LIETUVOS RESPUBLIKOS

LIETUVOS RESPUBLIKOS REPUBLIC OF LITHUANIA LAW ON CREDIT UNIONS 21 February 1995  No I-796 (As last amended on 22 December 2009 – No XI-597) Vilnius CHAPTER ONE GENERAL PROVISIONS Article 1. Purpose of the Law This Law shall establish the procedure for establishing, licensing, pursuing the business of, terminating and supervising credit unions and divisions thereof with a view to ensure the stability, soundness, efficiency and security of the system of credit unions. Article 2. Definitions 1. Payments in proportion to turnover shall mean the payments to members of a credit union made from profit in proportion to turnover of interest of the members of the credit union within the credit union. 2. Central Credit Union shall be interpreted as defined in the Republic of Lithuania Law on the Central Credit Union. 3. Customer shall mean a member of a credit union or another person whereto the credit union provides financial services under this Law. 4. Credit union shall mean a credit institution satisfying the economic and social needs of its members and holding a licence to engage and engaged in the receipt of deposits and other repayable funds from the non-professional participants of the market specified by this Law and lending thereof, also authorised to engage in the provision of other financial services stipulated by this Law to the persons specified by this Law and assuming related risks and responsibility. 5. Licence of a credit union (hereinafter referred to as the “licence”) shall mean an authorisation granted according to the procedure set forth by this Law to engage in the provision of licensed financial services as stipulated by this Law. 6. Turnover of interest of a credit union’s member in the credit union (hereinafter referred to as the “turnover”) shall mean the aggregate amount of income from the credit union’s interest earned by a member of a credit union and expenses for the interest paid to the credit union. 7. Share instrument to a named person (hereinafter referred to as a “share”) shall mean a security attesting to a person’s participation in a credit union’s capital and granting to a member of a credit union the property and non-property rights, with the exception of the non-property rights of an associate member restricted under this Law. 8. Share contribution shall mean an amount of funds paid by a person to a credit union and used to form the share capital of the credit union. 9. Other concepts used in this Law shall be interpreted as they are defined in the Law of the Republic of Lithuania on Financial Institutions. Article 3. Name, Legal Form and Registered Office of a Credit Union, Legal Acts Regulating the Activities of Credit Unions 1. The words “credit union” or other combinations or derivatives thereof may be used in the Republic of Lithuania by the credit unions operating in accordance with this Law in their names, for advertising or other purposes, except where the use of these words is evidently unrelated to the provision of licensed financial services. The name of a credit union shall not be subject to the provision of paragraph 4 of Article 3 of the Law of the Republic of Lithuania on Cooperative Societies (Cooperatives). 2. The legal form taken by a credit union as a legal person may only be a cooperative society. 3. The registered office of a public credit union holding a licence issued according to the procedure set forth by this Law and registered in the Republic of Lithuania Register of Legal Entities must be in the Republic of Lithuania. 4. In its activities, a credit union shall comply with the Civil Code of the Republic of Lithuania, this Law, other laws, the legal acts adopted by the supervisory institution and its articles of association. Credit unions shall also act in compliance with the Law of the Republic of Lithuania on Financial Institutions, the Law of the Republic of Lithuania on Cooperative Societies (Cooperatives), unless this Law provides otherwise. Article 4. Financial Services Provided by a Credit Union and Other Activities 1. A credit union must provide a licensed financial service specified in subparagraph 1 of paragraph 2 of this Article and shall have the right to provide the financial services specified in subparagraphs 2 and 3 of paragraph 2 and paragraph 3 of this Article, including financial services in a foreign currency, provided these rights have not been restricted in accordance with the procedure laid down by this Law or other laws. 2. Licensed financial services shall be: 1) receipt of deposits and other repayable funds from non-professional participants of the market; 2) the payment services specified in Article 5 of the Law of the Republic of Lithuania on Payments; 3) currency exchange (in cash). 3. Non-licensed financial services shall be: 1) receipt of deposits and other repayable funds; 2) lending (including mortgage loans); 3) administering travellers’ cheques, bankers’ drafts and other means of payment, insofar as this activity is not covered by the payment services indicated in subparagraph 2 of paragraph 2 of this Article; 4) provision of financial assurances and financial guarantees; 5) financial mediation (activities of an agent) as provided for by the Law of the Republic of Lithuania on Financial Institutions; 6) administering of money; 7) provision of information as well as advice on issues of the granting and payment of a credit; 8) lease of safes. 4. A credit union shall have the right to provide financial services: 1) to members of the credit union and associate members of the credit union (hereinafter referred to as “members”); 2) associations of credit unions; 3) credit unions; 4) the Central Credit Union. 5. In addition to the persons indicated in paragraph 4 of this Article, a credit union shall have the right to receive deposits and other repayable funds also from the Government of the Republic of Lithuania or municipal agencies and institutions, where this is provided for in the founding documents of credit unions, the associations, religious communities and societies, organisations of trade unions, charity and sponsorship foundations established in the Republic of Lithuania, international or foreign charity and sponsorship foundations, also from minor children (adopted children) or children under guardianship of members of the credit union in accordance with the procedure laid down by the Civil Code of the Republic of Lithuania, provided at least one of the parents or guardians (custodians) is a member of the credit union. A credit union shall also have the right to provide the payment services specified in subparagraph 2 of paragraph 2 of this Article to the persons referred to in this paragraph. 6. A licence issued to a credit union shall grant the right to provide the payment services specified in subparagraph 2 of paragraph 2 of this Article, with the exception of the payment services referred to in subparagraphs 1, 2, 5 and 6 of Article 5 of the Law of the Republic of Lithuania on Payments: 1) indirectly with the assistance of the Central Credit Union, where the credit union is a member thereof; 2) indirectly with the assistance of a selected bank, where the credit union is not a member of the Central Credit Union. 