Įstatymas skelbtas: ˇin REPUBLIC OF LITHUANIA LAW ON BANKS 30 March 2004 No IX-2085 (As last amended on 19 March 2009 – No XI-201) Vilnius CHAPTER I GENERAL PROVISIONS Article 1. Purpose of the Law 1.

The purpose of this Law shall be to regulate the procedure for setting up, licensing, pursuing of business, terminating and restructuring as well as supervising of Lithuanian commercial banks and specialised banks as well as foreign banks operating in the Republic of Lithuania, including establishments thereof, in order to ensure a stable, sound, efficient and safe banking system.

1. This Law shall implement the legal acts of the European Union listed in the Annex to this Law. Article
2. Definitions
3. “Bank” shall mean a commercial bank and a specialised bank.
4. “Banking licence” (hereinafter referred to as “licence”) shall mean an authorisation granted to a bank according to the procedure set forth by this Law to engage in the provision of licensed financial services.
5. “Financial services” shall mean the services referred to in paragraph 1 of Article 3 of the Law on Financial Institutions.
6. “Heads of a legal person” shall mean members of bodies of legal persons with the exception of the meeting of members.
7. “Commercial bank” shall mean a credit institution set up in the Republic of Lithuania which is authorised to engage in receiving of deposits and other repayable funds from non-professional participants of the market and in lending thereof and engages therein as well as assumes the risk and liability related thereto.
8. “Licensed financial services” shall mean: 1) receipt of deposits or other repayable funds from non-professional participants of the market; 2) money transfer; 3) issuing and administering of electronic money; 4) other financial services subject to a licence issued in accordance with other laws of the Republic of Lithuania.
9. “Specialised bank” shall mean a credit institution set up in the Republic of Lithuania which has been authorised to provide only the licensed financial service referred to in subparagraph 3 of paragraph 6 of this Article.
10. “Foreign bank” shall mean a credit institution set up in a foreign state which holds an authorisation or licence issued by the supervisory institution of the foreign state to engage in receiving of deposits and other repayable funds from non-professional participants of the market and lending thereof or in the issuance and administration of electronic money and is engaged therein.
11. “Participation in management of the capital” shall mean a direct or indirect management of 20 per cent or more of an undertaking’s authorised capital and/or voting rights, also another real possibility to exercise influence over decisions on the activities of the undertaking both being a participant of the undertaking and holding other rights related to the capital.
12. “Persons acting in concert” shall mean two or more persons that, on the basis of a verbal or written agreement concluded explicitly between them or anticipated to be concluded, exercise or seek to exercise their rights granted by a qualifying holding in a bank’s authorised capital and/or voting rights.
13. Other concepts used in this Law shall be interpreted as they are defined in the Law on Financial Institutions. Article
14. Name, Legal Form and Registered Office of a Bank, Legal Acts Regulating Banking Activities
15. The word "bank" or other combinations or derivatives thereof may be used in the Republic of Lithuania only by the persons operating in accordance with this Law in their name or for advertising or other purposes, except where the use of this word is evidently unrelated to the provision of licensed financial services.
16. Paragraph 1 of this Article shall not be applied where the name of a legal person has been laid down by a law of the Republic of Lithuania regulating its activities.
17. The legal form taken by a bank as a legal person may only be a public limited liability company or a private limited liability company.
18. The registered office of a public limited liability company or a private limited liability company holding a licence issued according to the procedure set forth by this Law and registered in the Republic of Lithuania Register of Legal Persons must be in the Republic of Lithuania.
19. Banks shall act in compliance with the Constitution of the Republic of Lithuania, the Civil Code, this Law, legal acts adopted by supervisory institutions and their statutes (articles of association) (hereinafter referred to as “articles of association”). Banks shall also act in compliance with the Law on Financial Institutions, the Law on Companies and other legal acts, except where this Law provides otherwise. Article
20. Financial Services Provided by a Bank and Other Activities
21. The right to engage in receiving of deposits or other repayable funds from non-professional participants of the market according to the procedure set forth by this Law shall only be vested in: 1) the banks holding a licence which grants such a right; 2) branches of foreign banks holding a licence which grants such a right; 3) foreign banks which are licensed in the Member States of the European Union and in the states of the European Economic Area (hereinafter referred to as “the Member States of the European Union”) and which have the right to engage in receiving of deposits or other repayable funds from non-professional participants of the market in the state concerned, have set up branches in the Republic of Lithuania according to the procedure set forth by this Law or provide financial services without setting up a branch.
22. A bank shall have the right to provide all financial services, including financial services in a foreign currency, except where this right is restricted by this Law and other laws.
23. In addition to the provision of financial services, a bank may pursue only such other activities as those in the absence of which financial services cannot be provided, which assist in the provision of the financial services or are otherwise directly related to the provision of the financial services.
24. Where a bank itself decides not to carry on a certain activity in the absence of which financial services cannot be provided, which assists in the provision of financial services or is otherwise directly related to the provision of financial services and to conclude transactions with other persons on the provision of respective services to the bank (hereinafter referred to as “the purchase of ancillary banking services”), the bank must notify thereof the supervisory institution and provide to it the information laid down by legal acts of the supervisory institution prior to concluding the said transactions. The legal acts of the supervisory institution may set the requirements for the purchase of the ancillary banking services.
25. A specialised bank authorised only to issue and administer electronic money may provide only such other non-licensed financial services and pursue only such other activities as those in the absence of which electronic money cannot be issued and administered or which assist in the issuing and administering thereof or are otherwise directly related to the issuance and administration of electronic money, also store data on an electronic media on behalf of other legal persons. Moreover, the said specialised bank shall have the right to issue payment cards and other means of payment and to carry out operations therewith, however, when providing this financial service, the bank shall not have the right to grant any form of credit.
26. Prior to taking decisions which restrict a bank’s freedom to dispose of the funds in its account or which otherwise restrict the right of the bank to provide financial services to the bank’s clients, court of the Republic of Lithuania and other institutions or officials stipulated by laws must obtain a conclusion of the supervisory institution on the influence of these decisions on the stability and soundness of the whole system of banks. Article
27. Articles of Association of a Bank
28. The articles of association of a bank being established and amendments to the articles of association of the bank shall become invalid where they are not submitted to the Register of Legal Persons within 12 months accordingly of the signing of the articles of association or of the taking of a decision on the amendment of the articles of association of the bank at the general meeting of the shareholders.
29. Amendments to the articles of association of a bank may be registered in the Register of Legal Persons only upon obtaining an authorisation of the supervisory institution, where the provisions of the articles of association are amended in respect of: 1) the name or registered office of the bank; 2) the amount of the authorised (share) (hereinafter referred to as “authorised”) capital; 3) the number of shares and their number according to class, their nominal value and the rights attaching to them; 4) the powers of the bank’s bodies, procedure for electing and removing from office their members.
30. An authorisation to register amendments to articles of association of a bank shall be granted by the supervisory institution according to the procedure set forth this Law and legal acts of the supervisory institution.
31. In order to obtain an authorisation to register amendments to articles of association, a bank shall submit to the supervisory institution an application and other documents and data specified by legal acts of the supervisory institution.
32. The supervisory institution must examine submitted documents and decide on the granting of an authorisation to register amendments to articles of association of a bank within 30 days of the receipt of the application or, where the amendments to the articles of association of the bank are related to the increase of the authorised capital of the bank by issuing new shares, within 2 months of the receipt of the application.
33. (Repealed as of 4 April 2009)
34. The supervisory institution may refuse to grant an authorisation to register amendments to articles of association of a bank, where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect; 2) upon making the amendments, provisions of the articles of association of the bank will not ensure safe and sound activities of the bank or will not be in conformity with the relevant legal acts; 3) upon increasing the authorised capital by issuing new shares, the bank’s shares have not been fully paid-up in the prescribed manner or the bank’s shareholders, including those acquiring a qualifying holding in the bank’s authorised capital and/or voting rights, do not meet the requirements set.
35. The supervisory institution shall give written notice to the Register of Legal Persons of the taking of a decision to grant or not to grant an authorisation to register amendments to articles of association of a bank within 5 working days of the taking of the decision. CHAPTER II ESTABLISHMENT AND LICENSING OF A BANK, FINANCIAL UNDERTAKINGS CONTROLLED BY A BANK, A BANK’S BRANCHES AND REPRESENTATIVE OFFICES Article
36. Procedure for Establishing a Bank
37. A bank shall be established according to the procedure set forth by the Civil Code, the Law on Financial Institutions, this Law and, except where this Law provides otherwise, the Law on Companies.
38. A bank may only be established for an indefinite period of time.
39. A bank may be registered upon obtaining an authorisation of the supervisory institution to establish the bank.
40. Shares of a bank being established must be fully paid-up prior to the convening of the statutory meeting. Article
41. Founders
42. A bank may be established by not less than 10 founders.
43. Paragraph 1 of this Article shall not be applied where one of the founders of a bank is a Lithuanian or foreign financial institution or insurance undertaking and acquires more than 2/3 of the bank’s voting shares.
44. Each founder of a bank must acquire not less than 3 per cent of the bank’s voting shares.
45. The persons who may not be founders of a financial institution pursuant to the Law on Financial Institutions and the persons who may not be shareholders of a bank pursuant to this Law may not be founders of a bank. Article
46. Authorisation to Establish a Bank
47. An authorisation to establish a bank shall be granted by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
48. In order to obtain an authorisation to establish a bank, founders of the bank shall submit to the supervisory institution an application and the documents and data specified by legal acts of the supervisory institution, including: 1) the memorandum of the bank; 2) articles of association of the bank; 3) minutes of the statutory meeting and list of participants of the meeting; 4) a framework for activities of the bank; 5) documents and data on the identities of the founders of the bank and the proportion of the bank’s authorised capital and/or voting rights being acquired by each one of them as well as the documents and data evidencing that the funds used for the acquisition of the proportion of the bank’s authorised capital and/or voting rights have been obtained legitimately; 6) the documents required to asses the suitability of the founders of the bank acquiring a qualifying holding in the bank’s authorised capital and/or voting rights; 7) the documents proving that shares of the bank have been fully paid-up; 8) a list of heads of the bank elected by the statutory meeting whose election or appointment is subject to an authorisation of the supervisory institution; 9) au authorisation of a foreign supervisory institution to establish a controlled bank in the Republic of Lithuania or the information that this institution does not oppose the establishment of the bank (the information shall be provided in the case of establishment of a controlled bank by a foreign bank).
49. A bank’s founder acquiring a qualifying holding in the bank’s authorised capital and/or voting rights may only be a person: 1) who meets the requirements set by this Law for a bank’s shareholders and the requirements set by Article 7 of the Law on Financial Institutions; 2) who is of good repute. When a qualifying holding in a bank’s authorised capital and/or voting rights is held by a legal person, heads of the legal person must also be of good repute; 3) whose financial situation is sound and stable.
