Official translation

Official translation Official translation REPUBLIC OF LITHUANIA COMPANY LAW 5 July 1994 No. I-528 (As amended by  16 March 2000 No. VIII-1570) Vilnius CHAPTER ONE GENERAL PROVISIONS Article 1. Purpose of the Law The Law shall regulate the establishment, reorganisation and liquidation of public and private companies, their management and activities, as well as the rights and obligations of their shareholders.  When the text of the Law applies both to public and  private companies, they shall be referred to by the term "companies." Article 2.  Public Companies and Private Companies 1. The company is  an enterprise whose authorised capital is divided into shares.  It may be formed for any business not prohibited by the laws of the Republic of Lithuania.  The company is a legal person. 2. The company is a limited liability formation.  It shall be liable for its obligations only to the extent of its assets. The shareholders shall be liable only for the amounts which they must pay for their shares. 3. The amount of the authorised capital of a public company may not be less than 100 000 litas.  Its shares may be circulated and traded in publicly. 4. The amount of the authorised capital of a private company may not be less than LTL10,000. A private company must limit the number of its shareholders to 50.  The shares of a private company may not be circulated or traded in  publicly, unless the laws regulating the sale of state-owned property (shares) provide otherwise. 5. The registered office of the company must be situated in the Republic of Lithuania. 6. The company may be established for a period of limited or unlimited duration. If the Articles of Association of the company do not specify the period for which it is established, it shall be deemed to have perpetual existence. The duration of the company may be extended, accordingly amending its Articles of Association. Article 3.  The Incorporators 1.  The incorporators of the company shall be natural or legal persons who have executed the company incorporation agreement (act) in accordance with the procedure established by this Law. Natural and legal persons of the Republic of Lithuania and other states may be incorporators. The number of incorporators shall not be limited. Each incorporator of the company must be its shareholder. If at least one of the incorporators (investors) of the company is a foreign person, the laws of the Republic of Lithuania which regulate foreign investment shall also apply to the company. 2.  If the company is set up by one person, the incorporation act shall be drawn up instead of the company incorporation agreement and the requirements of the incorporation agreement shall apply to it.  3.The incorporators shall conclude the agreement on the incorporation of the company. The following must be specified in the  incorporation agreement : 1) the incorporators (full names, names of legal persons) and their addresses; 2) the name of the company; 3) the manner in which the company is formed; 4) the rights and obligations of the incorporators in the setting up of the company and liability for failure to fulfil their obligations; 5) the number of shares acquired by each incorporator; 6)  the par value, price of issue, and the procedure and time period of offering of shares; 7) compensation of incorporation expenses and remuneration for the incorporation; 8) the procedure for settling disputes between the incorporators; and 9) the incorporators who may represent the company. The agreement shall be signed by all incorporators or persons authorised by them. If at least one of the incorporators is a natural person, the agreement must be certified by the notary. If all the incorporators are legal persons or enterprises, the signature of their manager or authorised person shall be certified by a seal. The procedure established for natural persons shall apply to a foreign legal person who does not possess a seal. The agreement on the incorporation of the company shall be a public document. 4. The company incorporation agreement or an act on the incorporation of the company concluded in accordance with the procedure established in this Law shall grant the right to open a cummulative account with a bank registered in the Republic of Lithuania. 5. Upon executing the company incorporation  agreement, the incorporators shall draw up the company's Articles of Association and offer for sale the shares. The incorporators of a public company shall have the right to offer shares for sale  only upon registering the company's Articles of Association in accordance with the procedure established by the Law on the Register of Enterprises of the Republic of Lithuania as well as upon registering the issue of shares with the Securities Commission. 6. Prior to the statutory general meeting the persons specified in the incorporation agreement shall have the right to enter into transactions in the name of the company which is being incorporated. Upon their approval by the statutory general meeting, the above transactions shall create obligations for the company. If the meeting refuses to approve the transactions, the incorporators shall be jointly liable for the obligations thereunder, whereas other persons specified in the incorporation agreement shall be severally liable. On the proposal of the incorporator the general meeting may transfer to the company the obligations under the transactions concluded by the incorporator in his own name. 7. The shareholders shall have the right to request that the incorporators compensate for the losses incurred by the company prior to the day of its registration  by reason of failure to fulfil the obligations, dishonest management of the affairs related to the incorporation, with the exception of cases where the losses have been incurred because of  normal production or business risks. Disputes concerning the compensation of losses shall be settled in court. 8.  