7. A credit union shall have the right to acquire solely the securities of the Government of the Republic of Lithuania, the securities of the Bank of Lithuania, the securities of governments of other EU Member States and the states of the European Economic Area (hereinafter referred to as the “EU Member States”). 8. In addition to the provision of financial services, a credit union 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. 9. A credit union shall be prohibited from establishing enterprises, also from participating therein, with the exception of participation in the Central Credit Union. 10. A credit union must organise and carry out its activities with a view to ensuring the stability and soundness of its activities. 11. A credit union must organise and carry out its activities with a view to enabling each member of the credit union to make use of the financial services provided by the credit union. 12. Where a credit union 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 assists in the conclusion of transactions with other persons on the provision of respective services to the credit unions (hereinafter referred to as “the purchase of a credit union’s ancillary services”), the credit union must notify thereof the supervisory institution and provide to it the information laid down by legal acts of this institution prior to concluding the said transactions. The legal acts of the supervisory institution may set the requirements for the purchase of the credit union’s ancillary services. 13. Courts of the Republic of Lithuania, other institutions or officers of the Republic of Lithuania must, prior to taking decisions restricting the right of a credit union to provide financial services to non-specific group of customers of the credit union, obtain and the supervisory institution must provide a conclusion on the impact of these decisions on the stability and soundness of the credit union and the entire system of credit unions. CHAPTER TWO ESTABLISHMENT AND LICENSING OF A CREDIT UNION Article 5. Establishment and Founders of a Credit Union 1. A credit union shall be established according to the procedure set forth by the Civil Code of the Republic of Lithuania, the Law of the Republic of Lithuania on Financial Institutions, this Law and, except where this Law provides otherwise, the Law of the Republic of Lithuania on Cooperative Societies (Cooperatives). 2. A credit union may be established only for an indefinite period. 3. A credit union may be established only upon obtaining an authorisation of the supervisory institution to establish the credit union. 4. The articles of association of a credit union being established must be submitted to the manager of the Register of Legal Entities and the credit union must be established within nine months from signing of the articles of association; in the event of a failure to do so within the specified time limit, the articles of association of the credit union shall become invalid and the share contributions and initial membership fees paid earlier shall be reimbursed.  5. A credit union shall be established by accumulating the funds covering the expenses incurred in connection with the establishment thereof from initial membership fees and accumulating the share capital – from share contributions. 6. The founders of a credit union may be solely natural persons. A credit union may be established by not less than five founders. 7. The shares of a credit union being established may be acquired by the founders thereof, also the natural and legal persons entitled to membership of the credit union being established according to Article 13 of this Law and in compliance with the restriction established in paragraph 5 of Article 13 of this Law. Each founder of the credit union must acquire shares of the credit union and make a share contribution in accordance with the established procedure. 8. The persons who may not be founders of a financial institution pursuant to the Law of the Republic of Lithuania on Financial Institutions and the natural persons who may not be members of a credit union pursuant to Article 13 of this Law may not be founders of a credit union. 9. Founders shall enter into an agreement of the establishment of a credit union. The following data must be indicated: 1) the date and venue of conclusion of the agreement on establishment of the credit union; 2) names, surnames, personal numbers and place of residence of the founders; 3) the name and registered office of the credit union; 4) the rights and duties of the founders when establishing the credit union and liability for defaulting on the obligations; 5) the persons authorised to represent the credit union being established and their rights and duties; 6) initial membership fee, the procedure for paying and using it; 7) the smallest and largest amounts of a share contribution and the time limits and the procedure for paying these share contributions; 8) the amount of a share contribution paid by each founder; 9) the procedure for reimbursing the share contribution made and the initial membership fee paid where the credit union is not established; 10) compensation of the costs of establishment and remuneration for establishment; 11) the procedure for settling disputes between the founders. 10. A memorandum of association must be signed by all founders.  The authenticity of the signatures of the natural persons who have signed the memorandum of association of a credit union shall not be notarised. 11. A memorandum of association concluded in accordance with the procedure laid down by this Law shall be a public document and shall entitle to open a funds accumulation account with a bank registered in the Republic of Lithuania or with the Central Credit Union. 12. The founders of a credit union shall draft the articles of association of the credit union and shall submit them for approval to the statutory meeting. The founders must, prior to the statutory meeting, enter the persons who have made share contributions in the register of members. 13. Prior to the statutory meeting, the minimum share capital must be accumulated and the shares of at least 50 persons must be paid up. 14. Prior to the statutory meeting, any of the founders shall have the right to enter into transactions on behalf of and for the benefit of a credit union being established, unless the memorandum of association thereof stipulates otherwise. Where the statutory meeting does not approve these transactions, the obligations based on these transactions shall be jointly and severally guaranteed by the founders who have entered into them. Article 6. Statutory Meeting of a Credit Union 1. Founders of a credit union must convene the statutory meeting not later than within 60 days from the signature of an agreement on establishment of a credit union. 