance to market participants and other investors.
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4.The requirements set forth in this Article shall be implemented in compliance with the rules specified by Commission Regulation (EC) No 1287/2006 of 10 August 2006.
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Article 60Central Counterparty and Clearing and Settlement System Arrangements of a Regulated Market
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1.A regulated market shall have the right to enter into arrangements with a central counterparty or clearing house and a settlement system operating in another Member State with a view to providing for the clearing and settlement of some or all transactions concluded by market participants under the trading system of the regulated market.
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2.The Securities Commission may not oppose the use, by a regulated market operating in the Republic of Lithuania, of central counterparty, clearing houses and/or settlement systems operating in another Member State except where this is demonstrably necessary in order to maintain the orderly functioning of the regulated market and taking into account provisions of paragraph 2 of Article 42 of this Law.
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3.In order to avoid undue duplication of supervision, the Securities Commission shall take into account the supervision of clearing and settlement systems exercised by the central banks of Member States or by other supervisory institutions exercising supervision of clearing and settlement systems.
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Article 61List of Regulated Markets
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The Securities Commission shall draw up a list of the regulated markets operating in the Republic of Lithuania and forward it to the other Member States and the European Commission. The Securities Commission shall communicate all changes to this list to the other Member States and the European Commission. A list of all regulated markets of the European Union shall be drawn up, updated and, at least one a year, published by the European Commission in the Official Journal of the European Union. The list of regulated markets of the European Union shall also be published at the website of the European Commission, which shall be updated each time a Member State communicates changes to its list of regulated markets.
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CHAPTER IV
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PROHIBITION OF ABUSE OF A MARKET IN FINANCIAL INSTRUMENTS
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Article 62Prohibition of the Use of Inside Information when Trading in Financial Instruments
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1.The persons who possess inside information by virtue of being employees of the issuer’s administration, by virtue of membership of the management or supervisory bodies or by virtue of having access to such information through the exercise of their employment, profession, duties or by virtue of being a shareholder of the issuer or by virtue of their criminal activities shall be prohibited from trying to enter or to enter for their own account or for the account of a third party, either directly or indirectly, into transactions in the financial instruments to which the information relates, until it is made public. Where the person referred to is a legal person, the appropriate prohibition shall also apply to the natural persons who take part in the decisions to enter into transactions for the account of the legal person concerned.
\n
2.The persons indicated in paragraph 1 of this Article shall also be prohibited:
\n
1)from directly or indirectly forwarding inside information to another person, unless such disclosure is made in the normal course of the exercise of his employment, profession or duties;
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2)from recommending, inducing or offering another person, on the basis of inside information, to enter into a transaction in the financial instruments to which the inside information relates.
\n
3.The prohibitions specified in this Article shall also apply to any person who possesses inside information, while that person knows, or ought to have known, that it is inside information. The prohibitions specified in paragraph 1 of this Article shall not apply to carrying out of the transactions entered into prior to familiarisation with inside information.
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4.Heads of the issuer and the persons closely linked thereto a list whereof shall be compiled by the Securities Commission must, in accordance with the procedure and within the time limits laid down by it, notify of the transactions which they entered into on own account concerning the securities of their issuer and the derivatives or other financial instruments related to those securities. These notices must indicate the type, number of transactions, dates, the type and number of the financial instruments transferred or acquired, the amount of the transactions, form of settlement and other data required by the Securities Commission. The information indicated in this paragraph shall be published in accordance with the procedure laid down by the Securities Commission.
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5.An issuer or a person acting on behalf of or for the account of the issuer who discloses inside information to any third party in the normal exercise of his employment, profession or duties must simultaneously (in the case of non-intentional disclosure – immediately after the disclosure) make effective public disclosure of the entire information. This requirement shall not apply if the person receiving the information owes a duty of confidentiality based on regulations, on articles of association of an undertaking or on a contract. Issuers, or persons acting on behalf of the issuers or for their account, must, in accordance with the procedure laid down by the Securities Commission, transmit to it data (including personal numbers) of the persons having the right to familiarise with inside information under contracts of employment or otherwise and of the persons associated with an issuer.
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6.When mediating in the entering into a transaction and having reasonable suspicions that the transaction would be effected in violation of the prohibitions specified in paragraph 1, 2 or 3 of this Article or Article 63, a financial brokerage firm or a credit institution must forthwith give a notice thereof to the Securities Commission.
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7.The prohibitions provided for in this Article and Article 63 shall not apply to the operations effected by the Republic of Lithuania, another Member State of the European Union, the Bank of Lithuania, the European System of Central Banks or another institution performing similar functions or a person acting under their authorisation in the field of monetary policy, regulation of the currency exchange rate, state debt and reserve management policy.
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8.The prohibitions provided for in this Article and Article 63 shall not apply to the purchase of own shares or stabilisation of prices, where it is carried out in accordance with the procedure laid down by legal acts.
\n
9.The prohibitions and requirements as provided for in this Article and Article 63 in respect of the financial instruments which are traded on the regulated market situated or operating in the Republic of Lithuania (or for which a request for admission to trading to such markets has been made) shall apply both to the actions carried out on the territory of the Republic of Lithuania and abroad. The prohibitions and requirements as provided for in this Article and Article 63 in respect of the financial instruments which are traded on the regulated market situated or operating in the Republic of Lithuania (or for which a request for admission to trading to such markets has been made) shall apply to the actions carried out on the territory of the Republic of Lithuania, even if an appropriate transaction has been entered into outside such a market.
\n
10.The prohibitions as provided for in this Article shall also apply to the financial instruments traded in the markets provided for in paragraph 9 of this Article where the value of these measures is related to the financial instruments provided for in paragraph 9.
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Article 63Prohibition of Market Manipulation
\n
1.All persons shall be prohibited from:
\n
1)entering into transactions or issuing orders to purchase or sell which give, or are likely to give, false or misleading signals as to the supply of, demand for or price of financial instruments or which secure, by a person, or persons acting in collaboration, the price of one or several financial instruments at an abnormal or artificial level. The prohibition indicated in this subparagraph shall not apply where a person who has entered into a transaction or issued the order establishes that he has a legal ground to conduct himself in such a manner or that appropriate transaction or orders conform to accepted practices on the regulated market as approved by the supervisory institution;
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2)entering into transactions or issuing orders which employ fictitious devices or any other form of deception or contrivance;
\n
3)disseminating information through the media, including the Internet, or by other means, which gives, or is likely to give, false or misleading signals as to financial instruments, including dissemination of rumours and false or misleading news, where the person who made the dissemination knew, or ought to have known, that the information was false or misleading. Where such an information is disclosed by journalists when they act in their professional capacity, such an act must be assessed taking into account the rules governing their profession, unless they derive, directly or indirectly, gain personal advantage or profits from the disclosure of such information.
\n
2.The actions prohibited in paragraph 1 of this Article shall take the following forms:
\n
1)conduct by a person, or persons acting in collaboration, to secure a dominant position over the supply of or demand for financial instruments which has the effect of fixing, directly or indirectly, the purchase or sale price or creating other unfair trading conditions;
\n
2)the buying or selling of financial instruments at the close of the market with the effect of misleading investors acting on the basis of closing prices;
\n
3)taking advantage of occasional or regular access to the media by voicing own opinion about financial instruments (or indirectly about their issuer) where that person has previously entered into a transaction or issued an order concerning those financial instruments, due to which he may gain profit from the impact of his opinion voiced on the price, without having simultaneously disclosed information about such a conflict of interest in a proper and effective way;
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4)other forms a typical list whereof shall be specified by the Securities Commission.