By drawing up the record of transfer and receipt the incorporators must within 7 days of the day of the statutory general meeting transfer the company's assets and documents to the Board (if it has not been elected - to the head of the Administration). Article 4. Shareholders 1.  A shareholder is a natural or a legal person, the state or municipality who has at least one share in the company acquired in the manner prescribed by law. The state or the municipality shall be represented in the company by a state or municipal institution or a state-owned or municipal enterprise. 2. Each shareholder shall have such rights in the company which are incidental to the shares in the company held by him. 3. If the holder of all shares in the company is one natural or legal person, the person's written decisions shall be equivalent to the resolutions of the general meeting. Article 5. Special Purpose Companies 1. The status of special purpose companies may be assigned to companies which fulfil functions that are of vital significance for the state or companies whose activities require a special regime. The sphere of activity in which special purpose companies may operate shall be approved by the Seimas on the recommendation of the Government of the Republic of Lithuania. 2. The shares held  by an institution of state governanance in a special purpose company must carry at least 2/3 of all the votes. 3. The state or municipal institution holding  controlling interest in a special purpose company shall have the right to additionally prescribe: 1) obligatory works (assignments); 2) quality requirements for goods (services); and 3) prices of goods (services) or price calculation rules. 4. Taking into account the specific character of the company, the terms and conditions set forth in Paragraph 3 hereof must be provided in the company's Articles of Association. CHAPTER TWO INCORPORATION, REORGANISATION AND LIQUIDATION OF THE COMPANY Article 6.  Incorporation of the Company 1.  A private company may be founded only  in a closed manner, whereas a public company may be founded either in a closed or in an open manner. 2. The company shall be founded in a closed manner by forming its authorised capital from contributions received for issued shares acquired only by the incorporators. 3. The company shall be founded in an open manner by forming its authorised capital from contributions received for issued shares a portion whereof is acquired by the incorporators while the remaining shares are offered for sale to other persons. 4. The business year of the company shall be the calendar year. Other 12-month periods   may also be established in the Articles of Association for the beginning and the end of the company's business year. If the company is registered after the commencement of the business year, the day of the end of the company's business year provided in the company's Articles of Association shall be considered as the end of the first business year of the company. If the company is removed from the Register prior to the end of the business year, the last business year shall end by the day the company is removed from the Register.  5. The incorporators must prepare a statutory report specifying: 1) incorporation expenses; 2) money received for the shares; 3) non-pecuniary (property) contributions, the value of said contributions and valuation methods submitted to the meeting for approval; 4) the number of shares acquired by each incorporator; 5) repayable incorporation expenses, remuneration for the incorporation; and 6) transactions, the obligations whereunder are transferred to the company by the incorporators or other persons. 6. The statutory report must be audited and conclusions thereon must be submitted to the statutory  meeting by an independent auditor or the inspector who shall have the right to invite property valuation experts. If the incorporators deny the auditor, inspector the required information and explanations, the auditor, inspector shall inotify the statutory meeting thereof in writing. Each shareholder shall have the right of access to the statutory report and the auditor's findings and the right to make copies thereof. 7.  If, during incorporation,  not all shares in a public company are subscribed for during the time period set for the subscription for shares, the amount of the authorised capital may be reduced on the resolution of the statutory meeting,  but by not more than 50%.  The reduced amount of the authorised capital may not be less than the minimum amount specified in  Paragraph 3 of Article 2 of this Law.  If during the time period set for the subscription for  shares not all shares are subscribed for and the amount of the authorised capital is not reduced, the public company may not be registered.  In this case the contributions of the subscribers must be returned to them without any deductions within 15 days.  All the incorporators shall be jointly liable for the return of the contributions. 8.  Within 60 days of the end of the subscription period or the last day of the subscription for shares (in the event that all shares are subscribed for prior to the fixed date) the incorporators must call the statutory general meeting.  If the general meeting is not called within the above period, all the subscribers shall be relieved of their obligations to the company and shall have the right to request full return of their contributions for the shares within 15 days. 9.  The provisions established by this Law for the general meeting shall apply to the statutory general meeting. The statutory general meeting  shall also be attended by the incorporators of the company. If there is no quorum, a repeat meeting shall be called. 10.  The statutory general meeting shall approve the statutory report of the company and the transactions concluded by the incorporators, shall elect the managing bodies, the inspector or auditor, may amend or supplement the Articles of Association, settle other issues within the competence of the general meeting. 11. The first Supervisory Board or the Board of the company shall be elected for no longer than 2 business years. 