2. The statutory meeting shall: 1) consider and approve the articles of association of a credit union; 2) elect members of the supervisory board, board, loan committee of a credit union, members of the controllers’ commission (controller); 3) approve a statutory report; 4) approve the transactions entered into by founders of a credit union; 5) decide other issues falling within the scope of competence of the general meeting of members of a credit union. 3. The statutory meeting must be attended by at least 2/3 of the persons entered in the register of members, apart from associate members. 4. The statutory meeting shall be chaired by the chairman elected by the statutory meeting. 5. Minutes must be taken at the statutory meeting. It must indicate: the number of the persons participating in the meeting, all the issues discussed and the decisions adopted.  The minutes of the meeting shall be signed by the chairman of the meeting, the secretary and one member authorised by the statutory meeting. A list of all members of a credit union being established must be enclosed with the minutes of the statutory meeting. 6. Where founders of a credit union fail, within the time limit laid down in paragraph 1 of this Article, to convene the statutory meeting of the credit union, all the natural and legal persons entered in the register of members, with the exception of the founders, shall be released from obligations to the credit union and shall have the right to claim from the founders reimbursement of share contributions and initial membership fees without any deductions. Article 7. Statutory Report of a Credit Union The founders of a credit union must draft a statutory report of the credit union and submit it for approval to the statutory meeting. The report must indicate: 1) establishment expenditure; 2) the number of issued shares and the amount of funds received in return for them; 3) the amount of share contributions made by each founder; 4) transactions, where founders transfer the obligations based on these transactions to a credit union;  5) establishment expenditure subject to reimbursement, consideration for establishment. Article 8. Authorisation to Establish a Credit Union 1. An authorisation to establish a credit union shall be granted by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution. 2. In order to obtain an authorisation to establish a credit union, founders of the credit union shall submit to the supervisory institution an application and the documents and information specified by legal acts of the supervisory institution, including: 1) an agreement of the establishment of the credit union; 2) the articles of association of the credit union; 3) the minutes of the statutory meeting; 4) a one-year framework for activities of the credit union; 5) a list of founders, documents and information on the identity of the founders of the credit union, also the amount of the share contribution of each of them, the documents and information evidencing that the funds used for the share contributions have been obtained legitimately; 6) the documents evidencing the complete payment of the credit union’s share contributions; 7) a list of heads of the credit union elected by the statutory meeting whose election is subject to an authorisation of the supervisory institution. 3. The supervisory institution must examine submitted documents and take a decision on the granting of an authorisation to establish a credit union not later than within three months of the receipt of the application. 4. The supervisory institution may refuse to grant an authorisation to establish a credit union where: 1) the submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all information specified by the legal acts or additionally required has been submitted or it is incorrect; 2) the provisions of the articles of association of the credit union do not ensure safe and sound activities of the credit union or are not in conformity with the relevant legal acts; 3) the credit union being established does not conform to the requirements of a legal form as set forth by laws and the requirements set forth for founders, the minimum capital of a credit union, heads of a credit union, the minimum number of members of a credit union. 5. The supervisory institution shall give a written notice to the manager of the Register of Legal Entities of a decision adopted on the granting or a refusal to grant an authorisation to establish a credit union. 6. Following the granting of an authorisation to establish a credit union and until a licence is issued to the credit union, the founder of the credit union shall be prohibited from selling or otherwise transferring the share acquired by him, whereas the credit union shall be prohibited from issuing new shares or otherwise altering the amounts of the smallest share contribution and the largest share contribution as specified in the memorandum of association or the composition of the founders participating in the capital of the credit union. 7. The supervisory institution shall have the right to withdraw an authorisation to establish a credit union prior to the establishment of the credit union where: 1) the authorisation has been obtained by fraud or otherwise violating laws; 2) the credit union was not established within the time limit specified in paragraph 4 of Article 5 of this Law. 8. The supervisory institution shall give a written notice to founders of a credit union and the manager of the Register of Legal Entities of a decision adopted on the withdrawal of an authorisation to establish the credit union. Article 9. Licence 1. When issuing a licence to a credit union, the supervisory institution may restrict its right to provide the licensed financial service of currency exchange (in cash), where this is requested by the credit union or where it is not prepared to provide this service. A restriction on the provision of the licensed financial service of currency exchange (in cash) shall be lifted where the credit union submits an application, documents and information evidencing that the credit union is prepared to provide this service. 2. A licence shall be issued for an indefinite period of time. 3. A licence shall be issued to a credit union registered in the Register of Legal Entities by the supervisory institution in accordance with the procedure set forth by laws and legal acts of the supervisory institution. 4. In order to obtain a licence, a credit union shall submit to the supervisory institution an application and the documents and information specified by legal acts of the supervisory institution, including: 1) the articles of association of the credit union registered in the Register of Legal Entities; 2) the evidence that the size of the share capital of the credit union does not fall below the minimum size of the capital of a credit union as specified by this Law; 3) a list of members of the credit union indicating the amount of the share contribution paid in by each of them; 4) a list of heads of the credit union elected following the statutory meeting whose election is subject to an authorisation of the supervisory institution. 