\n
3.The persons who produce or disseminate research intended for distribution channels or for the public and concerning financial instruments or issuers thereof or other information recommending or suggesting investment strategy must ensure that such information is fairly presented and disclose their interests, indicate conflicts of interest concerning the financial instruments to which that information relates.
\n
4.In order to ensure compliance with the requirements set forth in this Article and Article 62 of this Law, the Securities Commission shall undertake the measures allowing to ensure that the public is correctly informed (including public disclosure of any known information).
\n
5.Disseminators of public information must disseminate the information liable to have a significant effect on a market in financial instruments in compliance with the principles of fairness and transparency.
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CHAPTER V
\n
ACCOUNTING OF FINANCIAL INSTRUMENTS
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Article 64Basic Principles of Accounting of Financial Instruments
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1.Financial instruments shall be recorded by entries in the personal accounts of financial instruments managed in accordance with the procedure laid down by the Rules on Accounting of Financial Instruments and Their Circulation. These rules shall be prepared by the Central Depository and approved by the Securities Commission. Personal accounts shall be opened in the name of owners of the financial instruments, with the exception of the exceptions specified in paragraphs 2, 3, 4 and 5 of this Article.
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2.The accounts of pledged financial instruments may be opened in the name of the holder of the pledge also indicating the owner of the financial instruments. The entry of pledged financial instruments in an account opened in the name of the holder of the pledge shall be considered as transfer thereof to the holder of the pledge.
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3.Accounts of customers of the managers of accounts registered in foreign states may be opened in the name of the managers of the accounts indicating that they act as managers of accounts and an account is opened for the benefit of the customers. Managers of foreign accounts in the name whereof such accounts are opened must, on demand of the Securities Commission or the Central Securities Depository of Lithuania, indicate the clients for the benefit whereof financial instruments have been acquired.
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4.The financial instruments pledged to the European Central Bank or the central bank of another Member State may be recorded by entries in the accounts opened in the name of the Bank of Lithuania in the Central Depository indicating the holder of the pledge and the owner of the financial instruments. Entries in these accounts shall be made according to instructions of the Bank of Lithuania.
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5.The financial instruments transferred into the ownership of the European Central Bank or the central bank of another Member State according to repurchase or other transactions may be recorded by entries in the accounts opened in the name of the Bank of Lithuania in the Central Depository indicating the European Central Bank or the central bank of the Member State as the holder of the financial instruments. Entries in these accounts shall be made according to instructions of the Bank of Lithuania.
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Article 65Management of Accounts of Financial Instruments
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1.Financial brokerage firms, licensed credit institutions and the Central Depository shall have the right to open personal accounts of financial instruments.
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2.When opening an account of the financial instruments issued by it, amending or supplementing entries, the issuer must submit documents within the time limits and in accordance with the procedure laid down by the Rules on Accounting of Financial Instruments and Their Circulation.
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3.Prior to commencing the initial circulation of financial instruments, the issuer must conclude a contract with the manager of accounts on the management of personal accounts of financial instruments. The Central Depository shall communicate the managers of accounts authorised by issuers to the Securities Commission in accordance with the procedure laid down by it. A manager of accounts authorised by an issuer must open personal accounts of the financial instruments issued by the issuer for each owner who has not stated in writing to the issuer that it transfers the management of an account to another manager of accounts.
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4.An issuer shall have the right to require at any time that managers of accounts submit lists of owners of the registered financial instruments issued by it and the persons in the name whereof accounts of the financial instruments have been opened. This right shall be exercised by submitting an enquiry to the Central Depository, which shall, at the choice of the issuer, submit a list of managers of accounts or a list of the owners of the financial instruments. Prior to each annual general meeting of shareholders, a list of managers of accounts shall be submitted free of charge at the request of the issuer. Managers of accounts shall submit lists of owners of financial instruments and the persons in the name whereof accounts of financial instruments have been opened in the accounting of the managers of the accounts to the Central Depository in accordance with the procedure laid down by it.
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5.Accounts of financial instruments may be managed and content thereof may be altered in the name of a manager of accounts only by the employees thereof authorised in writing. Each manager of accounts must submit a list of such persons to the Central Depository. The manager of accounts must, on a continuous basis, ensure the right of the owner to dispose of financial instruments.
\n
6.Heads and employees of a manager of accounts must ensure the confidentiality of the information which they obtained while managing accounts, with the exception of the cases when they are subject to the duty to supply such information under laws.
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Article 66Communications about the Status of an Account
\n
A manager of account must communicate to the owner of financial instruments any change in his account in accordance with the procedure, in a manner and at intervals specified in a contract with the owner of the financial instruments. After the close of a calendar year, managers of accounts must, in accordance with the procedure and in a manner specified in the contract, present a report about the status of the account of the financial instruments at the end of the last day of the past year.
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Article 67Central Depository
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1.The Central Depository is a public limited liability company acting according to this Law and its regulations.
\n
2.Only the Republic of Lithuania, the Bank of Lithuania or the credit institutions, financial brokerage firms, insurance undertakings, investment companies with variable capital and investment fund management companies, pension fund management companies, operators of a regulated market, central depositories and central counterparties licensed in the Republic of Lithuania, another Member State or a state which has commenced official negotiations on membership in the European Union may be shareholders of the Central Depository. The Central Depository may issue only ordinary registered shares.
\n
3.Members of the supervisory board of the Central Depository, members of the board or the head must be of sufficiently good repute, possess the qualification or work experience at financial or equivalent institutions as specified by the Securities Commission.
\n
Article 68Rights and Duties of the Central Depository
\n
1.The Central Depository must:
\n
1)draft and submit to the Securities Commission for approval the Rules on Accounting of Financial Instruments and Their Circulation;
\n
2)draft and approve the documents of accounting of financial instruments and their circulation specifying in detail the separate procedures provided for in the rules, also other documents regulating the accounting of financial instruments and their circulation;
\n
3)open accounts of managers of accounts and personal accounts of financial instruments and manage them;
\n
4)ensure a timely transfer of financial instruments from an account of financial instruments of one manager of accounts to an account of financial instruments of another manager of accounts when executing transactions in the financial instruments;
\n
5)control the correspondence of the number of the financial instruments of each issue put into circulation to the number of these financial instruments actually in circulation;
\n
6)prepare and introduce the measures ensuring the uniformity and security of the system of accounting of financial instruments;
\n
7)control compliance, by managers of accounts, with provisions of the rules on accounting of financial instruments and other documents regulating the accounting of the financial instruments and their circulation;
\n
8)accumulate, process and disseminate information about the accounting of financial instruments, train and advise specialists of accounting of financial instruments;
\n
9)issue to managers of accounts extracts about the status of their account of financial instruments;
\n
10)ensure the protection of confidential information and exercise internal control;
\n
11)provide proposals to the Securities Commission on the issues of accounting of financial instruments and submit thereto a report on improvement of the accounting and the main problems encountered during a year;
\n
12)supply free of charge to the Bank of Lithuania and the Securities Commission the information required for performance of functions thereof.
\n
2.The Central Depository shall have the right:
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1)to handle clearing and monetary settlements for transactions in financial instruments;
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2)to take over the management of accounting of financial instruments from the managers of accounts against which bankruptcy proceedings have been instituted;
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3)to provide to issuers and managers of accounts other services related to the accounting of financial instruments and settlements.
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3.A representative of the Securities Commission shall have the right to participate in meetings of the management bodies of the Central Depository with the right of deliberative vote and to obtain the material presented to participants of a meeting.