12. Remuneration for the incorporation of the company or compensation of the incorporation expenses may be paid to the incorporators or to third persons provided that civil contracts have been concluded with them and the incorporation costs are substantiated by documents. Disputes between the incorporators, shareholders and third persons concerning the compensation of incorporation costs and remuneration for the incorporation shall be settled by  court. Article 7. The Company's Articles of Association 1  The Articles of Association of the company constitute the legal document governing the conduct of the company's business. 2.  The Articles of Association must state: 1)  the name of the company; 2) the company's registered office; 3) the objects of the company and types of business activities; 4) the procedure for transferring registered shares to the ownership of other persons in the cases specified in Paragraph 7 of Article 34 of this Law; 5) the amount of the authorised capital and its composition according to the classes of shares; 6) the number of shares according to class, their par value and the rights they carry; 7) procedure of payment for shares; 8) procedure for exchanging shares of one type for shares of another type; 9)  procedure for electing the Supervisory Board, the Board and the inspector, and their respective powers; 10) the powers of the general meeting, the procedure for calling  the meetings and their voting rules; 11) the rules for the distribution of profit; 12) the procedure for communicating the notices of the company; and 13) the company reorganisation and liquidation procedure. 3. The Articles of Association of the company may also contain other rules that are in conformity with the laws of the Republic of Lithuania. 4. If the conduct of business activities provided for in the company's Articles of Association is regulated by other laws of the Republic of Lithuania, said laws must be complied with when drafting the company's Articles of Association. 5. The Articles of Association of the company must be signed by all incorporators and the signatures must be certified: in the case of natural persons - by a notary,  in the case of legal persons, when the signature belongs to the head of the enterprise or to the authorised person - by a seal. The procedure established for natural persons shall apply to a foreign legal person who does not posses a seal. Article 8. Registration of the Articles of Association and the Company 1.  Prior to offering their shares to the public for subscription or purchase, companies must register their Articles of Association according to the procedure established by the Law on the Register of Enterprises. 2. In the event that the general meeting amends or supplements the company's Articles of Association, said amendments must be registered. Amendments to the Articles of Association shall be effective only upon their registration. 3. The company must be registered in the Register of Enterprises of the Republic of Lithuania within 6 months of the day of conclusion of the incorporation agreement. If the company is not registered within the prescribed time period, it shall be deemed not to have been incorporated and the contributions of persons to the company's authorised capital must be returned without any deductions within 15 days of the day of expiry of the period prescribed for the registration. In the event of failure to register the company because of reasons not related to the activities of the company's incorporators or shareholders, the  incorporators may appeal the actions of the registrar in court. 4. The company shall be registered according to the procedure established by the Law on the Register of Enterprises after the shares have been subscribed for, initial installments have been collected and the statutory  general meeting has been held. The sum of the collected initial installments must be not less than the amount of the minimum  authorised capital as established in Article 2 of this Law, of which sum pecuniary contributions must constitute no less than 1/4.  5. The company shall acquire the rights of legal person as of the day of its registration. Article 9. Affiliate of the Company 1.  The company shall have the right to establish affiliates. Affiliates shall be established on the resolution of the company's Board. The number of affiliates of the company shall not be limited. 2. The affiliate is a division of the company possessing a separate registered office. The affiliate shall not be a legal person and shall use the name of the company as a legal person. It shall operate in compliance with the Articles of Association of the company and within the powers  which are granted by the Board and  which must be specified in the company's Articles of Association. 3. The assets of the company's affiliate shall be  accounted in the company's balance sheet and in a separate balance sheet of the affiliate. 4. Affiliates of the company shall be registered in accordance with the procedure established in the Law on the Register of Enterprises. Article 10. Reorganisation of the Company 1. Reorganisation is transformation of the company as a legal person without the liquidation procedure. The successors to all the rights and liabilities of reorganised companies shall be the companies newly incorporated in the process of reorganisation and companies continuing to operate after reorganisation as going concerns. 2. Companies may be reorganised in the following ways: 1) by merger or consolidation of companies; 2) by division of companies; 3) by changing the type or status of the company. 3. Reorganisation by merger or consolidation of companies shall be carried out by: 1) joining the companies (one or several) which cease their existence as separate legal entities to the Company which continues its business; or 2) combining companies which terminate their existence as legal entities to form a newly created company. 