5) the credit union’s one-year framework of activities; 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 credit union has a proper internal control system, personnel, technical, information and technological security means, premises and insurance of property; 9) documents and information evidencing preparedness to provide the payment services specified in subparagraph 2 of paragraph 2 of Article 4 of this Law, with the exception of the payment services referred to in subparagraphs 1, 2, 5 and 6 of Article 5 of the Law of the Republic of Lithuania on Payments, indirectly with the assistance of the Central Credit Union, where the credit union is a member thereof; 10) documents and information evidencing preparedness to provide the payment services specified in subparagraph 2 of paragraph 2 of Article 4 of this Law, with the exception of the payment services referred to in subparagraphs 1, 2, 5 and 6 of Article 5 of the Law of the Republic of Lithuania on Payments, indirectly with the assistance of a selected bank, where the credit union is not a member of the Central Credit Union. 5. The supervisory institution shall have the right to carry out an on-site inspection of preparedness of a credit union applying for the issuance of a licence to provide financial services. 6. Upon the request of the supervisory institution, state and municipal institutions as well as other persons must forthwith supply to the supervisory institution available information on founders, members and heads of a credit union, their financial situation, activities, discovered infringements of laws and other legal acts, conclusions of conducted inspections and checks as well as other information required by the supervisory institution for the taking of a decision on the issuance of a licence. 7. The supervisory institution must examine the submitted documents and information and take a decision on the issuance of a licence within three months of the receipt of the application. Where the supervisory institution requests additional documents or information, the decision must be taken within three months of the receipt of the additional documents and information. A decision on the issuance of a licence must, in any case, be taken within 12 months of the receipt of the application. 8. 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 credit union applying for a licence must ensure safe and sound activities of the credit union and comply with the relevant legal acts, also the credit union must conform to other requirements set forth by this Law, including the requirements set forth for the minimum capital and registered office of a credit union, members of a credit union, heads of a credit union, and be prepared for a safe and sound provision of financial services. 9. 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 information specified by the legal acts or additionally required has been submitted or it is incorrect; 2) a credit union does not meet the requirements set forth in paragraph 8 of this Article. 10. A decision taken on the issuance of a licence shall be notified to the manager of the Register of Legal Entities according to the procedure set forth by the Register of Legal Entities and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios. 11. A credit union shall have the right to commence the provision of financial services only upon the issuance of a licence. 12. A credit union holding a licence must at all times conform to the requirements set forth for the granting of an authorisation to establish the credit union and for the issuance of the licence. In the cases and according to the procedure set forth in this Law and legal acts of the supervisory institution, the credit union must notify the supervisory institution of any changes in the information submitted to obtain the licence. 13. A credit union 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 credit union and not for the benefit of the credit union. Article 10. Withdrawal of a Licence or Suspension of Validity Thereof 1. The grounds for the withdrawal of a licence shall be laid down by the Law of the Republic of Lithuania on Financial Institutions. In addition to the grounds laid down in paragraphs 1 and 2 of Article 10 of the Law of the Republic of Lithuania on Financial Institutions, a licence may be withdrawn by a decision of the supervisory institution where: 1) a credit union does not meet the requirements set for the granting of an authorisation to establish the credit union or for the issuance of a licence; 2) a credit union ceases to exist due to reorganisation or a decision is taken on liquidation thereof; 3) a credit union does not pay in the first (advance) insurance premium in accordance with the Law of the Republic of Lithuania on Insurance of Deposits and Liabilities to Investors where it must pay it or where insurance is terminated. 2. Withdrawal of a licence or suspension of validity thereof shall be notified to a credit union and the manager of the Register of Legal Entities in accordance with the procedure laid down by regulations of the Register of Legal Entities and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios. 3. Reasons must be given for a decision of the supervisory institution on the withdrawal of a licence. 4. A licence may also be withdrawn or validity thereof suspended on the grounds and according to the procedure set forth in Chapter Eight of this Law. 5. Upon the withdrawal of a licence, a credit union shall not have the right to provide financial services, except to the extent it is necessary to settle with the credit union’s creditors, and a decision must be taken on the liquidation of the credit union or opening of bankruptcy proceedings against it according to the procedure set forth in Chapters Nine and Ten of this Law. Article 11. Amendment to the Articles of Association of a Credit Union 1. Amendments to the articles of association of a credit union may be registered in the Register of Legal Entities 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 of the credit union; 2) the smallest and the largest amounts of a share contribution, the rights granted by a share; 3) the powers of the credit union’s bodies, procedure for electing and removing from office their members; 4) the cases when borrowing is possible by a decision of the head of administration, by a decision of the board of the credit union without the consent of the loan committee, and when such a borrowing is not possible without the consent of the loan committee. 2. An authorisation to register amendments to the articles of association of a credit union shall be granted by the supervisory institution according to the procedure set forth this Law and legal acts of the supervisory institution. 3. In order to obtain an authorisation to register amendments to articles of association, a credit union shall submit to the supervisory institution an application and other documents and information specified by legal acts of the supervisory institution. 4. The supervisory institution must examine submitted documents and information and take a decision on the granting of an authorisation to register amendments to the articles of association of a credit union not later than within 30 days of the receipt of the application. 