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4.Documents of the Central Depository on the issues of financial instruments and their circulation, ensuring of its security requirements shall be binding on all managers of accounts.
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5.The amounts of entrance and annual fees of managers of accounts, quarterly account management fees and operation fees for accounting entries as specified by the Central Depository and applied generally and in a standard manner must be co-ordinated with the Securities Commission.
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CHAPTER VI
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SUPERVISION OF MARKETS IN FINANCIAL INSTRUMENTS SECTION ONE LEGAL STATUS OF THE SECURITIES COMMISSION
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Article 69Securities Commission – Supervisory Institution of Markets in Financial Instruments
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1.Markets in financial instruments shall be regulated and supervised by the Securities Commission of the Republic of Lithuania (hereinafter referred to as the “Securities Commission”).
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2.The Securities Commission shall be a legal entity having a seal with the Lithuanian state emblem and its name inscribed therein.
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3.The Securities Commission shall be set up and liquidated by the Seimas on the recommendation of the Government.
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Article 70Composition of and Procedure for Forming the Securities Commission
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1.The Securities Commission shall consist of a chairman and 4 members. They shall be appointed for a period of five years by the Seimas on the recommendation of the President of the Republic.
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2.The same person may be elected a member of the Securities Commission only for two successive terms of office. The chairman of the Securities Commission shall appoint his deputies from among the members. The chairman and members of the Securities Commission must be citizens of the Republic of Lithuania.
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3.On expiry of the term of office, members of the Securities Commission shall hold office until new members are appointed.
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4.Members of the Securities Commission shall be dismissed before the expiry of the term of office only in the following cases:
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1)at their own request;
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2)if they lose citizenship of the Republic of Lithuania;
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3)by reason of their health condition (where they are incapable of work for at least 3 successive months);
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4)upon the entry into force of a court judgement imposing a punishment for a deliberate crime, a criminal act against the civil service and public interests, disclosure of a state secret, loss of a state secret, disclosure of an official secret or a corruption criminal act as defined in the Law on Corruption Prevention;
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5)if they commit a grave infringement of provisions of this Law regarding restrictions on trading in financial instruments as imposed on members and employees of the administration of the Securities Commission.
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5.Dismissal of a member of the Securities Commission before the expiry of the term of office shall be proposed to the Seimas by the President of the Republic. The Seimas shall appoint other persons to the office of the members of the Securities Commission dismissed before the expiry of the term of office on the recommendation of the President of the Republic for a period of five years.
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6.A member of the Securities Commission shall be prohibited from performing the activities incompatible with the civil service.
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7.Remuneration of members of the Securities Commission shall be regulated by the Law on the Remuneration of State Politicians, Judges and State Officials; The Labour Code shall apply to members of the Securities Commission to the extent their status is not regulated by other laws. The chairman and members of the Securities Commission may be provided with incentives by the payment of lump sums not exceeding the amount of funds allocated for remuneration. The chairman and members of the Securities Commission shall be provided with incentives in the following cases:
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1)for excellent performance during a calendar year;
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2)upon performance of one-time tasks of particular importance;
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3)on the occasion of the public holidays specified by a law;
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4)on the occasion of personal and professional anniversaries.
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8.A decision on provision of a member of the Securities Commission with incentives shall be taken by the chairman of the Securities Commission. A decision on provision of the chairman of the Securities Commission with incentives shall be taken collegially by members of the Securities Commission. In each case indicated in paragraph 7 of this Article, a lump sum may be paid not more than once per year and may not exceed 100% of the basic salary.
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Article 71Tasks and Functions of the Securities Commission
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1.The Securities Commission shall have the following tasks:
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1)to supervise observance of the rules of fair trading in respect of circulation of financial instruments;
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2)to undertake the measures ensuring an efficient functioning of markets in financial instruments and protection of investors;
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3)to submit proposals regarding formation of the state economic policy promoting development of markets in financial instruments;
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4)to disseminate information about the principles of functioning of markets in financial instruments;
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5)to undertake other measures for implementation of this Law and other legal acts related to a market in financial instruments.
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2.In implementing the tasks specified in paragraph 1 of this Article, the Securities Commission shall perform the following functions:
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1)draft, approve, amend and declare as void the rules regulating the licensing and activities of regulated markets, financial brokerage firms, financial adviser companies and brokers, circulation of financial instruments;
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2)provide explanations and recommendations on issues of circulation of financial instruments;
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3)issue or revoke licences of regulated markets, financial brokerage firms, brokers;
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4)monitor, analyse, inspect and otherwise supervise the activities of financial brokerage firms, regulated markets and members thereof, the Central Depository and managers of accounts;
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5)impose the sanctions specified in this Law and other laws of the Republic of Lithuania on the persons that have violated this Law and resolutions of the Securities Commission;
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6)print or participate in the printing of publications about the functioning and regulation of markets in financial instruments;
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7)organise examinations and performance appraisals to assess the knowledge and competence of financial brokers;
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8)co-operate with associations of financial brokerage firms;
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9)conclude agreements with appropriate institutions of other states on co-operation and exchange of information;
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10)co-operate and exchange required information with appropriate institutions of other states;
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11)co-operate and exchange information with the institutions exercising supervision of credit institutions, insurance undertakings and mediators of insurance undertakings, also other institutions exercising supervision of financial institutions;
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12)delegate its representative to the Commission for Co-ordination of Regulation and Supervision of Financial Institutions and Insurance Companies;
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13)perform other functions specified by this Law and other laws of the Republic of Lithuania.
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3.The Securities Commission must draft and submit to the public and to the Seimas an annual work report. It must describe the development of markets in financial instruments and the main events of the reporting period.
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4.Acts or omissions committed by the Securities Commission may be appealed against in accordance with the procedure laid down in the Law on Administrative Proceedings.
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Article 72Rights of the Securities Commission in Implementing the Functions Assigned Thereto
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1.For the purpose of implementing the functions assigned thereto, the Securities Commission shall have the right:
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1)to receive free of charge documents, copies thereof, other data and information from the entities subject to inspection, also state institutions and registers or the entities performing analogous functions;
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2)to demand any other available information from persons and if necessary to obtain additional information – to summon such persons and obtain their explanations;
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3)to carry out investigations and on-the-spot verifications, invite auditors and experts during them;
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4)to employ specialists, experts in appropriate fields (auditors, accountants, lawyers, information technology specialists, etc.) for them to present their opinion, conclusion, assessment or carry out the actions requiring appropriate qualification, knowledge or experience;
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5)to obtain existing telephone and existing data traffic records;
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6)to require the cessation of any practice that is contrary to the provisions of this Law or the legal acts specifying it;
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7)to refer to court for the freezing or the sequestration of assets;
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8)to require temporary termination of professional activity;
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9)to require auditors of financial brokerage firms and operators of regulated markets to provide information about the audit of these entities;
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10)to adopt other measures to ensure that financial brokerage firms and regulated markets continue to comply with the requirements set forth in this Law and other legal acts;
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11)to require the suspension of trading in or the removal from trading of a specific financial instrument on a regulated market or under other trading arrangements;
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12)to forward the material collected during investigation and another information to law enforcement institutions;
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13)to refer to court for defence of a public interest in representing the interests of investors;
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14)to make public the information required for the protection of interests of a market or participants thereof.
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2.The Securities Commission shall exercise the rights provided for in paragraph 1 of this Article:
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1)directly;
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2)in collaboration with other supervisory institutions;
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3)by application to other persons for the carrying out of certain actions;
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4)by application to law enforcement institutions.