50. A supervisory institution shall refer for advice to the supervisory institution of the Republic of Lithuania which is responsible for supervision of financial brokerage firms or insurance companies or a supervisory institution of another Member State of the European Union responsible for supervision of foreign banks, financial brokerage firms or insurance companies where a bank will be: 1) an undertaking controlled by a foreign bank licensed in another Member State of the European Union or a financial brokerage firm or insurance company licensed in the Republic of Lithuania or another Member State of the European Union; 2) an undertaking controlled by the parent undertaking of a foreign bank licensed in another Member State of the European Union or a financial brokerage firm or insurance company licensed in the Republic of Lithuania or another Member State of the European Union; 3) controlled by the same persons controlling a foreign bank licensed in another Member State of the European Union or a financial brokerage firm or insurance company licensed in the Republic of Lithuania or another Member State of the European Union.
51. Prior to granting an authorisation to establish a bank and while exercising supervision of the bank, a supervisory institution shall refer for advice to the institutions indicated in paragraph 4 of this Article and, when evaluating the suitability of the persons acquiring a qualifying holding in the bank’s authorised capital and/or voting rights and the repute, qualification and experience of the heads of the undertakings of the same group, shall provide the information on these issues to the institutions indicated in paragraph 4 of this Article.
52. The supervisory institution must examine the submitted documents and take a decision on the granting of an authorisation to establish a bank within 3 months of the receipt of an application.
53. The supervisory institution may refuse to grant an authorisation to establish a bank where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect; 2) provisions of the articles of association of the bank do not ensure safe and sound activities of the bank or are not in conformity with the relevant legal acts; 3) the legal form, founders of the bank being established, heads of the bank, minimum capital of the bank do no meet the requirements set by laws.
54. The supervisory institution shall give written notice to the Register of Legal Persons of a decision to grant or not to grant an authorisation to establish a bank.
55. Upon granting an authorisation to establish a bank and until issuing to the bank a licence, a founder (shareholder) of the bank shall be prohibited from selling or otherwise transferring the shares acquired by him and set out in the memorandum, and the bank shall be prohibited from issuing new shares or otherwise changing the size of the authorised capital or composition of founders provided for by the memorandum.
56. The supervisory institution shall withdraw an authorisation to establish a bank prior to the establishment of the bank where: 1) the authorisation has been obtained by fraud or otherwise violating laws; 2) upon the expiry of the time limit laid down in paragraph 1 of Article 5 of this Law, articles of association of the bank being established become invalid.
57. The supervisory institution shall give written notice to founders and the Register of Legal Persons of a decision to withdraw an authorisation to establish a bank within 3 working days. Article
58. Licence
59. When issuing a licence, the supervisory institution may restrict the right of a bank to provide one or several licensed financial services where this is requested by the bank or where it is not prepared to provide all licensed financial services. Restrictions on the provision of licensed financial services shall be removed where the bank submits an application and the documents and data evidencing that the bank is prepared to provide all licensed financial services.
60. A licence shall be issued for an indefinite period of time.
61. A bank shall be prohibited from transferring the rights granted by a licence or otherwise permit another person to provide licensed financial services not on behalf of the bank and not for the benefit of the bank.
62. A licence shall be issued to a bank registered in the Register of Legal Persons by the supervisory institution in accordance with the procedure set forth by laws and legal acts of the supervisory institution.
63. In order to obtain a licence, a bank shall submit to the supervisory institution an application, the documents and data specified by legal acts of the supervisory institution, including: 1) registered articles of association of the bank and certificate of registration; 2) documents proving that the bank has the minimum capital of a bank laid down by this Law; 3) a list of shareholders of the bank specifying the proportion of the bank’s authorised capital and/or voting rights acquired by each one of them; 4) upon the establishment of the bank, a list of elected (appointed) heads of the bank whose election or appointment is subject to an authorisation of the supervisory institution; 5) an operating plan of the bank for the first three years; 6) a description of the management and organisational structure; 7) a draft of the accounting policy and a detailed description of the accounting organisation; 8) documents and information evidencing that the bank has in place the following ensuring safe and sound activities of the bank: internal control system, personnel, technical, information and technological security means, premises and insurance of property; 9) conclusions, authorisations or other documents issued by other State institutions on the preparedness to provide licensed financial services where this is required by other laws.
64. The supervisory institution shall have the right to carry out on-the-spot verification of the preparedness of a bank applying for the issuance of a licence to provide financial services.
65. Upon the request of the supervisory institution, State and municipal institutions as well as other persons must forthwith supply available information on founders, shareholders and heads of a bank, their financial situation, activities, discovered infringements of laws and other legal acts, conclusions of conducted verifications and examinations as well as other information required by the supervisory institution for the taking of a decision on the issuance of a licence.
66. The supervisory institution must examine submitted documents and take a decision on the issuance of a licence within 3 months of the receipt of the application. Where the supervisory institution requests additional documents or data, the decision must be taken within 3 months of the receipt of the additional documents and data. A decision on the issuance of a licence shall, in any case, be taken within 12 months of the receipt of the application.
67. Articles of association, an operating plan, management and organisational structure, risk management system, accounting organisation, internal control system, technical, information and technological security means, premises, insurance of property of a bank applying for a licence must ensure safe and sound activities of the bank and comply with the relevant legal acts. The bank must also meet the requirements set by this Law, including the requirements set for the legal form, minimum capital of the bank, requirements for the registered office, shareholders of the bank, including the shareholders who have acquired a qualifying holding in the bank’s authorised capital and/or voting rights, heads of the bank, and must be prepared to safely and soundly provide financial services.
68. The supervisory institution may refuse to issue a licence where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect; 2) a bank does not meet the requirements set in paragraph 9 of this Article; 3) close links exist between the bank and other person, which would prevent the supervisory institution from effectively exercising the supervision of the bank; 4) close links exist between the bank and a person from a state other than a Member State of the European Union whose legal acts governing the activities of this person or difficulties in ensuring compliance with the said legal acts may prevent the supervisory institution from effectively exercising the supervision of the bank.
69. Close links shall be considered to exist between two or more persons where they are linked by: 1) direct or indirect ownership (by way of control of a proportion of the authorised capital and/or voting rights granting the right to control the activities and management of an undertaking) of 20 per cent or more of the undertaking’s authorised capital and/or voting rights or other real possibility to exercise influence over decisions on the activities of the undertaking; or 2) ownership of a proportion of the authorised capital and/or voting rights granting the right to control the activities of an undertaking; or 3) one and the same third party controlling their proportions of the authorised capital and/or voting rights granting the right to control the activities of an undertaking.
70. A decision taken to issue or not to issue a licence shall be notified to the Register of Legal Persons in accordance with the provisions of this Register and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
71. A bank shall have the right to commence the provision of financial services only upon the issuance of a licence.
72. A bank holding a licence must always meet with the requirements set to obtain the licence. In the cases and according to the procedure set forth in this Law and legal acts of the supervisory institution, the bank must notify the supervisory institution of any changes in the data submitted to obtain the licence. Article
73. Withdrawal of a Licence
74. The grounds for the withdrawal of a licence shall be laid down by the Law on Financial Institutions. In addition to the grounds laid down in paragraph 2 of Article 10 of the Law on Financial Institutions, a licence may be withdrawn by a decision of the supervisory institution where: 1) a bank does not meet the requirements set for the granting of an authorisation to establish a bank or for the issuance of a licence; 2) a bank ceases to exist due to reorganisation or a decision is taken on liquidation thereof; 3) a bank does not pay in the first (advance) insurance premium in accordance with the Law on Insurance of Deposits and Liabilities to Investors where it must pay it or where insurance is terminated.
75. Withdrawal of a licence or suspension of validity thereof shall be notified to the bank and the Register of Legal Persons in the manner prescribed by provisions of this Register and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
76. Reasons must be given for a decision of the supervisory institution on the withdrawal of a licence.
77. A licence may also be withdrawn or validity thereof suspended on the grounds and according to the procedure set forth in Chapter 10 of this Law.
78. Upon the withdrawal of a licence, a bank shall not have the right to provide financial services, except to the extent it is necessary to settle with the bank’s creditors, and a decision must be taken on the liquidation of the bank or opening of bankruptcy proceedings according to the procedure set forth in Chapters 11 and 12 of this Law. Article
79. Branches and Other Establishments of a Bank in the Republic of Lithuania
80. Articles of association of a bank, management and organisational structure, accounting organisation, security means, premises and insurance of property of a branch and other establishments of the bank providing financial services must ensure safe and sound activities of the bank and be in compliance with the relevant legal acts.
81. All establishments of a bank providing financial services must have communication facilities to transmit information on the operations carried out to the registered office of the bank in real time.
82. Upon the setting up of a branch or another establishment providing financial services, a bank must, within 15 days of its establishment, notify thereof the supervisory institution and submit to the supervisory institution the information and documents specified by legal acts. In the event of a change in any of the particulars communicated, the bank must, within 15 days from the day of the change, notify thereof the supervisory institution and submit to the supervisory institution the information and documents established by legal acts. Article
83. Representative Office of a Bank
84. A bank shall have the right to establish a representative office in the Republic of Lithuania and in foreign states.
85. A representative office of a bank shall not have the right to provide financial services.
86. Upon the establishment of a representative office, a bank must, not later than within 15 days of its establishment, notify thereof the supervisory institution and submit to the supervisory institution the information and documents specified by legal acts. In the event of a change in any of the particulars communicated, the bank must, within 15 days from the day of the change, notify thereof the supervisory institution and submit to the supervisory institution the information and documents established by legal acts. Article
87. Banks and Branches Thereof in Foreign States
88. A bank shall have the right to establish a bank in a foreign country, acquire a qualifying holding in the authorised capital and/or voting rights of a foreign bank or increase it so that the foreign bank would become controlled by it or establish a branch in a foreign state only upon obtaining an authorisation of the supervisory institution.
89. An authorisation to establish a bank in a foreign country, acquire a qualifying holding in the authorised capital and/or voting rights of a foreign bank or increase it so that the foreign bank would become controlled by it or establish a branch in the foreign country shall be issued by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
90. For an authorisation to be granted to establish a bank in a foreign country, acquire a qualifying holding of the authorised capital and/or voting rights of a foreign bank or increase it so that the foreign bank would become controlled by it, an application and the documents and data specified by legal acts of the supervisory institution as well as data on the founders (members) of a bank being established or of a bank whose part of the authorised capital and/or voting rights is acquired who hold a qualifying holding in the foreign bank’s authorised capital and/or voting rights, the financial situation, operating plan, organisational and management structure and heads of the bank shall be submitted.
91. For an authorisation to be granted to establish a branch in a foreign country, an application and the documents and data specified by legal acts of the supervisory institution as well as the documents and data evidencing that the branch meets the requirements set in paragraph 1 of Article 11 of this Law shall be submitted.