5. The supervisory institution may refuse to grant an authorisation to register amendments to articles of association of a credit union, where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all information specified by the legal acts or additionally required has been submitted or it is incorrect; 2) provisions of the articles of association of the credit union will not ensure safe and sound activities of the credit union or are not in conformity with the relevant legal acts. Article 12. Branches, Representative Offices and Other Structural Divisions of a Credit Union 1. A credit union may establish branches and other structural divisions indicated in the articles of association of the credit union in accordance with the procedure laid down in the articles of association solely within the territory of a municipality of the Republic of Lithuania where the registered office of the credit union is located and within the territory of other municipalities indicated in the articles of association of the credit union and bordering on this municipality. 2. The articles of association of a branch of a credit union, the management and organisational structure, accounting organisation, security means, premises and insurance of property of a branch and other structural divisions of the credit union providing financial services must ensure safe and sound activities thereof and be in compliance with the relevant legal acts. 3. All structural divisions of a credit union providing financial services must be equipped with the communication facilities ensuring transmission of information on the operations carried out to the registered office of the credit union in order to enable the drawing up of a daily balance sheet of the credit union. 4. A representative office of a credit union shall not have the right to provide financial services. 5. Upon the setting up of a branch or another structural division providing financial services, a credit union must, within 15 days of its establishment, notify thereof the supervisory institution and submit to it the information and documents specified by legal acts of the supervisory institution. In the event of a change in any of the particulars communicated, the credit union must, within 15 days from the day of the change, notify thereof the supervisory institution and submit to it the information and documents established by legal acts of the supervisory institution. CHAPTER THREE MEMBERS OF A CREDIT UNION Article 13. Members of a Credit Union 1. Legally capable natural persons having a permanent place of residence in the Republic of Lithuania may be members of a credit union.  A natural person may be a member of a credit union where he resides, is employed or studies within the territory of a municipality of the Republic of Lithuania where the registered office of the credit union is located and within the territory of other municipalities indicated in the articles of association of the credit union and bordering on this municipality. 2. The following legal persons registered in the Republic of Lithuania and having their registered office within the territory of a municipality of the Republic of Lithuania where the registered office of a credit union is located and within the territory of other municipalities indicated in the articles of association of the credit union and bordering on this municipality may be associate members of the credit union: 1) associations, trade unions, religious communities and societies, gardeners’ societies, associations of multi-family apartment house owners, public establishments wherein no holdings are held by state institutions, cooperative societies (cooperatives) and agricultural companies; 2) individual enterprises of natural persons who are members of the credit union, the private limited liability companies in which a member or members of the credit union hold a proportion of the authorised capital and/or voting rights granting the right to control the activities. The legal persons indicated in this subparagraph may be associate members of the credit union if they conform to the definition of small and micro enterprises provided for in the Law of the Republic of Lithuania on Small and Medium-Size Business Development. 3. The articles of association of a credit union may also specify additional criteria of admission to the credit union of members of the credit union. 4. An associate member of a credit union must perform all duties of a member of a credit union and may make use of all the services provided by the credit union and exercise the rights of a member, with the exception of the right to vote, be elected to the management and supervisory bodies, commissions, committees and services of the credit union.  The articles of association of the credit may also provide for other restrictions of the rights of an associate member: the largest amount of a deposit which may be accepted from a single associate member may be established, the amount of a share contribution and/or loan may be limited, the procedure for reimbursing the deposit and/or share contribution may be laid down, etc. 5. The smallest number of members of a credit union, apart from associate members, is 50. 6. In a credit union, the number of associate numbers may not exceed or be equal to the number of the members meeting the criteria specified in paragraph 1 of this Article. 7. The following persons may not be members of a credit union: 1) the persons who, in the cases and according to the procedure laid down by legal acts, have failed to submit to the supervisory institution the data on their identity, participants, activities, financial situation, heads of a legal person (member of bodies of the legal person, with the exception of the meeting of participants);   2) 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. 8. A credit union must, in accordance with the procedure laid down in Article 15 of the Law of the Republic of Lithuania on Financial Institutions, manage the register of members of the credit union indicating members and associate members of the credit union. Moreover, the credit union must submit particulars of the register of the credit union’s members to the supervisory institution within ten days from the date of the annual general meeting of the credit union or otherwise upon the request of the supervisory institution. 9. A credit union’s members must exercise the rights and perform the obligations of members in such a way as to ensure the stability and soundness of the credit union’s activities. 