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3.Provisions of this Article shall apply mutatis mutandis to licensed credit institutions.
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Article 73Organisation of Work of the Securities Commission
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1.The work of the Securities Commission shall be headed by the chairman and, in the absence thereof, by the deputy chairman.
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2.The chairman of the Securities Commission shall:
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1)ensure that meetings of the Securities Commission are convened on a regular basis, determine the issues to be considered at each meeting, submit reports on the activity of the Securities Commission, give assignments to members of the Securities Commission between the meetings and check their execution;
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2)sign decisions (resolutions) of the Securities Commission;
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3)approve the structure and lists of staff of the administration not exceeding the largest allowable number of positions of civil servants and employees as specified by the Seimas and the annual work remuneration fund;
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4)be in charge of the administration, unless he authorises an employee of the administration to be in charge thereof.
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3.Each member of the Securities Commission shall be responsible for the field of activities assigned to him and shall participate in the consideration and taking of decisions (resolutions) on all issues within the sphere of competence of the Securities Commission. Where an issue considered during a meeting of the Securities Commission is related to the private interests of a member of thereof resulting in a conflict of public and private interest, the member concerned shall, prior to the consideration, give a written notice thereof and shall not have the right to participate in the consideration and taking of a decision (resolution).
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4.The Securities Commission shall hold open and closed meetings. The issues related to infringements of this Law and other legal acts as committed by market participants or confidential information shall be considered during closed meetings. Other issues shall be considered during open meetings.
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5.A meeting of the Securities Commission may take place where not less than three members of the Securities Commission participate in it.
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6.A decision of the Securities Commission shall be taken by a simple majority of votes of participants of a meeting, and a resolution on the adoption, amendment or annulment of legal acts shall be deemed adopted if not less than three members vote for it.
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7.Members of the Securities Commission shall have equal rights of the casting vote. A member of the Securities Commission shall not have the right to refuse to vote or restrain from voting. In the event of a tie, the chairman of a meeting shall have the casting vote. Decisions (resolutions) of the Securities Commission shall be taken recorded vote, where this is required by at least one member of the Securities Commission. Decisions (resolutions) of the Securities Commission and reasons therefor shall be made public. The sanctions imposed by the Securities Commission shall be made public not later than within three workings days, with the exception of the cases when such publication would incur damage to a market or would incur disproportionate damage to the persons concerned.
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Article 74Delegation of Powers
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The Securities Commission make take a decision on authorisation of a member of the Securities Commission or an employee of the administration to perform any of the functions thereof, with the exception of the adoption, amendment or annulment of legal acts, issuance of licences or revocation thereof and imposition of the sanctions provided for in this Law.
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Article 75Restrictions on Trading in Financial Instruments for Members and Employees of the Administration of the Securities Commission
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1.Seeking to avoid conflicts of interest, members and employees of the administration of the Securities Commission as well as spouses and cohabitants thereof shall be prohibited from transferring the financial instruments traded in a regulated market operating in the Republic of Lithuania earlier than after the lapse of six months from acquisition thereof.
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2.The prohibition provided for in paragraph 1 of this Article shall not apply to:
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1)inherited financial instruments;
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2)the financial instruments subject to an official offer;
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3)the financial instruments transferred for management to a portfolio manager;
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4)the financial instruments of the Government of the Republic of Lithuania or the Bank of Lithuania.
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Article 76Duty of Confidentiality of Members and Employees of the Administration of the Securities Commission and Other Persons
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1.Current and former members and employees of the administration of the Securities Commission shall not have the right to make use of confidential information received in the course of their duties at the Securities Commission or to divulge it to other persons. This prohibition shall also apply to auditors, experts and other persons to whom tasks have been delegated by the Securities Commission 2. The following shall not be considered as disclosure of confidential information as prohibited in paragraph 1 of this Article:
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1)supply of information about financial brokerage firms and licensed credit institutions in aggregate form such that an individual person cannot be identified;
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2)forwarding of information for investigation of a criminal case or for hearing thereof in accordance with the procedure laid down by law;
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3)forwarding of information in civil proceedings in the case of bankruptcy or compulsory winding up of a financial brokerage firm or credit institution;
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4)forwarding of information in accordance with the procedure laid down in Article 82 of this Law.
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Article 77Financing of the Securities Commission
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The Securities Commission shall be funded from the State budget.
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SECTION TWO CO-OPERATION OF THE SECURITIES COMMISSION WITH OTHER SUPERVISORY INSTITUTIONS
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Article 78Co-Operation of the Securities Commission with Supervisory Institutions of Other Member States
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1.The Securities Commission shall co-operate with supervisory institutions of other Member States for the purpose of performing the functions assigned to it by this Law and other laws. Co-operation shall cover exchange of information, participation in investigation or inspection activities or performance of other supervisory functions at the initiative of any of the supervisory institutions.
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2.Where a regulated market operating in another Member States establishes in the Republic of Lithuania the arrangements facilitating remote membership of that regulated market of the entities established in the Republic of Lithuania and/or trading on that regulated market due to which the activity of that regulated market becomes of importance for ensuring the orderly functioning of Lithuanian markets in financial instruments and the protection of the investors, the Securities Commission shall conclude an agreement on co-operation and exchange of information with the supervisory institution of that regulated market.
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3.Where a regulated market operating in the Republic of Lithuania establishes in another Member State the arrangements facilitating remote membership of this regulated market of the entities established in that Member State and/or trading on this regulated market, provisions of paragraph 2 of this Article shall apply mutatis mutandis.
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4.The Securities Commission shall co-operate and render other assistance to supervisory institutions of Member States, even in cases where the conduct under investigation does not constitute an infringement of legal acts in the Republic of Lithuania.
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5.Where there are good reasons to suspect that acts or omissions carried out by the persons not subject to supervision of the Securities Commission in another Member State are contrary to requirements of legal acts of another Member State, the Securities Commission shall notify this to the supervisory institution of the relevant Member State.
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6.Where the supervisory institution of another Member State notifies the Securities Commission about the possible infringements committed by the persons subject to its supervision in another Member State, the Securities Commission shall forthwith take appropriate action and inform thereof the notifying supervisory institution.
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7.The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions.
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Article 79Co-operation in Supervisory Activities, in Investigations and On-the-spot Verifications
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1.The Securities Commission shall co-operate with supervisory institutions of other Member States in a supervisory activity and in an investigation as well as an on-the-spot verification. To this end, the Securities Commission shall have the right to address supervisory institutions of other Member States for supply of information or rendering of other assistance.
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2.In the case of a financial brokerage firm established in another Member State that is a remote member of a regulated market operating in the Republic of Lithuania, the Securities Commission shall have the right to perform the functions of supervision of the regulated market by directly addressing the financial brokerage firm. In this case, the firm’s supervisory institution must be informed about the action taken in respect of the remote member of the regulated market.
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3.The supervisory institution of another Member State shall have the right to apply to the Securities Commission for co-operation and, upon the receipt of consent thereof, carry out an investigation or verification itself, also to request that the investigation or verification be carried out by the Securities Commission or that it assign carrying out thereof to auditors or experts. Investigations and verifications shall be carried out in accordance with the procedure laid down by this Law.
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4.The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions.
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Article 80Exchange of Information
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1.The Securities Commission shall exchange information with supervisory institutions of other Member States for the purposes of performing the functions assigned to it by this Law.