92. Upon the receipt of an application referred to in paragraphs 3 and 4 of this Article, the supervisory institution shall request the supervisory institution of the foreign state wherein a bank is being established or under whose jurisdiction a bank falls, where a proportion of the bank’s authorised capital and/or voting rights is being acquired, or wherein a branch of the bank is being established to provide information on the procedure for supervising banks and the requirements set for banks in that state as well as capabilities of the supervisory institution of the Republic of Lithuania to exercise its supervisory functions and obtain the required information, including the information required for the exercise of supervision on a consolidated basis.
93. The supervisory institution must examine submitted documents and take a decision on the granting of an authorisation within 3 months of the receipt of the application.
94. The supervisory institution may refuse to grant the authorisation referred to in this Article where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect; 2) a bank being established or a bank whose proportion of the authorised capital and/or voting rights is being acquired or a branch being established do not meet the requirements set by the supervisory institution or where such an establishment of the bank or of the branch or acquisition of the proportion of the bank’s authorised capital and/or voting rights may pose a threat to the safety and soundness of activities of the bank; 3) information requested according to paragraph 5 of this Article is not received from the supervisory institution of a foreign country or it is possible to draw a conclusion on the basis of the submitted information that legal acts of the foreign state do not provide for a sufficient supervision of banks or restrict rights of the supervisory institution when exercising its supervisory functions and obtaining the required information, including the information required for the exercise of supervision on a consolidated basis.
95. In the cases and according to the procedure set forth by this Law and legal acts of the supervisory institution, a bank must notify the supervisory institution of any changes in the data submitted to obtain the authorisations referred to in this Article.
96. Where the supervisory institution establishes that after the granting of the authorisations referred to in this Article, circumstances may arise which would preclude the granting of an authorisation, the supervisory institution shall have the right, according to the procedure set forth in Chapter 10 of this Law, to take a decision on the prohibition of the activities of a branch, obligation to sell or otherwise transfer a proportion of the authorised capital and/or voting rights of a foreign bank and imposition of other sanctions to the bank.
97. This Article shall not be applied where a bank establishes a controlled bank in a Member State of the European Union, acquires a proportion of the authorised capital and/or voting rights of a foreign bank falling under the jurisdiction of a Member State of the European Union, establishes a branch in a Member State of the European Union or provides services without establishing the branch. Article
98. Right of a Bank to Provide Financial Services in the Members States of the European Union
99. A bank shall have the right to establish a branch in a Member State of the European Union according to the procedure set forth by this Article or provide financial services without establishing the branch.
100. Prior to establishing a branch in a Member State of the European Union, a bank shall notify thereof the supervisory institution by indicating the state in which it plans to establish a branch and submit the information specified by the supervisory institution on an operating plan of the branch to be established setting out, inter alia, the financial services to be provided, the organisational structure of the branch, the intended registered office (address) of the branch in the foreign state and the heads of the branch.
101. The supervisory institution must forward the information referred to in paragraph 2 of this Article and submitted by the bank as well as information on the bank’s equity capital and capital adequacy within 3 months to the supervisory institution of a foreign state. The supervisory institution shall have the right to refuse the forwarding of the information to the supervisory institution of the foreign state where the operating plan of a branch, organisational structure or heads thereof or the financial situation of the bank do not meet the requirements set by the supervisory institution to the activities envisaged. Reasons must be given for the refusal of the supervisory institution to forward the information, and a decision thereon must be taken within 3 months of the receipt of the information referred to paragraph 2 of this Article. The bank must be forthwith notified of the forwarding of the information or refusal to forward it to the supervisory institution of the foreign state.
102. Where a bank has already established at least one branch in a foreign state, the procedure set forth in this Article shall not be applied to the establishment of other branches thereof in that state.
103. In order to provide financial services in a foreign state without establishing a branch, a bank must notify thereof the supervisory institution. The notification shall set out the financial services to be provided. The supervisory institution must, within one month, forward or refuse to forward this information to the supervisory institution of a foreign country and notify thereof the bank.
104. In the event of a change in any of the particulars communicated to the supervisory institution when effecting the notification referred to paragraphs 2 or 5 of this Article, a bank must notify thereof the supervisory institution and the supervisory institution of a foreign country in advance, at least one month before making the change. The supervisory institution shall, within one month, forward the information on the planned changes to the supervisory institution of the foreign state or refuse to forward it where there are grounds referred to in paragraph 3 of this Law and notify thereof the bank. Upon the refusal of the supervisory institution to forward the information on the planned changes to the supervisory institution of the foreign state, the bank shall not have the right to effect these changes.
105. Legal acts of the supervisory institution may lay down the procedure for applying the provisions of this Article to a specialised bank authorised only to issue and administer electronic money. Article
106. Right of the Financial Undertakings Controlled by a Bank to Provide Financial Services in the Member States of the European Union
107. The right to establish a branch in a Member State of the European Union or provide financial services without establishing the branch according to the procedure set forth by Article 14 of this Law shall also be vested in a financial undertaking controlled by one or several banks and established in the Republic of Lithuania where according to legal acts of the Republic of Lithuania and establishment documents it has the right to engage in the provision of financial services and meets all of the following requirements: 1) the parent bank or banks of the financial undertaking hold a licence obtained according to the procedure set forth by this Law; 2) the financial undertaking is already engaged in the provision of the financial services in the Republic of Lithuania which are to be provided in the Member State of the European Union; 3) the parent bank or banks of the financial undertaking hold 90 per cent or more of the authorised capital and/or voting rights of the financial undertaking; 4) the parent bank or banks of the financial undertaking satisfy the supervisory institution regarding the prudent management of the controlled financial undertaking and have declared, with the consent of the supervisory institution, that the parent bank or banks of the financial undertaking jointly and severally guarantee the commitments entered into by the controlled financial undertaking; 5) the controlled financial undertaking is supervised by exercising the supervision of the parent bank or banks on a consolidated basis.
108. When effecting a notification pursuant to paragraph 3 of Article 14 of this Law, the supervisory institution shall indicate therein, inter alia, whether the controlled financial undertaking meets the requirements set in paragraph 1 of this Article and submit information on the equity capital of the financial undertaking and consolidated equity capital of the parent bank and of the entire financial group.
109. A financial undertaking which is the subject of a notification effected according to the procedure set forth by this Article must submit to the supervisory institution the information specified by legal acts thereof and required to supervise the compliance with terms and conditions set in this Article. After the effecting of the notification, the capital of the financial undertaking may not be reduced, and the undertaking must ensure adequate management and organisational structure, accounting organisation and internal control system. Moreover, the supervisory institution shall have the right to inspect the financial undertaking according to the procedure set forth by this Law and to impose to it administrative penalties in accordance with the Code of Administrative Offences. Where the controlled financial undertaking no longer meets at least one requirement set in paragraph 1 of this Article, the supervisory institution shall notify thereof the supervisory institution of a foreign state. CHAPTER III ACTIVITIES OF FOREIGN BANKS IN THE REPUBLIC OF LITHUANIA Article
110. Activities of Foreign Banks in the Republic of Lithuania
111. Foreign banks may, according to the procedure set forth by this Law, establish banks in the Republic of Lithuania, acquire a proportion of the authorised capital and/or voting rights of the banks in operation and establish branches and representative offices; the foreign banks licensed in the Member States of the European Union shall also have the right to provide financial services without establishing a branch in the Republic of Lithuania pursuant to Article 20 of this Law.
112. A branch of a foreign bank may be established in the Republic of Lithuania according to the procedure set forth by this Law only upon obtaining an authorisation to establish the branch of the foreign bank. The branch of the foreign bank may commence the provision of financial services in the Republic of Lithuania only upon obtaining of a licence according to the procedure set forth by this Law.
113. Paragraph 2 of this Law shall not apply to the foreign banks licensed in the Member States of the European Union and establishing a branch in the Republic of Lithuania according to the procedure set forth by Article 20 of this Law.
114. A representative office of a foreign bank may be established in the Republic of Lithuania according to the procedure set forth by this Law only upon obtaining an authorisation to establish the representative office of the bank. This provision shall not be applied to the foreign banks licensed in the Member States of the European Union.
115. The requirements set for banks under this Law shall be applied to branches and representative offices of foreign banks and to activities, supervision, termination and restructuring thereof to the extent that they do not contradict the essence of a branch or representative office and this Law does not provide otherwise.
116. A branch of a foreign bank established in the Republic of Lithuania, when providing financial services in a place other than the registered office of the branch, need not establish the branch therein. Where the foreign bank establishes more than one branch in the Republic of Lithuania, it must specify one branch which would provide the supervisory institution with the information on all branches established in the Republic of Lithuania as specified in this Law and legal acts of the supervisory institution.
117. Where legal acts of a state other than a Member State of the European Union under whose jurisdiction falls a foreign bank establishing a bank in the Republic of Lithuania, acquiring a qualifying holding in the bank’s authorised capital and/or voting rights or establishing a branch or representative office provide for additional or stricter, as compared with this Law, requirements and terms set for Lithuanian banks wishing to pursue business in that state on the establishment of a bank, acquisition of a qualifying holding in the bank’s authorised capital and/or voting rights or the establishment of a branch or representative office, the supervisory institution shall have the right to require that the foreign bank wishing to pursue business in the Republic of Lithuania meet the same requirements and terms. Article
118. Granting of an Authorisation to a Foreign Bank to Establish a Bank in the Republic of Lithuania and Issuance of a Licence to a Bank Established by the Foreign Bank An authorisation to establish a bank in the Republic of Lithuania shall be granted to a foreign bank and a licence shall be issued to an established bank according to the procedure set forth by Articles 8 and 9 of this Law. Article
119. Granting of an Authorisation to Establish a Branch to a Foreign Bank
120. An authorisation to establish a branch of a foreign bank in the Republic of Lithuania shall be granted by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
121. In order to obtain an authorisation to establish a branch, a foreign bank shall submit an application and the documents and data specified by legal acts of the supervisory institution, including: 1) the establishment documents of the foreign bank, certificate of registration, licence or other documents granting the right to pursue the business of a credit institution; 2) decision of a body of the foreign bank to establish a branch in the Republic of Lithuania; 3) documents and data evidencing that the foreign bank meets the soundness criteria set by legal acts of the supervisory institution; 4) a framework for activities of the branch; 5) a written confirmation that the supervisory institution of a foreign state under whose jurisdiction the foreign bank falls does not object to the establishment of the branch in the Republic of Lithuania and information of this supervisory institution on the procedure for supervising foreign banks in that state, including branches thereof in foreign states, and the requirements set for banks as well as the obligation to exercise supervision of the branch established in the Republic of Lithuania and to provide information to the Lithuanian supervisory institution; 6) a list of heads of the branch and other persons whose election or appointment is subject to an authorisation of the supervisory institution.
122. The supervisory institution must examine submitted documents and take a decision on the granting of an authorisation to establish a branch within 3 months of the receipt of the application.