10. A person may become a member of a credit union where he meets all the requirements set forth for a member of the credit union by this Law and the articles of association of the credit union. Article 14. Rights and Duties of a Member of a Credit Union 1. A member of a credit union shall have the following rights: 1) to participate in the general meetings of members of the credit union and cast a single vote during voting; 2) to elect to the management and supervisory bodies of the credit union and be elected thereto; 3) to obtain information on the annual and interim financial statements of the credit union, reports of the Board on the activities of the credit union, minutes and decisions of the general meetings of members. It shall be possible to refuse to supply information where it contains secrets of the credit union. A refusal to provide the documents or information requested must be executed in writing at the request of a member of the credit union. Disputes relating to the right of a member of a credit union to information shall be settled in court; 4) to appeal to court against the decisions adopted by the general meeting of members, management and supervisory bodies; 5) to secede from the credit union; 6) to receive a part of the profit allocated to members; 7) to receive a share of the assets of a credit union in liquidation in proportion to the amount of his share contribution; 8) to devise his share to one or more persons; 9) subject to consent of the board of the credit union, to transfer his share into the ownership of other persons. The board may object to transferring of the share where the person acquiring it may not be a member of the credit union under this Law or does not meet membership criteria (if such are stipulated in the articles of association of the credit union); 10) to request that the credit union return his share contribution or a part of the share contribution in compliance with the restrictions specified in paragraph 3 of Article 47 of this Law. 2. The articles of association of a credit union may also provide for other rights of a member not in contravention of laws of the Republic of Lithuania. 3. A member of a credit union shall not be entitled to vote at the general meeting of members when the general meeting of members is considering the issue of his membership of the credit union, also in other cases provided for in the articles of association of the credit union, where he is directly concerned.  4. A member of a credit union must: 1) hold shares in the credit union which would be at least of the size specified by this Law and the articles of association; 2) give a timely notice of disappearance of a ground for his membership of the credit union; 3) at the time and in accordance with the procedure laid down by the articles of association, pay the initial membership fee, share contributions and other additional contributions; 4) comply with the articles of association, perform obligations towards the credit union, carry out the resolutions of the management and supervisory bodies thereof, participate in the activities of the credit union; 5) timely and in a due manner perform the loan contracts, contracts on holding deposits with the credit union and other contracts concluded therewith.  5. A member of a credit union may not simultaneously be a member of another credit union, where this is prohibited by the articles of association of the credit union. 6. A member of a credit union’s management or supervisory bodies who has seceded or has been expelled from the credit union may no longer perform his functions at the mentioned bodies. Article 15. Grounds for the Cessation of Membership of a Credit Union A membership of a credit union shall cease where: 1) the board of the credit union grants a member’s request to secede from the credit union; 2) a member of the credit union is recognised legally incapable in accordance with the procedure laid down by laws of the Republic of Lithuania; 3) a member of the credit union is expelled from the credit union; 4) a member of the credit union who is a natural person dies or an associate member of the credit union which is a legal person is reorganized or liquidated; 5) a member of the credit union becomes a member of another credit union, where the articles of association of the credit union prohibit membership of more than a single credit union; 6) a member of the credit union transfers shares to another person; 7) the credit union is liquidated. Article 16. Secession from a Credit Union 1. Each member of a credit union shall have the right to secede from the credit union on his own initiative upon giving a written notice thereof to the board of the credit union at least three months prior to the intended secession. A decision on secession and settlement with the seceding person shall be taken by the board of the credit union. 2. Secession shall be possible solely after the close of a financial year. The board of a credit union may permit a member to secede from the credit union before the close of the financial year where settlement with the person wishing to secede is possible without impairing the interests of the credit union. Article 17. Expulsion from a Credit Union 1. Where a member of a credit union fails to perform his duties, violates this Law and the articles of association of the credit union, he may be expelled from the credit union solely by a decision of the general meeting of members. The board of the credit union may suspend the rights of the member until the general meeting of members which is to consider the issue of expulsion of the member of credit union. Upon adoption, by the board of the credit union, of the decision on suspension of the member’s rights, the member shall be deprived of the right to use the services provided by the credit union.  2. A member of a credit union may be expelled where 2/3 of members of the credit union attending the general meeting of members vote for his expulsion. 3. Where a member expelled from a credit union does not agree with the decision of the general meeting of members to expel him, he shall have the right to refer to court for annulment of such a decision within three months from the day when he learnt or ought to have learnt about adoption of the decision. Article 18. Settlement with Former Members of a Credit Union 1. When repaying share contributions to a person whose membership of a credit union has expired, the credit union must reduce them in proportion to the amounts of the credit union’s losses recorded in the approved annual balance sheet of the credit union for the previous year. 2. A credit union shall settle with a person whose membership of the credit union has expired by paying his share contribution and other amounts relating to his participation in the share capital of the credit union not later than within 12 months from the expiry of membership of the credit union. 3. A person who has been expelled or has seceded from a credit union shall, as from his expulsion or secession, be deprived of the right to use the services provided by the credit union.    4. The funds payable to a deceased person shall be paid to his heirs in accordance with the same procedure as in the cases of secession or expulsion, unless the heirs of the deceased are members of this credit union and become its members in accordance with the procedure laid down by this Law and the articles of association. 5. The funds payable to a member who has been recognised legal incapable shall be paid through his legal representative after the latter submits the required documents.    