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2.When communicating information to the supervisory institution of another Member State, the Securities Commission shall have the right to demand that the information thus supplied must not be communicated to third parties without a prior consent of the Securities Commission. Such a restriction must be provided for at the time of communicating of information. When granting consent to communicate information to third parties, the Securities Commission must indicate the purposes for which information may be communicated.
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3.The Securities Commission shall have the right to transmit the information received from supervisory institutions of other Member States or third countries to institutions of the Republic of Lithuania exercising supervision of credit institutions, insurance undertakings and other financial institutions. The institutions of the Republic of Lithuania which have received the information may not transmit this information to other natural or legal persons without a prior consent of the supervisory institution of another Member State or a foreign state to communicate the information thus supplied and solely for the purposes indicated therein, unless the information is communicated without such a consent or for purposes other than indicated in justified circumstances. In this last case, a notice must be given to the Securities Commission, which shall immediately inform the supervisory institution of another Member State or a third country that sent the notification.
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4.The Securities Commission and other institutions of the Republic of Lithuania exercising supervision of credit institutions, insurance undertakings or other financial institutions shall have the right to use the confidential information received in accordance with the procedure laid down in this Article solely for the purpose of performing their supervisory functions, in particular:
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1)to check that the entities subject to supervision fulfil the conditions set out for the issuance of a licence and to monitor compliance with organisational and operation requirements, especially with regard to capital adequacy, administrative and accounting procedures as well as internal-control mechanisms;
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2)to monitor the proper functioning of trading venues;
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3)to impose sanctions;
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4)in hearing of disputes over the decisions taken by supervisory institutions in accordance with the procedure laid down by the Law on Public Administration;
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5)in hearing in court of disputes over the decisions taken by supervisory institutions;
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6)in hearing of investors’ disputes at extra-judicial (alternative) dispute settlement institutions.
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5.Provisions of Articles 76 and 82 of this Law and this Article shall not prevent the Securities Commission from transmitting confidential information to the Bank of Lithuania, the European system of Central Banks and the European Central Bank, to the extent this is necessary for the performance of their monetary functions, also to other state institutions overseeing payment and settlement systems, to the extent this is necessary for the performance of their supervisory functions.
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6.The institutions indicated in paragraph 5 of this Article shall have the right to communicate to the Securities Commission such confidential information as is required for the performance of the functions provided for in this Law.
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7.Where the Securities Commission possesses data that the actions prohibited in Articles 62 and 63 of the Law are being or have been carried out on the territory of another Member State of the European Union or they are related to the financial instruments which are traded on a regulated market of such a state, it shall notify this to a relevant foreign supervisory institution.
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Article 81Refusal to Co-operate
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1.The Securities Commission shall have the right to refuse co-operation or rendering of assistance in carrying out an investigation, on-the-spot verification or performing other supervisory functions as provided for in Article 79 of this Law or exchanging information as provided for in Article 80 of this Law, only where:
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1)such an investigation, on-the-spot verification, performance of other supervisory functions or communication of information might adversely affect the sovereignty, security or public policy of the Republic of Lithuania;
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2)trial or pre-trial proceedings have already been initiated in respect of the same actions and the same persons in the Republic of Lithuania;
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3)final judgement has already been delivered in the Republic of Lithuania in respect of the same persons and the same actions.
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2.Where the Securities Commission exercises the right provided for in paragraph 1 of this Article, it shall immediately notify this to the supervisory institution of another Member State which has filed a request for the supply of information or rendering of another assistance indicating reasons for the refusal to co-operate.
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Article 82Exchange of Information with Supervisory Institutions of Third Countries
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1.In performing the supervisory functions assigned to it, the Securities Commission shall have the right to conclude co-operation agreements providing for the exchange of information with supervisory institutions of third countries if in a third country, the communicated information is subject to requirements for the protection of confidential information at least equivalent to those provided for in Article 76 of this Law. Personal data may be transferred to the supervisory institution of a third country only in compliance with requirements of the Law on Legal Protection of Personal Data.
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2.For the purposes of performance of supervisory functions, the Securities Commission shall also have the right to conclude co-operation agreements providing for the exchange of information with entities of third countries if the communicated confidential information is subject to requirements for the protection of confidential information at least equivalent to those provided for in Article 76 of this Law. The agreements may be concluded with supervisory institutions, also natural or legal persons responsible for:
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1)the supervision of credit institutions, other financial institutions, insurance undertakings and financial markets;
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2)conducting of the liquidation and bankruptcy of financial brokerage firms and other similar procedures;
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3)carrying out statutory audits of the accounts of financial brokerage firms, credit institutions, other financial institutions and insurance undertakings, in their performance of supervisory functions, or administration of investment compensation schemes, in their performance of supervisory functions;
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4)overseeing the persons involved in the liquidation and bankruptcy of financial brokerage firms and other similar procedures;
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5)overseeing persons carrying out statutory audits of the accounts of insurance undertakings, credit institutions, financial brokerage firms and other financial institutions.
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3.Where the information whose supply is requested from the supervisory institutions of a third country originates in another Member State, it may not be communicated without a prior consent of the supervisory institution which has transmitted the information and solely for the purposes of using the information indicated therein.
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4.Provisions of paragraph 3 of this Article shall apply mutatis mutandis to the information received from supervisory institutions of third countries.
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Article 83Relations with Auditors
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1.When carrying out the audit of a financial brokerage firm, an auditor must immediately give a written notice to the Securities Commission about the circumstances or facts which is liable to:
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1)constitute a material breach of the laws and other legal acts which lay down the conditions governing the issuance of authorisations or which specifically regulate pursuit of the activities of financial brokerage firms, or
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2)affect the continuous functioning of a financial brokerage firm, or
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3)lead to refusal to certify the accounts or to expression of reservations.
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2.An auditor must also report to the Securities Commission the facts and circumstances indicated in subparagraphs 1-3 of paragraph 1 of this Article which transpire in the course of carrying out of the audit of an undertaking having close links with a financial brokerage firm.
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3.The notification of the Securities Commission indicated in paragraphs 1 and 2 of this Article shall not constitute a breach of legal or contractual restriction on disclosure of confidential information and hence shall not involve an auditor in liability of any kind.
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Article 84Alternative (Extra-Judicial) Settlement of Investors’ Disputes
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1.The Securities Commission shall encourage the setting-up and functioning of the entities ensuring an efficient alternative (out-of-court) settlement of disputes of investors and the undertakings providing investment services.
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2.The entities indicated in paragraph 1 of this Article shall have the right to mutually exchange information and data, including the cases when settlement of a dispute falls under the jurisdiction of several Member States.
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SECTION THREE SUPERVISION OF MARKETS IN FINANCIAL INSTRUMENTS
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Article 85Rights of the Securities Commission in Considering Infringements of the Regulatory Enactments Regulating the Functioning of Markets in Financial Instruments
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1.The Securities Commission shall have the right to organise and carry out verifications in order to determine compliance with this Law and the legal acts adopted on the basis thereof.
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2.When carrying out a verification, officers of the Securities Commission shall have the right:
\n
1)to receive explanations in writing or orally from the persons involved in the infringements under investigation and request them to arrive to the office premises of the officer carrying out inspection in order to give explanations;
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2)upon producing their service card and a reasoned decision of the Securities Commission or a person authorised by it, to carry out a verification (audit), freely enter the premises of financial brokerage firms, credit institutions, operators of regulated markets, the Central Depository, issuers and other legal persons related to the alleged infringements, inspect the documents, record books, and other sources of information needed for the verification and, on the basis of the collected evidence, to receive conclusions from expert institutions;
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3)to require that copies of accounting documents, contracts, orders, memorandums and other documents which are deemed important for the purposes of the investigation by the Securities Commission are made;
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4)to temporarily seize documents of the financial brokerage firms, credit institutions, operators of regulated markets, the Central Depository, issuers under verification that may be used as evidence of infringements leaving a reasoned decision for seizing the documents and a list of the documents seized;
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5)upon producing a reasoned decision of the Securities Commission, to obtain from bank institutions the data, certificates and copies of documents of the financial operations related to the object under verification;
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6)to obtain the data and documents or copies thereof related to a person under verification from other economic entities, also from state and municipal institutions.