4. Reorganisation of companies by way of company division shall be carried out by: 1) parcelling out the company which terminates its activities to other companies which continue their business; or 2) organising new companies from the company which terminates its activities. 5. When the type of the company is being changed, it may be reorganised: 1) from a private company into a public company by registering its shares with the Securities Commission; or 2) from a public company into a private company  by cancelling the registration of its share issue with the Securities Commission. 6. Reorganisation by changing the status of the company means cancelling of the special purpose status of the company by amending its Articles of Association. 7. The companies under reorganisation must prepare a plan of reorganisation,  which must state: 1) the name, type and registered office of each company under reorganisation; 2) valuation of assets of each Company under reorganisation, performed in the manner prescribed by the Government; 3) assumption of liabilities, including debts to the state social insurance fund budget, also the amounts due, including penalties and default interest, calculated by the tax administrator's officers and other state institutions prior to the removal from the register, in the manner prescribed by law, of the enterprise under reorganisation, and the deadline for assuming said liabilities; 4) the criteria and rules for dividing the shareholders and shares of the companies which are connected with the reorganisation among the companies which will continue as going concerns after the reorganisation. If the shares are distributed for the companies which will continue as going concerns after the reorganisation not in proportion to their authorised capital, the procedure providing each shareholder with the possibility to choose companies in which they desire to hold shares must be established in the plan. If prior to the company’s reorganisation the state or the municipality held shares therein carrying 2/3 (3/4) of the total number of votes or in excess of 1/2 or 1./3 (1/4) of all votes, then upon its reorgatisation  according to the method specified in subparagraph 2 of paragraph 4 hereof the state or the municipality must own in all the newly set up companies shares carrying accordingly not less then 2/3 (3/4) of all votes or over 1/2 (1/4) of all votes; 5) the rate at which the shares held by shareholders shall be exchanged for new shares taking into account the difference in price;  the number of new shares according to class and their par value; 6) the difference between the price of shares held by the shareholders and shares received by them after the reorganisation which shall be paid out to them in cash. The payment in cash may not exceed 10% of the par value of shares; 7) the procedure and time period for issuing new shares; 8) property and non-property rights of holders of shares and other securities after company reorganisation and the time period of acquisition thereof; 9) the projected business indices of the companies which will be going concerns after the reorganisation; and 10) the rights accorded to the managing bodies, inspectors and experts of companies during their reorganisation period. 8. The Articles of Association of each of the companies which will function after the reorganisation must be drafted together with the reorganisation plan. 9. The Board of each company under reorganisation shall make a comprehensive written evaluation of the plan of reorganisation and shall also assign one or more experts to conduct an examination of the plan. The experts shall be entitled to obtain any related information from the companies under reorganisation. Prior to the announcement of the general meeting, the experts shall submit to the Board the Examination Act which must contain findings concerning the valuation of property, the terms and conditions of loan extension and changes in the price of shares. During the reorganisation of the company in the way specified in Subparagraph 3 of Paragraph 2 hereof  valuation of property  in the reorganisaton plan and examination of the plan by experts shall not be required unless requested by the shareholders by a simple majority  vote. 10. Every company must make a public announcement  and notify each creditor in writing of its projected reorganisation not later than 30 days prior to the general meeting which has the consideration of issue of the company reorganisation on its agenda. During the stated period every shareholder shall have the right to familiarise himself with the company's plan of reorganisation, its evaluation, business indices of the companies under reorganisation and the Examination Acts as well as making copies thereof. 11. The resolution to reorganise the company may be passed and the plan of reorganisation and the draft Articles of Association may be at the same time approved by shareholders possessing  at least 2/3 of votes of every class of shares. The approved reoganisation plan and the minutes of the general meeting which approved the plan must be delivered to the registrar of the register of enterprises within 15 days from the day of the meeting which approved the plan. The general meetings of shareholders of companies which have been given loans, warranties or guarantees, with the exception of banks, shall have no right to adopt resolutions on the reorganisation of companies without obtaining a written consent of all entities who have granted the loans, warranties or guarantees, or their authorised representatives. The economic entity which granted the loan, warranty or guarantee must file its consent or objection to the company’s reorganisation  within 30 days of the receipt of the company’s reorganiastion notice. 12. The company against which bankruptcy proceedings have been instituted or with respect to which extrajudicial bankruptcy procedure is applied may be reorganised in accordance with the procedure established by the Enterprise Bankruptcy Law of the Republic of Lithuania. 