Article 19. Proxies A member of a credit union shall have the right to authorise another person to vote on his behalf at the general meeting of members of the credit union or carry out other actions. At the general meeting of members of the credit union, that person may represent not more than three members of the credit union or may obtain, under a contract, the voting right from not more than three members of the credit union.  A proxy statement by the member must be notarised. Heads of a credit union may not stand proxy for a member of the credit union. Article 20. Liability of a Member for the Damage Caused to a Credit Union A member of a credit union shall be held liable for the damage caused to the credit union in accordance with the procedure laid down by the Civil Code of the Republic of Lithuania. Expiry of member of the credit union shall not release the person from liability for the damage caused to the credit union. CHAPTER FOUR MANAGEMENT OF A CREDIT UNION Article 21. Bodies of a Credit Union 1. A credit union must have the following bodies: the general meeting of members, the supervisory board, the board and the head of administration of the credit union. 2. The management bodies of a credit union shall be the board of the credit union and the head of administration of the credit union. 3. A credit union’s articles of association, the Civil Code of the Republic of Lithuania, this Law as well as the Law of the Republic of Lithuania on Financial Institutions and the Law of the Republic of Lithuania on Cooperative Companies (Cooperatives) shall set forth the procedure for the formation and operation of the bodies of a credit union and specify the scope of competence, functions and liability thereof, except where this Law provides otherwise. Article 22. General Meeting of Members of a Credit Union 1. The general meeting of members of a credit union may not be replaced with the meeting of representatives of members of the credit union. 2. The general meeting of members of a credit union shall hold the exclusive right to: 1) amend the articles of association of the credit union; 2) shift the registered office of the credit union; 3) elect members of the supervisory board, the board and the loan committee and members of the controllers’ commission (controllers) and respectively from among the members – chairpersons of the supervisory board, the board, the loan committee and the controllers’ commission, an audit firm and remove them from office; 4) adopt a resolution on expulsion of a member from the credit union; 5) determine the amount of remuneration to members of the controllers’ commission (controller) and annual bonuses to heads of the credit union; 6) set limits for the funds to be allocated to remunerate a reporting expert or independent auditor for their work; 7) approve the annual estimate of revenue and expenditure of the credit union; 8) approve annual financial statements, adopt a resolution on the procedure for appropriating profit and compensating for losses; 9) approve the signing of the memorandum of association of the Central Credit Union, resolve the issue of the credit union’s joining the Central Credit Union and secession therefrom; 10) adopt a resolution on reorganisation or liquidation of the credit union; 11) resolve the issue of the credit union’s joining an association of credit unions and secession therefrom; 12) evaluate the reports submitted by the supervisory board, board, loan committee, the controllers’ commission (controller), the internal audit service of the credit union; 13) at the general meeting of members, resolve the issues assigned to the supervisory board or the board, at the request of the supervisory board or the board; 14) resolve other issues falling within the scope of its competence under laws and the articles of association of the credit union. Article 23. Grounds for Convening the General Meeting of Members of a Credit Union 1. The general meeting of members of a credit union shall be convened by the board of the credit union, and where the board does not convene the meeting in the specified cases and in accordance with the established procedure – by the supervisory board, the head of administration or at least ¼ of members of the credit union, excluding associate members. 2. The extraordinary general meeting of members of a credit union must be convened where: 1) the sum total of the constituent parts of the equity capital of the credit union as specified in paragraph 1 of Article 38 of this Law falls below the minimum capital of the credit union; 2) the equity capital of the credit union is insufficient to ensure safe and sound activities of the credit union; 3) the supervisory institution which sets the time limits for the convening of the meeting and agenda thereof so requires; 4) at the request of the board, the supervisory board or at least ¼ of members of the credit union, excluding associate members; 5) in other cases specified by the articles of association of the credit union and laws of the Republic of Lithuania. Article 24. Quorum of the General Meeting of Members of a Credit Union and Adoption of Resolutions 1. The general meeting of members may adopt resolutions where it is attended by more than ½ of all members of a credit union, excluding associate members. In the absence of the quorum, a repeat meeting shall be convened authorised to adopt resolutions on the issues on the agenda also in the event of absence of the quorum. 2. The members of a credit union attending the general meeting of members (proxies thereof) shall be registered against their signature in the list of participants to be signed by the chairperson and secretary of the meeting. The head of administration, who is not a member of the credit union, shall have the right to attend the general meeting of members in an advisory capacity. A member of the credit union not participating in the general meeting of members, who is nevertheless acquainted with the agenda and a draft resolution, may give a written notice to the general meeting of members not later than until the opening of the meeting as to whether he is in favour or against each individual issue. This notification shall be included in the quorum of the meeting and in the voting results. 3. Voting at the general meeting of members shall be open. Vote in secrecy shall be held at the request of at least 1/4 of members of a credit union participating at the meeting. 4. Resolutions of the general meeting of members shall be adopted by the majority of votes of the members of a credit union registered in the list of participants of the meeting, with the exception of the cases indicated in subparagraphs 1, 3, 4, 9 and 10 of paragraph 2 of Article 22 of this Law. In these cases, decisions shall be adopted by the majority of votes of least 2/3 of members of the credit union registered in the list of participants of the meeting. 5. The minutes of the general meeting of members shall be signed by the chairperson, the secretary of the meeting and one member of a credit union authorised by the meeting. The list of participants of the meeting and, where the vote was held in writing, ballot papers must be attached to the minutes.  