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3.For the purpose of exercising the rights specified in paragraph 2 of this Article, the Securities Commission may invite police officers.
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4.Where it has good reasons for suspecting an infringement of provisions of this Law or the resolutions of the Securities Commission adopted on the basis thereof, the Securities Commission shall have the right to prohibit or suspend, for a period not exceeding ten working days, trading on a regulated market or admission of financial instruments to trading on the regulated market. The Securities Commission may take a decision on the public declaration of an issuer as defaulting on its obligations, temporary prohibition for persons to pursue the professional activity relating to the provision of investment services or temporary sequestration of assets of the persons by a court (judge) ruling passed on the basis of a request of the Securities Commission. Requests of the Securities Commission regarding the sequestration of assets shall be heard by the Vilnius Regional Administrative Court.
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5.The Securities Commission may request foreign supervisory institutions to carry out required verifications on the territory of these states and to allow employees of the Securities Commission to participate in such inspections. Where the supervisory institution of a Member State of the European Union does not to act on a request to supply information or refuses to supply information, the Securities Commission may notify this to the Committee of European Securities Regulators.
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Article 86Sanctions Imposed against Financial Brokerage Firms and Credit Institutions
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1.The Securities Commission shall have the right impose the following sanctions against financial brokerage firms:
\n
1)to warn about the shortcomings and infringements of their activities and to set a deadline to eliminate them;
\n
2)to impose administrative penalties on employees of a financial brokerage firm or the penalties specified in this Law;
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3)to revoke a licence for the provision of one, several or all investment services;
\n
4)to appoint a temporary representative of the Securities Commission for supervision of the activities.
\n
2.The Securities Commission shall have the right to apply to licensed credit institutions the sanctions specified in subparagraphs 1 and 2 of paragraph 1 of this Article.
\n
Article 87Basic Principles of and Procedure for Imposing Sanctions
\n
1.The sanctions specified in this Law may be imposed where at least one of the following grounds exists:
\n
1)a financial brokerage firm has supplied false information to the Securities Commission;
\n
2)the information or documents necessary for supervision have not been supplied to the Securities Commission;
\n
3)the conditions under which a licence has been granted are no longer met;
\n
4)the laws or other legal acts of the Republic of Lithuania have been violated;
\n
5)a financial brokerage firm is incapable of discharging obligations according to its commitments or there is evidence that it will not be able to do that in the future.
\n
2.The choice of a sanction shall depend on the content of an infringement for which it is applied, the impact of the infringement and the sanction on an undertaking and security of the financial system. The issue of imposition of sanctions shall be considered upon giving a notice thereof to a financial brokerage firm and providing it with an opportunity to present explanations. A failure of a representative of the firm to attend the consideration of the issue or to present explanations shall not prevent adoption of a decision concerning the imposition of sanctions.
\n
3.A decision on the imposition of sanctions may be taken where not more than two years have lapsed from the commitment of an infringement, and in the case of a continuing infringement – from the carrying out of last actions.
\n
4.Provisions of this Article shall apply mutatis mutandis to licensed credit institutions.
\n
Article 88Temporary Representative for the Supervision of Activities
\n
1.In urgent cases and possessing data about an infringement of legal acts, the Securities Commission shall have the right to appoint a temporary representative for the supervision of activities of a financial brokerage firm for the purpose of prevention of a threat to clients’ financial instruments or the funds transferred to the financial brokerage firm.
\n
2.Heads of a financial brokerage firm must obtain a consent of a temporary representative for supervision of activities with regard to each decision relating to the activities of an undertaking.
\n
3.A temporary representative shall be recalled in the following cases:
\n
1)upon establishing that a financial brokerage firm is capable of sound functioning;
\n
2)where bankruptcy proceedings have been instituted against the financial brokerage firm.
\n
Article 89Reorganisation of a Financial Brokerage Firm
\n
A financial brokerage firm may be reorganised only subject to a prior agreement by the Securities Commission. The Securities Commission shall have the right to refuse to approve reorganisation only in the case where it would pose a threat to the financial instruments or funds transferred by clients to the financial brokerage firm.
\n
Article 90Bankruptcy of a Financial Brokerage Firm
\n
1.The bankruptcy proceedings of a financial brokerage firm shall be heard solely by court.
\n
2.The Securities Commission shall have the right to file a petition with a court for the initiation of bankruptcy proceedings against a financial brokerage firm.
\n
3.Upon the receipt of a petition for the initiation of bankruptcy proceedings, a court must, on the same day, impose a prohibition upon an undertaking to dispose of bank accounts and financial instruments.
\n
4.Not later than within 15 days of the receipt of a petition, a court shall pass a ruling on the initiation of or refusal to initiate bankruptcy proceedings.
\n
5.The operator of a financial brokerage firm shall repay the funds belonging to the firm’s clients and kept in the firm or in the clients’ accounts with a credit institution managed by the financial brokerage firm and shall transfer the management of the personal financial instruments of the firm’s clients to a manager of accounts indicated by a client.
\n
Article 91
\n
Powers of the Securities Commission over the Branches of the Financial Brokerage Firms Licensed in Another Member State as Established in the Republic of Lithuania 1. The Securities Commission shall have the right to demand that a financial brokerage firm which has established a branch in the Republic of Lithuania would regularly provide statistical data on the activities of the branch in the Republic of Lithuania.
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2.In performing the supervisory functions specified in this Law, the Securities Commission shall have the right to instruct a branch of a financial brokerage firm to provide the entire information required to assess compliance of the branch with the requirements for the activities of branches as set forth on the basis of Article 40 of this Law.
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3.The instructions of the Securities Commission provided for in paragraph 2 of this Article may not be more stringent than those imposed when exercising supervision of the financial brokerage firms established in the Republic of Lithuania.
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4.The Securities Commission shall supervise compliance of the branches of financial brokerage firms established in the Republic of Lithuania with requirements of Articles 22, 24, 25, 31, 33 and 34 of this Law and other legal acts adopted on the basis thereof. To this end, the Securities Commission shall have the right to carry out verifications of a branch with a view to ascertaining compliance with these requirements and to demand elimination of detected infringements.
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5.The supervisory institution of a financial brokerage firm which is licensed in another Member State and which has established a branch in the Republic of Lithuania shall have the right to carry out verifications of the branch of the firm established in the Republic of Lithuania upon giving a prior (written) notice thereof to the Securities Commission.
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6.The requirements set forth in this Article shall apply mutatis mutandis to licensed credit institutions.
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Article 92Precautionary Measures to Be Taken by the Securities Commission in Respect of the Financial Brokerage Firms Licensed in Another Member State
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1.Having grounds for suspecting that a financial brokerage firm providing investment services in the Republic of Lithuania and licensed in another Member State is in breach of the requirements set forth in this Law, the Securities Commission shall notify this to the supervisory institution of the financial brokerage firm.