123. The supervisory institution may refuse to grant an authorisation to establish a branch where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect; 2) a foreign bank establishing a branch does not meet the soundness criteria set by legal acts of the supervisory institution or heads of the branch of the foreign bank do not meet the requirements set by the legal acts; 3) the supervisory institution of a foreign state under whose jurisdiction a foreign bank falls objects to the establishment of a branch in the Republic of Lithuania or where the procedure for supervising foreign banks in that state and the requirements set for banks do not adequately ensure safe and sound activities of the branch or may prevent the Lithuanian supervisory institution from exercising its functions; 4) the supervisory institution of a foreign state under whose jurisdiction a foreign bank falls, where the foreign bank establishes a branch thereof in the Republic of Lithuania, does not undertake to supervise the activities of the branch of the foreign bank in the Republic of Lithuania and provide information to the Lithuanian supervisory institution under the terms acceptable to it.
124. The supervisory institution shall give written notice to the Register of Legal Persons of a decision taken to grant or not to grant an authorisation to establish a branch. Article
125. Granting of a Licence to a Branch of a Foreign Bank
126. A licence issued to a branch of a foreign bank shall be subject to the provisions of paragraphs 1-3 of Article 9 of this Law.
127. A licence shall be issued to a branch of a foreign bank registered in the Register of Legal Persons of the Republic of Lithuania by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
128. For a licence to be issued, an application and the documents and data specified by legal acts of the supervisory institution shall be submitted, including: 1) articles of association of a branch and certificate of registration; 2) a list of the heads of the branch appointed after the establishment of the branch and of other persons whose election or appointment is subject to an authorisation of the supervisory institution; 3) an operating plan of the branch for the first three years; 4) documents and data on the branch specified by subparagraphs 6-9 of paragraph 5 of Article 9 of this Law.
129. The supervisory institution shall have the right to carry out on-the-spot verification of the preparedness of a branch to commence the provision of financial services.
130. The supervisory institution must examine submitted documents and take a decision on the issuance of a licence within 3 months of the receipt of the application.
131. Regulations of a branch of a foreign bank, heads, operating plan, management and organisational structure, accounting organisation, internal control system, security means, premises and insurance of property thereof must ensure safe and sound activities of the branch and be in compliance with the relevant legal acts. The branch must also comply with other requirements set by this Law and be prepared to provide financial services in a safe and sound manner.
132. The supervisory institution may refuse to issue a licence where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect; 2) a branch does not meet the requirements set in paragraph 6 of this Article.
133. A decision taken to issue or not to issue a licence shall be notified to the Register of Legal Persons according to the procedure set forth by this Register and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
134. A foreign bank which has been issued a licence must, under any circumstances, meet the requirements set to obtain the licence. In the cases and according to the procedure set forth by this Law and legal acts of the supervisory institution, the bank must notify the supervisory institution of any changes in the particulars submitted to obtain the authorisation to establish a branch and to obtain the licence.
135. A licence shall be withdrawn by a decision of the supervisory institution on the grounds and according to the procedure set forth by Article 10 of this Law, also where the bank which has established a branch is being wound up or bankruptcy proceedings have been opened against it. Article
136. Right of Foreign Banks Licensed in the Member States of the European Union to Establish a Branch in the Republic of Lithuania or to Provide Financial Services without Establishing the Branch
137. A foreign bank licensed in a Member State of the European Union may, according to the procedure set forth in this Article, establish a branch in the Republic of Lithuania or provide financial services without establishing the branch. The right to provide financial services without establishing a branch shall not entitle a foreign bank licensed in a Member State of the European Union to engage in the permanent provision of financial services in the Republic of Lithuania.
138. A foreign bank licensed in a Member State of the European Union may establish a branch in the Republic of Lithuania and provide the financial services which the foreign bank has the right to provide according to an authorisation granted or a licence issued to it by the supervisory institution of a foreign state where: 1) the supervisory institution has received from the supervisory institution of a foreign state under whose jurisdiction the foreign bank falls a notification containing information on an operating plan of the branch setting out, inter alia, the financial services to be provided, the organisational structure of the branch, the intended registered office (address) of the branch in the Republic of Lithuania; the heads of the branch; the equity capital and capital adequacy of the bank; 2) a notification has been received from the supervisory institution on the preparedness to exercise supervision and, where necessary, information on the requirements set by legal acts for the protection of public interests and binding on the branch which is engaged in the provision of financial services in the Republic of Lithuania.
139. A branch of a foreign bank licensed in a Member State of the European Union may be established and commence its activities upon the receipt by the foreign bank of a notification referred to in subparagraph 2 of paragraph 2 of this Article, and where no notification is received – 2 months from the receipt of the information referred to in subparagraph 1 of paragraph 2 of this Article by the Lithuanian supervisory institution from the supervisory institution of the foreign state.
140. Where a foreign bank referred to in paragraph 1 of this Article has already established at least one branch in the Republic of Lithuania, the procedure set forth by this Article shall not be applied to the establishment of other branches thereof.
141. A foreign bank licensed in a Member State of the European Union may commence the provision of financial services in the Republic of Lithuania without establishing a branch from the receipt of a notification setting out the financial services to be provided by the Lithuanian supervisory institution from the supervisory institution of a foreign state under whose jurisdiction the foreign bank falls.
142. In the event of a change in any of the particulars on the operating plan of a branch, the organisational structure of the branch, the office (address) of the branch in the Republic of Lithuania or the heads of the branch communicated to the supervisory institution pursuant to subparagraph 1 of paragraph 2 of this Article, a foreign bank must notify thereof the Lithuanian supervisory institution in advance, at least one month before making the change. Article
143. Activities Carried on in the Republic of Lithuania by the Financial Undertakings which are Controlled by the Foreign Banks Licensed in the Member States of the European Union
144. A financial undertaking which is controlled by one or several foreign banks licensed in a Member State of the European Union shall have the right to establish a branch in the Republic of Lithuania or provide financial services without establishing a branch according to the procedure set forth by Article 20 of this Law, provided it has the right to engage in the provision of financial services in compliance with legal acts of the foreign state and its establishment documents and fulfils all of the following conditions: 1) the parent bank or banks of the financial undertaking have obtained an authorisation to pursue the business of a credit institution in a foreign state whose legal acts regulate the activities of an controlled financial undertaking; 2) the financial undertaking is already engaged in a Member State of the European Union in the provision of the financial services to be provided in the Republic of Lithuania; 3) the parent bank or banks of the financial undertaking hold 90 per cent or more of the authorised capital and/or voting rights of the financial undertaking; 4) the parent bank or banks of the financial undertaking satisfy the supervisory institution of a foreign state regarding the prudent management of the controlled financial undertaking and have declared, with the consent of the supervisory institution of the foreign state, that the parent bank or banks of the financial undertaking jointly and severally guarantee the commitments entered into by the controlled financial undertaking; 5) the controlled financial undertaking is supervised by exercising the supervision of the parent bank or banks on a consolidated basis.
145. A financial undertaking referred to paragraph 1 of this Article may establish a branch or provide financial services in the Republic of Lithuania without establishing a branch where the supervisory institution of a foreign state, when effecting a notification pursuant to subparagraph 1 of paragraph 2 of Article 20 of this Law, indicates, inter alia, whether the controlled financial undertaking meets the requirements set in paragraph 1 of this Article and provides information on the equity capital of the financial undertaking and the consolidated equity capital of the parent bank and the entire financial group.
146. Where the supervisory institution of a foreign state notifies the Lithuanian supervisory institution that a controlled financial undertaking no longer satisfies at least one of the conditions referred to in paragraph 1 of this Article, the financial undertaking shall thereupon be applied all requirements set by laws of the Republic of Lithuania for the persons providing such financial services.
147. Provisions of this Article shall apply mutatis mutandis to the financial undertakings controlled the financial undertakings controlled by the foreign banks licensed in the Member States of the European Union. Article
148. Representative Office of a Foreign Bank in the Republic of Lithuania
149. A representative office of a foreign bank shall not have the right to provide financial services in the Republic of Lithuania.
150. An authorisation to establish a representative office of a foreign bank in the Republic of Lithuania shall be granted by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
151. In order to obtain an authorisation to establish a representative office, a foreign bank shall submit an application and the documents and data specified by legal acts of the supervisory institution, including: 1) the establishment documents of the foreign bank, certificate of registration, licence or other documents granting the right to pursue the business of a credit institution; 2) a decision of the management body of the foreign bank to establish a representative office in the Republic of Lithuania; 3) a written consent of the supervisory institution of a foreign state under whose jurisdiction the foreign bank falls to establish a representative office in the Republic of Lithuania.
152. The supervisory institution must examine submitted documents and take a decision on the granting of an authorisation to establish a representative office within 3 months of the receipt of the application.
153. The supervisory institution may refuse to grant an authorisation to establish a representative office where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect; 2) a foreign bank establishing a representative office or the representative office does not meet the requirements set by legal acts of the supervisory institution; 3) the supervisory institution of a foreign state under whose jurisdiction the foreign bank falls objects to the establishment of a representative office in the Republic of Lithuania.
154. The supervisory institution shall give written notice to the Register of Legal Persons of the decision to grant or not to grant an authorisation to establish a representative office.
155. A representative office of a foreign bank, in the cases and according to the procedure set forth by legal acts of the supervisory institution, must give notice to the supervisory institution of the registration of the representative office in the Register of Legal Persons and of any changes in the particulars submitted to obtain an authorisation to establish the representative office. CHAPTER IV SHAREHOLDERS OF A BANK Article
156. Shareholders of a Bank
157. A bank must have at least 10 shareholders.
158. Paragraph 1 of this Article shall not be applied where one of a bank’s shareholders is a Lithuanian or foreign financial institution or an insurance undertaking and where it holds more than 2/3 of the bank’s voting shares or where the State becomes a shareholder of the bank according to the procedure set forth by Article 28 of this Law.
159. Shareholders of a bank may not be: 1) the legal persons financed from State or municipal budgets; 2) the persons who have not submitted, in the cases and according to the procedure set forth by legal acts, to the supervisory institution data on their identities, members, activities, financial situation, the heads of a legal person, the persons for whose benefit shares are acquired or the legitimacy of the acquisition of the funds used to acquire the bank’s shares or who have not proved the legitimacy of the acquisition of the funds used to acquire the bank’s shares; 3) the persons who object that the supervisory institution manages, in the cases and according to the procedure set forth by laws and other legal acts, their data required for the performance of the functions provided for under this Law, including their personal data and information on a person’s previous convictions and health.
160. A person who holds a qualifying holding in a bank’s authorised capital and/or voting rights must under any circumstances meet the requirements set forth in paragraph 3 of Article 8 of this Law.