Article 25. Time Limits and Procedure for Convening the General Meetings of Members of a Credit Union 1. The annual general meeting of members shall be convened by the board of a credit union on an annual basis, but not later than within three months after the close of the financial year. The board must announce the convening of the annual meeting of members in accordance with the procedure laid down by the articles of association of the credit union not later than 20 days in advance before the meeting. 2. The initiators of convening of an extraordinary general meeting of members shall submit an application therefor to the board.  The application shall indicate the following: the ground for and purpose of convening the meeting as well as the draft agenda. On receipt of the application, the board must, within ten days from the receipt of the application, take a decision on the convening of the extraordinary general meeting of members.  The extraordinary general meeting of members must be held not later than within 30 days from the receipt of the application, but not earlier than after the lapse of 20 days from publication of a notice of convening of the meeting. 3. A repeat general meeting of members of a credit union must be convened not later than within ten days from the meeting not held, and the members of the credit union shall be informed thereof not later than five days before the repeat meeting. 4. A notice of convening of the general meeting of members must indicate: 1) the name and address of the credit union; 2) the date, time and venue of the meeting; 3) the agenda of the meeting. 5. Not later than five days before the meeting, members of a credit union must be given access to the documents relating to the agenda of the meeting. 6. The chairperson of the general meeting of members shall be elected on convening each meeting from among the members of a credit union, and until election thereof the chairperson of the supervisory board shall preside, unless the articles of association of the credit union provide otherwise. 7. The general meeting of members shall not have the right to adopt resolutions on the issues outside the agenda where it is attended by less than 2/3 of members of a credit union, excluding associate members. Only the agenda of the meeting which was not held shall be valid at the repeat meeting. Article 26. Supervisory Board 1. The supervisory board shall be a collegial supervisory body of a credit union. Activities of the supervisory board shall be directed by the chairperson. 2. The number of members of the supervisory board – at least three and not more than nine – shall be determined by the articles of association of the credit union. The supervisory board and chairperson thereof shall be elected by the general meeting of members of the credit union for a term not exceeding four years. The general meeting of members may remove from office the entire supervisory board or its individual members before the expiry of the term of office thereof. The number of the terms of office of a member of the supervisory board shall not be limited. 3. The head of administration of a credit union, a member of the board, a member of the loan committee, a member of the controllers’ commission (controller), a member of the internal audit service or another employee of the credit union may not be a member of the supervisory board. 4. A member of the supervisory board may resign from office before the expiry of his term of office by giving a written notice thereof to the supervisory board at least 14 calendar days in advance. 5. Where individual members of the supervisory board are elected, they shall be elected only until the expiry of the term of office of the current supervisory board. Article 27. Competence of the Supervisory Board 1. The supervisory board shall: 1) control implementation of resolutions of the general meeting of members by the loan committee, the board and the head of administration; 2) assess the activities of the credit union, the board, loan committee and internal audit service thereof, accumulation and use of financial resources, work remuneration, financial situation; 3) submit to the general meeting of members the reports of the board, the loan committee, the controllers’ commission (controller), the internal audit service together with its conclusions and proposals; 4) warn the board, the loan committee and the head of administration of the credit union to eliminate, without delay, the violations in activities of the credit union or give a notice thereof to the general meeting of members, also may propose to the general meeting of members to remove from office members of the board and the loan committee and to the board – to remove from office the head of administration where they, in the opinion of the supervisory board, have violated this Law, other legal acts, the articles of association of the credit union; 5) ensure that the credit union has an efficient internal control system; 6) assess, on a periodical basis, the reports of the internal audit service of the credit union; 7) submit to the general meeting of members its conclusions and proposals regarding annual financial statements, draft procedure for appropriation of profit and/or compensation of losses and on the report on the activities of the credit union drawn up by the board, also on the violations and other shortcomings detected by the internal audit service and the auditor; 8) determine and approve the conditions of and procedure for lending to heads of the credit union and the persons closely related to the heads of the credit union; 9) represent the credit union at court, when hearing disputes between the credit union and the board, between members of the credit union and the board, between the credit union and the head of administration; 10) propose that the board and the head of administration revoke the unlawful resolutions adopted; 11) assess the credit union’s management of the risks arising in the course of provision of financial services; 12) may transfer the issues falling within its scope of competence for resolution to the general meeting of members; 13) consider or decide on the issues which must be considered or decided on by the credit union’s supervisory board under this Law and other laws or the articles of association of the credit union. 2. Minutes must be taken of meetings of the 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 their 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. 3. The documents submitted when considering issues on the agenda of a meeting must be attached to the minutes of the meeting. 4. All members of the supervisory board, including those who did not attend a meeting of a credit union’s supervisory board, must be granted access to the minutes of the meeting of the credit union’s supervisory board within five working days or, where it is impossible to grant all members of the supervisory board access to the drawn-up minutes of the meeting of the supervisory board within this time limit, as soon as the circumstances permit. A member of the credit union’s supervisory board must confirm that he has been granted access to the minutes of the meeting of the supervisory board and, where he does not agree with the decisions taken o …