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2.The notifications indicated in paragraph 1 of this Article shall be submitted where:
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1)investment services are provided in the Republic of Lithuania without establishing a branch;
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2)investment services are provided in the Republic of Lithuania through the establishment of a branch, and the financial brokerage firm which has established the branch is suspected of being in breach of the requirements set forth in this Law which do not confer powers on the Securities Commission.
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3.If, despite the sanctions applied by the supervisory institution of a financial brokerage firm or because the applied sanctions prove inadequate, the financial brokerage firm persists in non-compliance with the requirements set forth in this Law and violates the interests of investors of the Republic of Lithuania or poses a threat to the orderly functioning of markets in financial instruments, the Securities Commission shall have the right, after informing the supervisory institution of the financial brokerage firm, to take all the appropriate measures needed in order to protect investors’ interests and to ensure the orderly functioning of the market. The Securities Commission shall have the right to take the measures preventing offending financial brokerage firms from initiating transactions in financial instruments in the Republic of Lithuania. The Securities Commission shall inform the European Commission of the measures taken without delay.
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4.Where the Securities Commission ascertains that a financial brokerage firm licensed in another Member State and operating through a branch in the Republic of Lithuania is in breach of the requirements set forth in this Law which confer powers on the Securities Commission, it shall instruct the financial brokerage firm to put an end to the actions violating the requirements of legal acts. Where the financial brokerage firm persists in infringing the requirements of the legal acts, the Securities Commission shall have the right to apply all required sanctions to put an end to the infringements. The Securities Commission shall notify the supervisory institution of the financial brokerage firm of the measures taken.
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5.If, despite the sanctions applied by the Securities Commission, a financial brokerage firm persists in infringing requirements of legal acts of the Republic of Lithuania, the Securities Commission shall have the right, after informing to the supervisory institution of the financial brokerage firm, to apply sanctions to prevent the infringements or to impose the penalties specified in legal acts and, in so far as necessary, to prevent the financial brokerage firm from initiating transactions in financial instruments in the Republic of Lithuania. The Securities Commission shall inform the European Commission of the measures taken without delay.
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6.Where the Securities Commission has grounds for suspecting that the requirements set forth in this Law are being breached by a regulated market operating in another Member State or a market operator operating a multilateral trading facility or a financial brokerage firm which have undertaken the actions in the Republic of Lithuania as specified in this Law and aimed at providing an opportunity for the entities established in the Republic of Lithuania to become members of the regulated market or multilateral trading facility operated by them or facilitating trading on it, the Securities Commission shall notify this to the supervisory institution of the operator of the regulated market or the operator of the multilateral trading facility without delay. If, despite the sanctions applied by the host supervisory institution or because the applied sanctions prove inadequate, the operator of a regulated market or multilateral trading facility persists in infringing interests of the Republic of Lithuania investors or poses a threat to the orderly functioning of markets in financial instruments, the Securities Commission shall have the right, after informing the host supervisory institution, to take all the appropriate measures needed in order to protect the investors’ interests and to ensure the smooth/proper functioning of the markets.
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The Securities Commission shall have the right not to allow the operator of a regulated market or multilateral trading facility to undertake the actions in the Republic of Lithuania aiming at providing an opportunity for the entities established in the Republic of Lithuania to become members of that regulated market or multilateral trading facility or facilitating trading on it. The Securities Commission shall inform the European Commission of the measures taken without delay.
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7.All the sanctions which the Securities Commission may apply in the cases indicated in this Article must be justified and reasoned, and a financial brokerage firm or the operator of a regulated market shall be informed of the applied sanctions without delay.
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8.Provisions of this Article shall apply mutatis mutandis to licensed credit institutions.
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Article 93Supervision of Activities of Financial Brokerage Firms of the Republic of Lithuania in Third Countries
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1.The Securities Commission shall supervise compliance of the financial brokerage firms of the Republic of Lithuania providing investment services in a third country with prudential requirements. Where the supervisory institution of a third country notifies of the infringements committed by a financial brokerage firm, the Securities Commission must apply sanctions and notify this to the supervisory institution of the third country.
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2.The Securities Commission shall have the right to request the supervisory institution of a third country to carry out a verification of activities of a branch of a financial brokerage firm or to carry out the verification itself after informing the supervisory institution of the third country.
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3.Upon revoking the licence of a financial brokerage firm providing investment services in a third country, the Securities Commission shall inform the supervisory institution of the third country without delay.
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SECTION FOUR LIABILITY FOR INFRINGEMENTS OF THE LAW
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Article 94Consequences of an Infringement of the Law
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The persons who have violated this Law must:
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1)carry out instructions of the Securities Commission to put an end to actions, restore the previous condition, perform other obligations;
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2)reimburse the damage incurred;
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3)implement the sanctions specified in this Law and imposed by the Securities Commission.
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Article 95Pecuniary Penalties for Infringements of the Law
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1.The Securities Commission shall have the right to impose pecuniary penalties:
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1)on the legal persons providing investment services without the licence specified in this Law, when such a licence is required – in the amount of up to LTL 100 000 where the illegally received income does not exceed LTL 100 000, and in the amount of up to the double amount of the illegally received income where the illegally received income exceeds LTL 100 000;
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2)on the legal persons failing to comply with the requirements set forth in Chapter II of this Law - in the amount of up to LTL 100 000;
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3)on the legal persons pursuing the activities of the operator of a regulated market without the licence specified in this Law – in the amount of up to LTL 100 000 where the amount of the illegally received income does not exceed LTL 100 000, and in the amount of up to the double amount of the illegally received income where the amount of the illegally received income exceeds LTL 100 000;
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4)on the operators of a regulated market failing to comply with the requirements set forth in Chapter III of this Law - in the amount of up to LTL 100 000;
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5)on the legal persons failing to comply with the requirements set forth in Chapter IV of this Law – in the amount of up to LTL 100 000 where the amount of the illegally received income does not exceed LTL 100 000, and in the amount of up to the threefold amount of the illegally received income where the amount of the illegally received income exceeds LTL 100 000;
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6)on the legal persons failing to comply with the pre-trade and post-trade transparency requirements set forth in this Law – in the amount of up to LTL 100 000;
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7)on the legal persons failing to comply with instructions of the Securities Commission, supply the information indicated in this Law and other laws to the Securities Commission or hindering the Securities Commission or the persons authorised by it to carry out investigations or verifications – in the amount of up to LTL 100 000.
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2.Application of the sanctions specified in paragraph 1 of this Article against legal persons shall not release heads thereof from the civil, administrative and criminal liability specified by laws, also shall not prevent the Securities Commission from considering the issue of suspension or revocation of the licences issued by it.
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Article 96Procedure for Imposing Pecuniary Penalties
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1.Prior to considering the issue of imposition of the pecuniary penalties specified by this Law, the Securities Commission shall lay down a time limit of not less than five days for the submission of clarifications and shall give a notice thereof to a legal person whose actions are subject to an investigation. Where the clarifications are not received within the indicated time limit, it shall be considered that submission thereof has been refused.
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2.The Securities Commission shall give a notice by registered mail of the date and time of a sitting to consider the issue of imposition of a penalty to a person whose actions are subject to an investigation. Representatives and advocates thereof shall have the right to participate in consideration of this issue at the sitting. A failure of the representative of the person whose actions are subject to the investigation to arrive to the sitting shall not hinder consideration the issues of imposition of a penalty where the person has been notified of the consideration.
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3.Representatives of a person shall have the right to familiarise with the material evidencing an infringement, submit clarifications, present evidence, make use of the assistance of an advocate.