161. A bank must manage the list of the bank’s members (shareholders) according to the procedure set forth by the Law on Financial Institutions. The bank must, not later than within 5 days, notify the supervisory institution of any case of acquisition, increase, transfer or reduction of a qualifying holding in the bank’s authorised capital and/or voting rights exceeding the thresholds specified in paragraph 1 of Article 24 of this Law. Moreover, the bank must submit particulars of the list of the bank’s members (shareholders) to the supervisory institution within 10 days from the date of the annual general meeting of the shareholders or otherwise upon the request of the supervisory institution.
162. A bank’s shareholders must exercise their rights and perform their obligations in such a way as to ensure the stability and soundness of the bank’s activities. Article
163. Qualifying Holding in a Bank’s Authorised Capital and/or Voting Rights
164. A person or the persons acting in concert (hereinafter referred to as the “acquirer”) who have taken a decision on the acquisition of a qualifying holding in a bank’s authorised capital and/or voting rights or to increase it so that the proportion of the bank’s authorised capital and/or voting rights held by him would reach or exceed 20 per cent, 30 per cent or 50 per cent of the holding or so that the bank would become controlled by him (hereinafter referred to as the “proposed acquisition”) must give a written notice thereof to the supervisory institution and indicate the size of the proportion of the qualifying holding in the bank’s authorised capital and/or voting rights to be acquired, also submit the documents and provide the data specified in a list indicated in paragraph 2 of Article 25 of this Law. A failure to comply with the requirement to obtain the decision of the supervisory institution not to oppose the proposed acquisition shall not invalidate a transaction, however it shall give rise to the consequences specified in paragraph 4 of this Article.
165. A person who has taken a decision on the transfer of a qualifying holding in a bank’s authorised capital and/or voting rights or to reduce it so that the proportion of the bank’s authorised capital and/or voting rights held by him would fall below 20 per cent, 30 per cent or 50 per cent of the holding or so that the bank would cease to be controlled by him must give a written notice thereof to the supervisory institution and indicate the size of the proportion of the qualifying holding in the bank’s authorised capital and/or voting rights to be transferred.
166. When determining a qualifying holding in the authorised capital and/or voting rights for the purposes indicated in this Article and in Article 23 of this Law, provisions of Articles 23 and 24 of the Law on Securities must be complied with. Moreover, when determining a qualifying holding in a bank’s authorised capital and/or voting rights, no account shall be taken of the voting rights or shares which financial brokerage firms or credit institutions may hold as a result of the rendered investment service of underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis, provided that those rights are not exercised or otherwise used to intervene in the management of the issuer and that they are disposed of within one year of acquisition.
167. Where a qualifying holding in a bank’s authorised capital and/or voting rights has been acquired or increased without giving a notice thereof to the supervisory institution in accordance with paragraph 1 of this Article or prior to the expiry of the time limit specified in paragraph 4 of Article 25 of this Law (with the exception of the case of receipt of a decision of the supervisory institution not to oppose the proposed acquisition prior to the expiry of the time limit specified in paragraph 4 of Article 25 of this Law) or in the event of the opposition of the supervisory institution to the proposed acquisition, also where the supervisory institution takes a decision on suspension of the right exercise the voting right, the entire proportion of the bank’s authorised capital and/or voting rights held by the acquirer at the general meeting of the bank’s shareholders shall be divested of the voting right. The voting right shall be re-acquired on the day of receipt of a decision by the supervisory institution not to oppose the proposed acquisition or where the supervisory institution does not declare its opposition to the proposed acquisition or when the supervisory institution takes a decision on revocation of the decision on suspension of the right to exercise the voting right at the general meeting of the shareholders in the case specified in paragraph 3 of Article 26 of this Law. Article
168. Assessment of the Acquirer and the Proposed Acquisition
169. The acquirer shall submit a notification of the proposed acquisition, the documents and data necessary for performance of an assessment of the acquirer and the proposed acquisition in accordance with the procedure laid down by this Law and legal acts of the supervisory institution.
170. The supervisory institution shall establish a list of the documents and data submitted together with the notification of the proposed acquisition and required for the assessment of the acquirer and the proposed acquisition. The documents and data indicated in this list must be proportionate to and adjusted for the acquirer and the proposed acquisition. The list may not contain the documents and data which are not required for the assessment of the acquirer and the proposed acquisition according to the criteria established in paragraph 8 of this Article.
171. Upon the receipt of a notification of the proposed acquisition, the documents and data necessary for performance of an assessment of the acquirer and the proposed acquisition, also upon the subsequent receipt, in accordance with paragraph 6 of this Article, of additional documents and data, the supervisory institution shall immediately, within 2 working days, acknowledge in writing the receipt thereof to the acquirer.
172. The supervisory institution shall have a maximum of 60 working days for performance of an assessment of the acquirer and the proposed acquisition as from the date of the written acknowledgement of receipt of the notification of the proposed acquisition and all documents and data necessary to carry out the assessment of the acquirer and the proposed acquisition (hereinafter referred to as the “assessment period”). When acknowledging the receipt of a notification of the proposed acquisition and all the documents and data necessary for performance of an assessment of the acquirer and the proposed acquisition or of the additional documents and data submitted in accordance with paragraph 6 of this Article, the supervisory institution shall give a notice to the acquirer of the date of expiry of the assessment period.
173. The supervisory institution may, during the assessment period, if necessary, and no later than on the 50th working day of the assessment period, request the acquirer to submit additional documents and data that are required to complete the assessment of the acquirer and the proposed acquisition. Such a request shall be made in writing and shall specify the additional documents and data needed.
174. For the period between the date of filing a request by the supervisory institution to submit additional documents and data required to complete an assessment and the receipt of a response by the acquirer to the request of the supervisory institution, the assessment period shall be interrupted. The interruption of the assessment period may not exceed 20 working days. The supervisory institution may, at its own discretion, further request completion or clarification of the documents and data at its own discretion, but this may not result in an interruption of the assessment period.
175. The supervisory institution may extend the interruption of the assessment period as indicated in paragraph 6 of this Article for a period not exceeding 30 working days where the acquirer is: 1) situated or is regulated in a country other than European Union Member State, or 2) not subject to supervision under legal acts of the Republic of Lithuania or other Member States of the European Union regulating the activities of credit institutions, insurance companies, reinsurance companies, financial brokerage firms or management companies of harmonised collective investment undertakings.
176. In assessing the submitted notification of the proposed acquisition and the documents and data necessary for the assessment of the acquirer and the proposed acquisition as well as the submitted additional documents and data, the supervisory institution shall, in order to ensure the sound and prudential management of a bank in respect of which an acquisition is proposed, and having regard to the likely influence of the acquirer on the bank, appraise the suitability of the acquirer and the financial soundness of the proposed acquisition against all of the following criteria: 1) the good repute of the acquirer (paragraphs 12 and 13 of Article 34 of this Law); 2) the good repute and experience of the person who will be the head of the bank following the proposed acquisition (paragraph 2 of Article 34 of this Law); 3) the financial soundness of the acquirer, in particular in relation to the type of business pursued and envisaged in the bank in which the acquisition is proposed; 4) whether the bank will be able to comply at all times, following implementation of the proposed acquisition, with the prudential requirements as set forth by this Law and other legal acts, in particular, whether a group of which the bank will become a part has a structure that makes it possible to exercise effective supervision, effectively exchange information among supervisory institutions and determine the allocation of responsibilities among the supervisory institutions; 5) whether there is an appropriate ground to suspect that, in connection with the proposed acquisition, the activities of money laundering or terrorist financing as defined by the Law on Prevention of Money Laundering and Terrorist Financing are being or were carried out or attempted, or that the proposed acquisition could increase the risk thereof.
177. The supervisory institution shall have the right to oppose the proposed acquisition solely when, based on the criteria specified in paragraph 8 of this Article, there is an appropriate ground therefor or when the information as supplied by the acquirer is incomplete.
178. The supervisory institution may neither impose any prior conditions in respect of the size of a qualifying holding in a bank’s authorised capital and/or voting rights that must be acquired nor examine the proposed acquisition in terms of the economic needs of the market.
179. Where two or more proposed acquisitions have been notified to the supervisory institution regarding the same bank, the latter shall consider all the notifications received in accordance with the same procedure treating the acquirers in a non-discriminatory manner.
180. If the supervisory institution decides to oppose the proposed acquisition, it shall, within two working days and not exceeding the assessment period, inform the acquirer thereof in writing and provide the reasons for that decision. Moreover, the decision shall indicate all opinions or reservations received from other supervisory institutions following consultation according to paragraphs 15 and 16 of this Article. The supervisory institution shall have the right, at the request of the acquirer or at its own initiative, to publish information on the reasons for taking the decision to oppose the proposed acquisition.
181. Where the supervisory institution does not declare its opposition to the proposed acquisition during the assessment period, it shall be held that the supervisory institution does not oppose the proposed acquisition. If the supervisory institution takes a decision not to oppose the proposed acquisition prior to expiry of the assessment period, it must notify the acquirer thereof in writing within two working days.
182. When taking a decision not to oppose the proposed acquisition, the supervisory institution shall have the right to lay down a maximum time limit for implementing the proposed acquisition. Where necessary, this time limit may be extended.
183. The supervisory institution shall refer for advice to appropriate supervisory institutions of the Republic of Lithuania and other Member States of the European Union where the acquirer is: 1) a foreign bank licensed in another Member State of the European Union, an insurance company, reinsurance company, financial brokerage firm or management company of harmonised collective investment undertakings licensed in the Republic of Lithuania or another Member State of the European Union, or 2) the parent company of a foreign bank licensed in another Member State of the European Union, an insurance company, reinsurance company, financial brokerage firm or management company of harmonised collective investment undertakings licensed in the Republic of Lithuania or another Member State of the European Union, or 3) a person controlling a foreign bank licensed in another Member State of the European Union, an insurance company, reinsurance company, financial brokerage firm or management company of harmonised collective investment undertakings licensed in the Republic of Lithuania or another Member State of the European Union.
184. The supervisory institution shall, in consultation according to paragraph 15 of this Article, request other appropriate supervisory institutions to provide all information which is relevant for the assessment of suitability of the acquirer and the financial soundness of the proposed acquisition and shall communicate without delay to other supervisory institutions upon their request the information relevant for the assessment being conducted and shall communicate on its own initiative all information essential for the assessment being conducted.
185. Where it is suspected that the activities of money laundering or terrorist financing may be carried out or were carried out or attempted during the proposed acquisition or that the proposed acquisition could increase the risk thereof, the supervisory institution shall refer to the state institutions responsible for prevention of money laundering and/or terrorist financing with a request to provide available data and conclusions. Upon the request of the supervisory institution, the state institutions responsible for prevention of money laundering and/or terrorist financing, other state and municipal institutions, also other persons must forthwith supply available information on the acquirer, members and heads thereof, their financial situation, activities, discovered infringements of laws and other legal acts, conclusions of conducted verifications and examinations as well as other information required by the supervisory institution to perform an assessment of the acquirer and the proposed acquisition. Article
186. Suspension of the Right to Exercise the Voting Right
187. The supervisory institution shall have the right to take a decision on the suspension of the right of a person holding a qualifying holding in a bank’s authorised capital and/or voting rights to exercise his voting right at the general meeting of the shareholders where: 1) a notification as specified in paragraph 1 of Article 24 of this Law, the documents and data required for the assessment of the acquirer and the proposed acquisition or additional documents and data were provided by supplying incorrect information or by otherwise violating laws; 2) the person does not meet the requirements set in this Law.