13. Public announcement of the company's reorganisation shall be made at leastthree times with an at least a 2-month interval between the announcements, or each shareholder and creditor shall be given a written notice thereof. The company must provide additional guarantees to every creditor who requests them. 14. The Articles of Association of  companies which are going concerns   after the reorganisation  shall be registered after the first general meeting. The registration of the reorganised companies shall be regulated by the Law on the Register of Enterprises of the Republic of Lithuania.  For the purpose of registration of the company or its Articles of Association after reorganisation the minutes of the general meeting which approved the reorganisation plan shall be presented instead of the incorporation agreement. Article 11.  Liquidation of the Company 1. The company may be liquidated on the following grounds: 1)  the time period of the company's duration as specified in the Articles of Association has expired; 2)  the court or the creditors' meeting has passed a resolution to liquidate a bankrupt company. In this case the company shall be liquidated in accordance with the procedure established by the Law on Enterprise Bankruptcy; 3)  the court has passed a decision to liquidate the company for the violations of  law established by the laws of the Republic of Lithuania; and 4) the general meeting has passed a corresponding resolution (provided that no bankruptcy proceedings have been instituted against the company). 2.  The institution or the managing  body which takes a decision, according to the procedure prescribed by law, to liquidate the company shall appoint, remove from office or replace the company liquidator (administrator of the company in liquidation). If the company is put in liquidation in the manner prescribed by this Law, the managing bodies of the company, except for the general meeting,  shall be divested, as of the day of the liquidator's appointment, of the powers to manage the company.  The right to call the general meeting according to the procedure established in Article 21 of this Law shall be vested in the liquidator, the court or the holders of shares carrying over 1/2 of all votes. 3. The liquidator shall, in accordance with the procedure established by the Law on the Register of Enterprises, notify the registrar who registered the company of the alteration of the company's status and shall furnish the registrar with the information concerning the liquidator. After the company acquires the status of the company in liquidation, the words "in liquidation" shall precede its name. 4. The company in liquidation may conclude only  transactions which are related to its liquidation as well as those transactions which are provided in the liquidation resolution. 5. The liquidation of the company shall be announced publicly not less than three times at no shorter than 2-month intervals or each shareholder or creditor shall be personally notified thereof in writing. 6. The distribution of the company's assets to the shareholders may be carried out  only upon the expiry of two months after the day of the third public announcement of the liquidation of the company or of the personal notification of each shareholder and creditor. 7. In the event of disputes concerning the payment of the company's debts, the assets of the company may be  distributed to the shareholders only after the dispute has been settled in court and settlements with  the creditors have been effected. Disputes concerning the mortgaged assets of the company shall be considered in accordance with the procedure established by the Law on Mortgage of the Republic of Lithuania. 8. After the payment of the required taxes into the budget, including debts to the state social insurance fund budget, also the amounts due, including penalties and default interest, calculated by the tax administrator's officers and other state institutions prior to the removal from the register of the enterprise in liquidation  in the manner prescribed by law,  and after the discharge of liabilities to the creditors and the employees, the remaining assets shall be distributed to the shareholders in proportion to the par value of the shares owned by them. Any contingent assets shall later be distributed in an analogous manner. If the shares of the Company carry different rights, said rights must be taken into account during the distribution of assets. 9. After the decision to liquidate the company is adopted and after the company liquidator effects settlements with at least one shareholder (assigns and transfers to the shareholder the remaining share of the company’s property), the general meeting of shareholders of the company in liquidation shall be divested of  the right to change the status of the enterprise in liquidation. Article 12. Powers of the Liquidator 1.  The liquidator shall have the rights and obligations of the company's Board. The liquidator shall represent the company in liquidation in court, in its relations with the state governance institutions, and with other natural and legal persons. 2.  The liquidator of the company shall: 1)  make a stock-taking of material and financial valuables and draw up the act of receiving same, draw up the company’s financial statement  as of the beginning of the liquidation period (the liquidation balance sheet); 2)  complete the discharge of the obligations under  contracts concluded previously and enter into new  transactions within their powers; 3) complete transactions with the creditors and debtors of the company; 4) distribute the remaining assets of the company to and among the shareholders; 5) draw up the company liquidation act; and 6) apply to the Securities Commission with a request to remove the shares from the Register (annul the registration of the shares) if the company is put in liquidation; 7) transfer the documents of the company in liquidation for safekeeping in accordance with the procedure established in the Law on Archives; 8) present to the registrar of the register of enterprises the documents required in order to have the liquidated company removed from the Register of Enterprises of the Republic of Lithuania. 