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4.Upon considering the entire available material related to the suspected infringement, the Securities Commission shall have the right:
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1)to impose a pecuniary penalty specified by this Law;
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2)to terminate investigation in the absence of an infringement or a legal basis for imposition of a penalty;
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3)to continue investigation.
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5.The Securities Commission shall differentiate the amount of the pecuniary penalty to be imposed taking into consideration:
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1)the extent of the damage incurred by the infringement;
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2)duration of the infringement;
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3)amount of income that the person has received as a result of the infringement;
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4)mitigating or aggravating circumstances.
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6.Voluntary prevention of the detrimental consequences of an infringement by a person suspected of commitment of the infringement, his assistance to the Securities Commission in the investigation of the infringement, compensation of losses or elimination of the incurred damage shall be considered as mitigating circumstances. The Securities Commission may resolve to consider as mitigating other circumstances not provided for herein.
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7.Impeding of the investigation procedure by a person suspected of commitment of the infringement, concealment of the infringement, persistent infringement despite a commitment to discontinue illegal actions or a repeated infringement for which a pecuniary penalty specified in this Law has already been imposed shall be considered as aggravating circumstances.
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8.A decision of the Securities Commission shall be posted by registered mail within 3 working days to a person whose actions were subject to investigation or delivered against signature to a representative thereof.
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Article 97Recovery of Pecuniary Penalties
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Pecuniary penalties shall be paid into the State budget not later than within one month of the receipt of a decision of the Securities Commission on the imposition of a pecuniary penalty. Where the pecuniary penalty has not been paid voluntarily, the decision of the Securities Commission on the imposition of the pecuniary penalty shall be enforced in accordance with the procedure laid down by the Code of Civil Procedure.
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CHAPTER VII
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FINAL PROVISIONS
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Article 98Final Provisions
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1.A financial brokerage firm which holds the licence of a financial brokerage firm issued by the Securities Commission prior to the entry into force of this Law and meets the requirements set forth in Articles 9-13 and Article 16 of this Law shall have the right to provide investment services and exercise other rights specified in this Law.
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2.A financial brokerage firm which holds the licence of a financial brokerage firm issued by the Securities Commission prior to the entry into force of this Law, but does not meet the requirements set forth in Articles 9-13 and Article 16 of this Law shall have the licence of the financial brokerage firm revoked in accordance with the procedure laid down in this Law.
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3.The operator of a regulated market whose administered system holds the licence of a regulated market issued by the Securities Commission prior to the entry into force of this Law and meets the requirements set forth in Chapter III of this Law shall have the right to pursue the activities of a regulated market and exercise other rights specified in this Law.
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4.The operator of a regulated market whose administered system holds the licence of a regulated market issued by the Securities Commission prior to the entry into force of this Law, but does not meet the requirements set forth in Chapter III of this Law shall have the licence of the regulated market revoked in accordance with the procedure laid down in this Law.
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5.Where a financial brokerage firm treats a person as a professional client in compliance with the criteria and procedures similar to those indicated in Article 28 of this Law prior to the entry into force of this Law, it shall not be under the obligation to repeat the procedure of declaration of the person a professional client.
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6.The financial brokerage firms which concluded contracts with clients on the provision of investment and/or ancillary services prior to the entry into force of this Law must amend these contracts by 31 December 2007 so that they meet the requirements set forth in this Law. Investment and/or ancillary services may be provided after 31 December 2007 only to the clients wherewith the contracts on the provision of investment and/or ancillary services meeting the requirements of this Law have been concluded.
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7.Provisions of paragraphs 1, 2, 5 and 6 of this Article shall apply mutatis mutandis to licensed credit institutions.
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Article 99Application of Provisions of the Law
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1.The provisions of this Law setting forth new requirements for the persons providing investment services and/or regulated markets and operators thereof which have not been set forth in the Republic of Lithuania Law on the Securities Market, which was in force prior to the entry into force of this Law, shall apply from 1 November 2007. As of the entry into force of this Law, references to the Republic of Lithuania Law on the Securities Market shall, within the scope of this Law, be considered references to this Law, and references to the definitions provided in the Republic of Lithuania Law on the Securities Market shall be considered references to the respective definitions provided in this Law, with the exception of references to the Republic of Lithuania Law on the Securities Market which should, within the scope of the Republic of Lithuania Law on Securities, be considered references to the Republic of Lithuania Law on Securities, also references to the definitions provided in the Republic of Lithuania Law on the Securities Market which should, within the scope of the Republic of Lithuania Law on Securities, be considered references to the Republic of Lithuania Law on Securities.
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2.Upon the entry into force of this Law, the following laws shall be repealed:
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1)the Republic of Lithuania Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 16-412, 1996);
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2)the Republic of Lithuania Law Supplementing Article 3 of the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 41-992, 1996);
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3)the Republic of Lithuania Provisional Law Supplementing Article 41 of the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 71-1713, 1996);
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4)the Republic of Lithuania Law Amending the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 33-873, 1998);
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5)the Republic of Lithuania Law Amending Articles 3, 7 of the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 61-1824, 2000);
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6)the Republic of Lithuania Law Amending Articles 28, 38 and Supplementing Article 41 of the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 61-1837, 2000);
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7)the Republic of Lithuania Law Amending Article 41 of the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 39-1347, 2001);
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8)the Republic of Lithuania Law Amending Articles 3, 10 of the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 43-1497, 2001);
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9)the Republic of Lithuania Law Amending Article 28 of the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 85-2971, 2001);
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10)the Republic of Lithuania Law Amending the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 112-4074, 2001);
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11)the Republic of Lithuania Law Amending Article 51 of the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 38-1687, 2003);
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12)the Republic of Lithuania Law Amending Articles 2, 3, 48, 57 of the Law on Public Trading in Securities (Valstybės žinios (Official Gazette) No 74-3434, 2003);
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13)the Republic of Lithuania Law Amending Articles 1, 2, 3, 8, 9, 10, 11, 15, 16, 17, 19, 20, 22, 23, 26, 27, 29, 36, 40, 41, 48, 51, 52, 53, 57, 59, 61, 65 of the Law on the Securities Market and Supplementing the Law with Article 19(1) and an Annex (Valstybės žinios (Official Gazette) No 73-2514, 2004);
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14)the Republic of Lithuania Law Amending the Law on the Securities Market (Valstybės žinios (Official Gazette) No 84-3108, 2005);
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15)the Republic of Lithuania Law Amending Articles 2, 6, 7, 13, 14, 17, 18, 19, 19(1), 40, 45, 52, 61 of the Law on the Securities Market, Supplementing the Law with Section Three(1) and Supplementing the Annex to the Law (Valstybės žinios (Official Gazette) No 77-2963, 2006).
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Article 100Proposal to the Government
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To propose that the Government draft and submit to the Seimas by 1 September 2007 the draft laws amending and/or supplementing the laws making references to the Republic of Lithuania Law on the Securities Market.
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I promulgate this Law passed by the Seimas of the Republic of Lithuania.
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PRESIDENT OF THE REPUBLIC VALDAS ADAMKUS Annex to Republic of Lithuania Law on Markets in Financial Instruments IMPLEMENTED EU LEGAL ACTS 1. Directive 2001/34/EC of the European Parliament and of the Council of 28 May 2001 on the admission of securities to official stock exchange listing and on information to be published on these securities (OJ 2004 special edition, Chapter 6, Volume 4, p. 24).
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2.Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse) (OJ 2004 special edition, Chapter 6, Volume 4, p. 367).
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3.Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (OJ 2004 special edition, Chapter 6, Volume 7, p. 263).