188. A decision taken on the suspension of the right of a person to exercise his voting right at the general meeting of the shareholders shall be notified to this person and a bank whose qualifying holding in the authorised capital and/or voting rights is held within 5 working days of the taking of the decision.
189. A decision on the suspension of the right of a person to exercise his voting right at the general meeting of the shareholders as taken on the grounds specified in subparagraph 2 of paragraph 1 of this Article may be revoked in the event of submission of the documents and data evidencing the absence of the circumstances which provided a basis for the taking of such a decision. The supervisory institution shall take a decision on the revocation of the decision on the suspension of the right to exercise the voting right at the general meeting of the shareholders within 30 days of the receipt of an application and the required documents.
190. A decision on the suspension of the right of a person to exercise his voting right must be substantiated and taken at the general meeting of shareholders in accordance with the provisions of paragraph 2 of Article 73 of this Law. Article
191. Forced Sale of a Bank’s Shares
192. The supervisory institution shall have the right to apply to the courts requesting the forced sale of a bank’s shares owned by a shareholder of the bank who fails to meet the requirements set by this Law or is exerting an influence which operates to the detriment of the sound management of the bank to a person or persons indicated by the supervisory institution by granting the pre-emption right to other shareholders of the bank.
193. Where in the cases specified by this Law the general meeting of a bank’s shareholders does not take decisions on the restoration of the minimum amount of the capital of the bank or where within the fixed time limit the capital is not restored, the supervisory institution shall have the right to apply to the courts requesting the forced sale of the shares owned by all shareholders of the bank to a person or persons indicated by the supervisory institution and meeting the requirements set by this Law.
194. The forced sale of a bank’s shares shall be carried out according to the procedure set forth in Chapter IX of Part II of Book Two of the Civil Code of the Republic of Lithuania. Work of the experts appointed by the courts and their other expenses shall be borne by the bank. Article
195. Taking over of a Bank’s Shares for Public Needs
196. Where according to the Law on Insurance of Deposits and Liabilities to Investors an insured event, in the event of its occurrence to a bank, may pose a threat to the liquidity of the State undertaking “Deposit and Investment Insurance” (hereinafter in this Article and in Article 29 referred to as “the insurance undertaking”) and proper payment of insurance compensations, the bank’s shares may be taken over from shareholders of the bank for public needs with a fair recompense. The shares taken over shall be managed, used and disposed of by the right of trust by the insurance undertaking.
197. Upon the receipt from the supervisory institution of information that activities of a bank are not safe and sound and that the bank may become insolvent as well as having a sufficient grounds to believe that an insured event, in the event of its occurrence to a bank, may pose a threat to the liquidity of the insurance undertaking and proper payment of insurance compensations, the council of the insurance undertaking shall have the right to take a decision on the taking over of the bank’s shares from the shareholders.
198. A bank’s shareholders shall be given written notice of a decision taken by the insurance undertaking on the taking over of the bank’s shares from the shareholders.
199. Where it transpires that the value of the shares taken over is equal to zero, the right of ownership of the shares taken over shall be transferred from the moment of taking a decision on the taking over of the shares for public needs. In other cases, the right of ownership of the shares taken over shall be transferred from the moment of settlement with the holder of the shares.
200. Disputes relating to the taking over of a bank’s shares shall be settled in court. Filing of an appeal to court shall not have suspensory effect on the decision appealed against.
201. Upon the transfer of the shares taken over into the ownership of the State, the insurance undertaking must, according to the procedure set forth by laws, take all possible and necessary measures to ensure that a bank’s activities are again safe and credible.
202. Where a bank’s activities are again safe and sound, the bank’s shares shall be sold according to the procedure set forth by the legal acts regulating the privatisation of State property. Article
203. Valuation of a Bank’s Shares Taken over for Public Needs and Compensation Therefor
204. A bank’s shares shall be valued by the supervisory institution by taking account of the market value of the bank’s shares and other factors likely to influence value thereof on the basis of the methods (criteria) approved by legal acts of the supervisory institution. However, where the bank fulfils at least one condition set by the supervisory institution for the declaration of the insolvency of a bank, the value of the bank’s shares shall be considered to be equal to zero.
205. Where it transpires that a bank’s shares to be taken over have value, the bank’s shareholders shall be compensated for the shares taken over in money’s worth.
206. Where it transpires that a bank’s shares to be taken over have value, shareholders shall be specified, by a notification referred to in paragraph 3 of Article 28 of this Law, a sum of money to be paid for the shares and informed that they must, within 5 days of the receipt of the notification, give written notice to the insurance undertaking of data on the accounts opened (held) in a credit institution wherein money for the bank’s shares taken over must be deposited. Where the bank’s shareholders avoid accepting the performance of this obligation and fail, within the fixed time limit, to notify of the accounts opened (held) or in other cases specified in paragraph 1 of Article 6.56 of the Civil Code, the insurance undertaking shall settle with the shareholders by depositing the money into the deposit account of a notary, a bank or other credit institution. A deposit of the money into the account indicated by the bank’s shareholders or into the deposit account of a notary, bank or other credit institution shall be considered a proper settlement with the bank’s shareholders.
207. Disputes relating to the valuation of a bank’s shares and the losses incurred upon the taking over of property from its holders shall be settled in court. Filing of an appeal to court shall not have suspensory effect on the decision appealed against. The losses shall be reimbursed according to the procedure set forth by laws. CHAPTER V MANAGEMENT OF A BANK Article
208. Bodies of a Bank
209. A bank must have the following bodies: the general meeting of the shareholders, the supervisory board, the board and the head of the administration.
210. The management bodies of a bank’s shall be the bank’s board and the head of the administration. The bank’s articles of association must clearly establish and define the powers and functions of the bank’s board and the head of administration.
211. The general meeting of shareholders and the supervisory board as well as meetings of the board, in addition to other statutory grounds, may also be convened upon the instruction of the supervisory institution.
212. A bank’s articles of association, the Civil Code, this Law, the Law on Financial Institutions and the Law on Companies shall set forth the procedure for the formation and operation of the bodies of the bank and specify powers, functions and liability thereof, except where this Law provides otherwise. Article
213. Supervisory Board of a Bank
214. The supervisory board of a bank shall: 1) approve operating plans of the bank; 2) lay down the procedure for lending, which may be carried out only upon the approval of the bank’s supervisory board; 3) ensure that the bank has efficient internal control system; 4) consider or decide on the issues which must be considered or decide on by the bank’s supervisory board under this Law and other laws or the bank’s articles of association.
215. Minutes must be taken of all meetings of a bank’s supervisory board. The minutes of a meeting must: 1) specify the venue and time of the meeting, members of the supervisory board attending the meeting, the chairperson of the meeting, information on whether the meeting has a quorum, the agenda of the meeting; 2) present the substance of every issue considered at the meeting, specify the documents and information on the basis whereof every issue is considered, submit a report on speeches of the persons attending the meeting and on proposals made on every issue considered at the meeting, a record of the results of voting and decisions taken and attach the individual opinions and protests of the persons attending the meeting.
216. The documents submitted when considering issues on the agenda a meeting as well as the documents referred to in paragraph 4 of this Article must be attached to the minutes of the meeting.
217. All members of a bank’s supervisory board, including those who did not attend a meeting of a bank’s supervisory board, must be granted access to the minutes of the meeting of the bank’s supervisory board within 5 days or, where this is impossible, as soon as the circumstances permit. A member of the bank’s supervisory board must confirm in writing that he has been granted access to the minutes of the meeting of the bank’s supervisory board and, where he does not agree with the decisions taken at the meeting, forthwith declare his protest in writing to the supervisory board.
218. Every member of a bank’s supervisory board must take all possible measures to ensure that the supervisory board decides on the issues within the limits of its powers and that the decisions meet the requirements set in legal acts. A member of the bank’s supervisory board shall be held liable for nonfeasance or misfeasance of this duty or other duties set forth by legal acts in the same manner as members of the management bodies of the bank under laws, the bank’s articles of association and agreements concluded with the bank.
219. A member of the bank’s supervisory board may also be a member of the board of the parent undertaking of a bank. Article
220. Board of a Bank
221. The board of a bank shall be a collegial management body of the bank.
222. The board of a bank shall: 1) elect (appoint) and remove from office the head of the administration and his deputy; 2) consider or decide on the issues which must be considered or decided on by the bank’s board under this Law and other laws or the bank’s articles of association.
223. Minutes must be taken of all meetings of a bank’s board. The minutes of a meeting must: 1) the specified venue and time of the meeting, members of the board attending the meeting, the chairperson of the meeting, information on whether the meeting has a quorum, the agenda of the meeting; 2) present the substance of every issue considered at the meeting, specify the documents and information on the basis whereof every issue is considered, submit a report on speeches of the persons attending the meeting and on proposals made on every issue considered at the meeting, a record of the results of voting and decisions taken and attach the individual opinions and protests of the persons attending the meeting.
224. The documents submitted when considering issues on the agenda a meeting as well as the documents referred to in paragraph 5 of this Article must be attached to the minutes of the meeting.
225. All members of a bank’s board, including those who did not attend a meeting of a bank’s board, must be granted access to the minutes of the meeting of the bank’s board within 5 days or, where this is impossible, as soon as the circumstances permit. A member of the bank’s board must confirm in writing that he has been granted access to the minutes of the meeting of the bank’s board and, where he does not agree with the decisions taken at the meeting, forthwith declare his protest in writing to the board.
226. Every member of a bank’s board must take all possible measures to ensure that the board deciders on the issues within the limits of its powers and that the decisions meet the requirements set in legal acts. A member of the bank’s supervisory board shall be held liable for nonfeasance or misfeasance of this duty or other duties set forth by legal acts in the same manner as members of the management bodies of the bank under laws, the bank’s articles of association and agreements concluded with the bank. Article
227. Head of the Administration of a Bank and his Deputy
228. A bank must have the head of the administration and his deputy (hereinafter referred to as “the heads of the administration).
229. The chairperson of the board of a bank must be the head of the administration or his deputy.
230. The heads of the administration of a bank shall be held liable for nonfeasance or misfeasance of the obligations set forth by legal acts or the bank’s articles of association under laws, the bank’s articles of association and the agreements concluded with the bank.
231. Provisions of paragraphs 1 and 3 of this Article shall also be applied to a branch of a foreign bank. Article
232. Heads and Employees of a Bank
233. Heads of a Bank shall be: 1) members of the bank’s supervisory board; 2) members of the bank’s board; 3) heads of the administration; 4) head of the internal audit service; 5) heads of the branches and representative offices of bank as well as other employees of the bank and other persons who, in accordance with the bank’s articles of association, resolutions of the board, the rules of procedure of the administration or by a decision of the heads of the administration, have been authorised to independently take decisions on the provision of financial services and to conclude, on behalf of the bank, the transactions meeting the criteria set by legal acts of the supervisory institution and having risk characteristics.
234. Heads of a bank must be of good repute (paragraphs 12 and 13 of this Article) and have qualifications and experience allowing them to properly exercise their functions. Requirements for the qualifications and experience of the heads of the bank shall be set by legal acts of the supervisory institution. The persons who object that the supervisory institution manages, in the cases and according to the procedure set forth by laws and other legal acts, their data required for the issuance of the licences and granting of the authorisations and consents provided for under this Law, including their personal data and information on a person’s previous convictions and health cannot be heads of the bank.
235. At least one head of a bank’s administration must speak the Lithuanian language and permanently reside in the Republic of Lithuania.
236. Only the persons holding an authorisation of the supervisory institution may be heads of a bank. Legal acts of the supervisory institution may provide for the cases where the requirement for the authorisation of the supervisory institution may be waived.
237. A bank (prior the establishment of the bank – founders thereof) must, at least 30 days prior to the election or appointment of a person head of the bank, notify thereof the supervisory institution and submit the documents and data specified by legal acts of the supervisory institution and evidencing that the person meets the requirements set by the legal acts.
238. Where a bank does not receive a request of the supervisory institution to submit additional information or is not notified of a decision not to grant an authorisation to elect or appoint the head of the bank within 30 days of the receipt of submitted documents and data by the supervisory institution, the authorisation shall be considered to have been granted. Where additional information is requested, the time limit of 30 days shall be counted from the receipt of additional information.
239. The supervisory institution may refuse to grant an authorisation to elect or appoint the head of a bank where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect; 2) in the opinion of the supervisory institution, the heads of the bank do not meet the requirements referred to in paragraphs 2 or 3 of this Article; 3) a person whose election or appointment is subject to an authorisation is prohibited from holding this position under other laws.
240. The supervisory institution shall withdraw an authorisation to elect or appoint the head of a bank where: 1) the authorisation has been obtained by fraud or otherwise violating laws; 2) the authorisation has been granted to elect or appoint a person who no longer meets the requirements set by this Law or other laws for the granting of an authorisation.
241. A bank shall be notified of a decision taken on the withdrawal of an authorisation to elect or appoint the head of a bank. Upon taking by the supervisory institution of a decision on the withdrawal of the authorisation and upon the request of the supervisory institution, the bank must, according to the procedure set forth by laws, forthwith remove the head from office and/or terminate the contract concluded therewith.
242. Requirements for the employees of a bank may be set by legal acts of the supervisory institution.
243. Provisions of this Article shall also be applied to a branch and a representative office of a foreign bank. The heads of the branch and the representative office of the foreign bank must meet the requirements set by this Law and legal acts of the supervisory institution for the heads of the administration of the bank. The provisions of paragraphs 4-9 of this Article shall not be applicable to the heads of a branch and a representative office established in the Republic of Lithuania by a foreign bank licensed in a Member State of the European Union.
244. A person may not be regarded to be of good repute where he: 1) has been convicted of a serious or particularly serious crime provided for in the Criminal Code of the Republic of Lithuania or of a crime against property, property rights and property interests, economy and business practice, the financial system or of corresponding criminal acts under criminal laws of foreign states, irrespective of whether the conviction has expired; 2) has been imposed administrative, disciplinary penalties or other sanctions provided for in laws where these penalties or sanctions have been imposed for infringement of the provisions of laws or other legal acts regulating the provision of financial services and pursuit of the activities of financial institutions and where he has been penalised more than once per year; 3) abuses psychotropic, narcotic, toxic substances or alcohol.
245. A supervisory institution shall also have the right to recognise that a person is not of good repute by taking into consideration: 1) his conviction of a crime or a criminal offence, with the exception of the crimes referred to in subparagraph 1 of paragraph 12 of this Article or of corresponding criminal acts under laws of foreign states; 2) acquisition of a qualifying holding in the bank’s authorised capital and/or voting rights, increased, transferred or reduced it without giving a notice thereof to the supervisory institution, where this was required; 3) the imposition of the sanctions provided for by laws on a legal person whose qualifying holding in the authorised capital and/or voting rights he holds or held or whose head he is or was or the winding up of the said legal person by reason of bankruptcy or by a court’s decision or judgement on other statutory grounds related to inappropriate activities or infringements of legal acts; 4) the suspension, while holding a qualifying holding in a financial institution’s authorised capital and/or voting rights, of his right to exercise the voting right at the general meeting of the financial institution’s members according to the procedure set forth by laws; 5) other important reasons why the person may not be regarded to be of good repute. Article
246. Internal Control of Activities of a Bank Requirements for the internal control of the activities of a bank shall be set by the Law on Financial Institutions and legal acts of the supervisory institution. Article
247. Committees of a Bank
248. A bank must have standing credit, internal audit and risk management committees. The bank’s supervisory board shall form the internal audit committee and control activities thereof.
249. A bank shall also have the right to have other committees provided for by the articles of association of the bank.
250. A bank’s articles of association and other documents adopted by the bodies of the bank shall set forth the procedure for the formation and operation of the committees of the bank and specify powers thereof. Requirements for the procedure for the formation and operation of the committees of the bank and powers thereof may also be set by legal acts of the supervisory institution. CHAPTER VI CAPITAL OF A BANK AND APPROPRIATION OF PROFIT Article
251. Capital of a Bank The capital of a bank shall consist of the equity and loan capital. Article
252. Equity Capital
253. The equity capital of a bank shall consist of: 1) authorised capital (reduced by the value of bought-up own shares) excluding the value of non-cumulative preference shares; 2) reserve capital; 3) capital reserves (share premium); 4) retained earnings (loss) of the previous year; 5) tangible fixed assets revaluation reserve; 6) financial assets revaluation reserve; 7) mandatory reserve or reserve capital; 8) restricted (distributable) profit; 9) retained earnings (loss) of the current year; 10) cumulative preference shares; 11) other reserves.
254. A bank may build-up and use the financial assets revaluation reserve where such a reserve has been provided for by its articles of association and accounting policy. Article
255. Loan Capital The loan capital of a bank shall be made up of the funds which the bank has acquired by the right of ownership through borrowing by issuing long-term debt securities (bonds) or concluding loan agreements where the term to maturity of the borrowed funds is at least 2 years and the debt securities (bonds) as well as the received loans have all characteristics of a subordinated loan. Article
256. Minimum Capital of a Bank
257. The sum total, expressed in the euro in accordance with the official rate of the litas and the euro set by the Bank of Lithuania, of the constituent parts of a bank’s equity capital listed in subparagraphs 1, 2, 3, 4 and 7 of paragraph 1 of Article 38 of this Law must be not less than EUR 5 million.
258. The sum total, expressed in the euro in accordance with the official rate of the litas and the euro set by the Bank of Lithuania, of the constituent parts of the equity capital listed in subparagraphs 1, 2, 3, 4 and 7 of paragraph 1 of Article 38 of this Law in respect of a specialised bank which has been authorised only to issue and manage electronic money must be not less than EUR 1 million.
259. Where it transpires that a bank’s capital has fallen below the minimum capital of the bank, the board of the bank must forthwith notify thereof the supervisory institution and immediately convene an extraordinary general meeting of the shareholders. The general meeting of the bank’s shareholders must take decisions which would allow to restore the bank’s capital to the minimum amount of the bank’s capital as quickly as possible. The board of the bank shall notify the supervisory institution of the decisions taken at the general meeting of the shareholders on the restoration of the capital within 3 working days. Article
260. Authorised Capital of a Bank and Shares of the Bank
261. The authorised capital of a bank shall be formed, increased and reduced according to the procedure set forth by the Republic of Lithuania Law on Companies, except where this Law provides otherwise.
262. A bank shall be prohibited from issuing bearer shares and employee shares.
263. Shares of a bank being established may be paid in money’s worth only.
264. When increasing the authorised capital of a bank by additional contributions, new shares of the bank may be paid only in money’s worth or by the rights of claim according to the bank’s payment obligations, except when the bank’s authorised capital is increased in the course of the reorganisation of the bank. A person subscribing for the shares must fully pay-up for the bank’s shares not later than until the day when the bank applies to the supervisory institution for the granting of an authorisation to register amendments to the bank’s articles of association related to the increase of the bank’s authorised capital.
265. A decision of the general meeting of a bank’s shareholders on the increase of the authorised capital, with the exception of a decision on the issuance of convertible debentures, shall be deemed to be void where amended articles of association of the bank have not been submitted to the Register of Legal Persons within 12 months of the general meeting of the shareholders which took a decision on the increase of the authorised capital.
266. Retained earnings, capital reserves (share premium), reserve capital and other reserves may be used to increase the authorised capital of a bank by a decision of the general meeting of the shareholders, except for the reserves referred to in paragraph 7 of this Article, by issuing new shares which are sold free of charge to the shareholders or by increasing the nominal value of the shares issued previously.
267. The mandatory reserve or the reserve capital, the restricted (distributable) profit, the tangible fixed assets revaluation reserve or the financial assets revaluation reserve may not be used to increase the authorised capital of a bank.
268. The funds paid for a bank’s shares shall be accumulated in an account opened for this purpose in a credit institution entitled to provide financial services in the Republic of Lithuania. The bank shall have the right to use the accumulated funds only upon the establishment of the bank or upon the registration of amendments to the articles of association related to the increase of the authorised capital.
269. A bank shall have the right to acquire its shares according to the procedure set forth by the Law on Financial Institutions and the Law on Companies. Article
270. Reduction of the Authorised Capital of a Bank
271. A bank shall have the right to reduce the authorised capital only upon obtaining an authorisation from the supervisory institution.
272. An authorisation to reduce the authorised capital of a bank shall be granted by the supervisory institution according to the procedure set forth by this Law and legal acts of the supervisory institution. An authorisation to reduce the authorised capital shall be granted where the supervisory institution makes sure that the reduced authorised capital of the bank will not fall below the minimum capital of a bank established by this Law and will be sufficient to ensure safe and sound activities of the bank. Article
273. Adjusted Capital of a Bank Adjusted capital of a bank shall be the sum total of the bank’s equity and loan capital reduced by the amount and according to the procedure set forth by legal acts of the supervisory institution. Article
274. Capitals and Reserves of a Bank
275. The reserve capital of a bank shall be formed by the additional contributions of the bank’s shareholders or deductions from the bank’s earnings. The purpose of the bank’s reserve capital shall be to guarantee the financial stability of the bank. The annual general meeting of the shareholders may also take a decision on the use of the reserve capital of the bank to cover losses of activities of the bank in the case referred to in subparagraph 6 of Article 41 of this Law.
276. The capital reserves (share premium) of a bank shall be formed from a difference in the earnings obtained after selling new shares at issue price above their par value or from other cash contributions by the bank’s owners to obtain the right to the bank’s shares.
277. At the close of the financial year, the annual general meeting of a bank’s shareholders may take a decision on the use of the capital reserves (share premium) to cover the losses incurred by the operations related to the sale of own issued shares and on inclusion thereof in the profit available for appropriation or on use thereof to increase the bank’s authorised capital.
278. The tangible fixed assets revaluation reserve shall be the amount of the increase in the value of tangible fixed assets resulting after the revaluation of the assets. The tangible fixed assets revaluation reserve shall be reduced in the event the revaluated assets are written off, depreciated, written down or transferred into the ownership of third parties. A part of the reserve which is left unused after the writing off, depreciating or transferring into the ownership of third parties of the tangible fixed assets may be included in the profit available for appropriation at the close of the financial year. The tangible fixed assets revaluation reserve may not be directly used to cover losses of the activities of a bank.
279. The financial assets revaluation reserve shall be changes in the value of a bank’s available-for-sale financial assets which have been appreciated and revaluated at their fair value.
280. The mandatory reserve or reserve capital shall be formed from a bank’s net profit deductions. Allocations to the mandatory reserve or reserve capital shall be compulsory and may not be less than 1/20 of the profit available for appropriation. The mandatory reserve or the reserve capital may, by a decision of the annual or extraordinary general meeting of the bank’s shareholders, be used only to cover losses of the activities of the bank.
281. Other reserves of a bank shall be the reserves whose formation and use has been provided for in the articles of association of the bank. Article
282. Retained Earnings (Loss) The procedure for using retained earnings (loss) shall be set forth by the Law on Financial Institutions. Article
283. Profit and Appropriation Thereof
284. The profit of a bank and appropriation thereof shall be managed according to the procedure set forth by the Law on Financial Institutions.
285. The profit of a bank which is net of compulsory deductions from profit and transfers to the reserve capital and other reserves and capitals provided for by the bank’s articles of association may not be allocated for the payment of dividends and for other purposes where after taking a decision of the general meeting of the shareholders, the adequacy of capital or the minimum capital of the bank falls below the amounts set by this Law and legal acts of the supervisory institution. CHAPTER VII A BANK’S OPERATIONAL RISK AND PRUDENTIAL TREATMENT THEREOF, PROTECTION OF THE INTERESTS OF THE BANK’S CLIENTS Article
286. Taking of Operational Risk and Prudential Treatment Thereof
287. Requirements for the taking of a bank’s operational risk and prudential treatment thereof shall be set by the Law on Financial Institutions.
288. A bank must make provisions to reduce its operational risk on the basis of legal acts of the supervisory institution and taking account of the risk of every transaction it concludes on the provision of financial services, the financial and economic condition of a client, the performance of the obligations related to the transactions on the provision of financial services, the available means of ensuring the performance of these obligations as well as other circumstances influencing the value of the bank’s assets. Article
289. Prudential Requirements for Banking Activities
290. The following prudential requirements shall be set for banks: 1) capital adequacy; 2) liquidity; 3) maximum open position in foreign currency and precious metals; 4) maximum exposure to a single borrower; 5) large exposures; 6) other requirements set by legal acts of the supervisory institution.
291. The specific ratios and methodology for calculation thereof shall be laid down by legal acts of the supervisory institution. The supervisory institution shall also have the right to set individual ratios for a bank. The supervisory institution shall have the right not to apply to specialised banks some or all requirements referred to in paragraph 1 of this Article and to set, by legal acts, requirements, specific ratios and methodologies for calculation thereof other than those set for commercial banks. Article
292. Limits on Investment
293. A bank may not hold a holding in the authorised capital of a legal person and/or voting rights where the on-balance-sheet value of the holding exceeds 15 per cent of the bank’s adjusted capital.
294. The sum total of the on-balance-sheet values of the holdings in legal persons’ authorised capital and/or voting rights belonging to the bank may not exceed 60 per cent of the bank’s adjusted capital.
295. The provisions of paragraphs 1 and 2 of this Article shall not be applied to investments in the legal persons which are financial institutions, insurance undertakings, reinsurance undertakings or the undertakings pursuing the activities in the absence of which a bank could not provide financial services, which assist the bank in the provision of the financial services or which are otherwise directly related to the financial services provided by the bank.
296. The provisions of paragraphs 1 and 2 of this Article shall not be applied in the cases where holdings in a legal person’s authorised capital and/or voting rights are acquired temporarily (for a time period not exceeding one year) during the winding up, restructuring or reorganisation of a client or where they have been acquired for distribution purposes, acquired in the bank’s own name, but on behalf of other persons or acquired not for the purpose of exercising the rights granted by them.
297. The provisions of paragraphs 1 and 2 of this Article shall not be applied where the amount by which a bank exceeds the above-mentioned limits is net of the bank’s adjusted capital. Where the bank exceeds both limits referred to in paragraphs 1 and 2 of this Article, a larger part exceeding the limits shall be deducted from the bank’s adjusted capital.
298. A specialised bank which has been authorised only to issue and manage electronic money may not hold any holding in the authorised capital and/or voting rights of a third legal person, except where the third legal person exercises operational or other supporting functions related to the electronic money issued and managed by this specialised bank. Article
299. Limits on Investment in Land and Other Immovable Property
300. A bank’s investments in land and other immovable property may not exceed 5 per cent of the bank’s adjusted capital.
301. Paragraph 1 of this Article shall not be applied where: 1) land and other immovable property has been acquired to ensure direct activities of a bank (buildings wherein the registered office of the bank is located or wherein financial services are provided, etc.); 2) immovable property has been acquired to provide the service of financial lease (leasing); 3) land and other immovable property has been acquired to cut the losses incurred by a financial service provided to a client, where the bank holds such a property by the right of ownership for a time period not exceeding one year from the day of its acquisition. Article
302. Lending
303. In Articles 52-54 of this Law, lending shall be considered to be the conclusion of transactions wherefrom a monetary claim of a bank or irrevocable monetary commitment of the bank arises.
304. The following limits on lending shall be applied to a bank: 1) internal lending; 2) lending to the persons related to the bank; 3) lending to acquire holdings in the authorised capital and/or voting rights of a legal person. Article
305. Limits on Internal Lending
306. Lending to the heads of a bank and to the persons related to the heads of the bank by blood as well as by marriage may not exceed the amounts set by the bank’s supervisory board. The terms of and the procedure for lending must be approved by the bank’s supervisory board. Decisions on the lending must be taken by the bank’s board. The person related to the lending may not participate in the taking of such a decision.
307. The terms of lending set for the persons referred to in paragraph 1 of this Article may not be more favourable than the terms of lending set for other clients of a bank. Article
308. Limits on Lending to the Persons Related to a Bank
309. The persons related to a bank shall be: 1) the persons holding a qualifying holding in the bank’s authorised capital and/or voting rights; 2) the legal persons whose qualifying holding in the authorised capital and/or voting rights is held by the bank; 3) the heads of the legal persons referred to in subparagraphs 1 and 2 of paragraph 1 of this Article and the persons related thereto by blood as well as by marriage; 4) the natural persons related by blood as well as by marriage to the natural persons referred to in subparagraph 1 of paragraph 1 of this Article; 5) the undertakings controlled by the persons referred in subparagraph 1 of paragraph 1 of this Article.
310. (Repealed)
311. (Repealed)
312. The terms of and the procedure for lending to the persons related to a bank must be approved by the bank’s supervisory board. A decision to lend to a person related to the bank must be taken by the board of the bank by at least 2/3 of votes of the members of the bank’s board attending the board’s meeting. Article
313. Limits on Lending to Acquire Holdings in the Authorised Capital and/or Voting Rights of a Legal Person A bank shall not have the right to lend for the purposes of the acquisition of holdings in its authorised capital and/or voting rights, granting of a subordinated loan to itself or the acquisition of the debt securities (bonds) issued by the bank and having all characteristics of a subordinated loan. Article
314. Secret of a Bank
315. The secret of a bank shall be all data and information known to the bank on: 1) accounts held in the bank by the bank’s client, the balance of funds in these accounts, the client’s operations performed with the funds in his account, the terms of the contracts on the opening of the accounts by the client; 2) liabilities of the bank’s client to the bank and terms of the contracts wherefrom these liabilities have arisen; 3) other financial services provided to the bank’s client and terms of the contracts on the provision of the financial services; 4) the financial situation and assets of the bank’s client, activities, operating plan, liabilities to third parties or transactions concluded with the third parties, commercial (industrial) or professional secrecy of the client.
316. A bank, the bank’s employees and any third parties being in the possession of the information which is considered a secret of the bank’s may not divulge such information for an indefinite period of time, except in the cases referred to in paragraphs 3-5 of this Article, paragraph 2 of Article 58 of this Law and in other laws.
317. The information which is considered a secret of a bank may be divulged only to the bank’s client whereto the information which is considered a secret of the bank is related or upon his written request specifying to whom and what information must be divulged.
318. A bank shall have the right to divulge the information which is considered a secret of the bank to courts or third parties where this is necessary to protect the legitimate interests of the bank and only to the extent this is necessary to protect the bank’s interests.
319. A bank shall provide the information which is considered a secret of the bank to the institutions referred to in the Law on the Prevention of Money Laundering, also to third parties according to the procedure set forth by laws where, according to the laws, the bank must provide such information thereto. Article
320. Protection of the Interests of Clients
321. At the places where a bank provides financial services to clients, the bank’s name and the financial services which the bank has the right to provide must be indicated, in an easily accessible place, to every prospective client; conditions must also be provided for public access to the information referred to in paragraph 2 of this Article.
322. Prior to concluding a contract on the provision of financial services, a bank must provide a client with detailed information on the terms of the provision of the financial services, price of the services, duration of the provision of the services, possible consequences thereof and other information which may influence the client’s decision to enter into the contract.
323. A bank must provide to each current or prospective client, upon his request, its annual accounts and an auditor’s report, which, under legal acts, the bank must provide to the public. CHAPTER VIII SUPERVISION OF FINANCIAL GROUPS ON A CONSOLIDATED BASIS Article
324. Scope of Supervision on a Consolidated Basis
325. Supervision on a consolidated basis shall be exercised in respect of a financial group which consists of a parent bank or a parent financial holding company (hereinafter referred to in this Chapter as a “parent institution of the group”) and the financial institutions which are controlled by the parent institution of the group or in which the parent institution of the group participates in management of the capital.
326. Legal acts of the supervisory institution may establish the cases when supervision on a consolidated basis shall not be exercised in respect of the financial institution