3.  If the liquidation of the company lasts for several years, within 3 months of the end of each business year the liquidator shall draw up the annual financial statement and the liquidation report.  These documents shall be open for review to all the shareholders and the third persons with vested interests. 4.  The liquidator shall be liable to the company and the third persons for the losses incurred through his fault.  5.  Shareholders who hold shares the total par value whereof amounts to at least 1/10 of the authorised capital shall have the right to appeal to court to replace the liquidator. CHAPTER THREE RIGHTS AND OBLIGATIONS OF COMPANIES AND SHAREHOLDERS Article 13. Company's Rights and Obligations 1.  Every company must have a name  which must include the words "Public Company" (in Lithuanian - akcine bendrove or the acronym - AB) or "Private Company" (in Lithuanian - uzdara akcine bendrove or the acronym UAB).  The name of an investment Company must include the words "Investment  Company" (in Lithuanian - investicine akcine bendrove or the acronym IAB). The name of the company must be in compliance with the regulations of names of enterprises, institutions and organisations approved by the Government.  Disputes over the name of the company shall be settled in court. 2.  The company may: 1)  have accounts with banking institutions registered in the Republic of Lithuania and other states, its own seal which may be altered and used at the company's discretion; 2)  buy or acquire in other ways assets, or sell, lease, or mortgage its assets or dispose thereof in any other  way. Seeking to avoid institution of bankruptcy proceedings, the company may offer its assets, in the manner prescribed by the Government, to pay off its arrears of payments to the state, municipal or state  social insurance fund budgets.  The state, municipality or state social insurance board shall have the right to decide, by 31 December 2000, on the issue  regarding the payment of arrears in assets. 3)  buy or acquire in any other way and own, as well as issue, transfer, exchange, mortgage, or use in any way investment and debt securities.  If the acquisition of shares and the exercise of the rights incidental to them reduces competition among companies (enterprises) or competition in the appropriate field of business activities, the number of shares of the other company which is acquired and held may be restricted in accordance with the procedure established by the  Law on Competition of the Republic of Lithuania; 4) engage in business activities in the Republic of Lithuania and beyond its boundaries; 5) allocate funds for the purposes of charity,  health care, culture, science, education, physical education and sport, as well as for relief in cases of natural calamities or other emergencies; 6) conclude contracts, assume obligations, lend and borrow money. When borrowing funds from its shareholders, the Company shall have no right to offer them its assets as a collateral. The Company shall have no right in engage in the activities of credit institutions. The amount of funds lent by the Company to legal and natural persons may not exceed the amount of its equity capital. When the Company borrows funds from its shareholder under a loan agreement, the annual rate of interest on the loan may not exceed the weighted average of the annual interest rate paid on treasury bills of the Republic of Lithuania issued by auction in litas the last calendar quarter, published in the “Official Gazette” by the Government or the competent authority; 7)  charge prices, rates and tariffs for its products, services or other resources, with the exception of cases provided for in the laws of the Republic of Lithuania; 8) prepare and implement the systems of  payment of pension supplements and benefits, as well as systems of incentives and privileges; 9) reorganise itself, be an incorporator and shareholder of another company; and 10) form associations, concerns or consortiums provided that this is in compliance with the Law on Competition. 3. The company may also have other civil rights and obligations which are not established in this Law, provided that said rights and obligations do not contradict the laws of the Republic of Lithuania. 4.  If the company acquires controlling interest in another company, the latter shall become a controlled company.  Controlling interest shall consist of shares which give their holder more than 50% of votes at the general meeting.  The controlled company shall be a subsidiary, and the controlling company shall be the holding company. A subsidiary may not acquire shares in the holding company. 5. The company which fails to settle accounts with creditors within the prescribed time period, and if   its debt exceeds 5% of the company’s authorised capital, shall be prohibited from investing its property into another enterprise without the written consent of the said creditors. Article 14. Rights and Obligations of Shareholders 1. The property and non-property rights as well as the obligations of the shareholders shall be established by this Law and other laws of the Republic of Lithuania and by the company's Articles of Association. The property and non-property rights of shareholders specified in Articles 15 and 16 of this Law  may not be subjected to any restrictions, unless the laws establish otherwise. 2. The shareholders shall have no other  liabilities to the company but the obligation  to pay, in the established manner, the issue price of all the shares subscribed for.  The resolution of the general meeting obligating all or some of the shareholders to make additional contributions shall be invalid if at least one of them objects to the resolution. 3.  If the company is in  liquidation and lacks funds to discharge its liabilities, shareholders whose shares have not been fully paid up  may be requested to pay up for their shares in  the manner established by the Articles of Association or by the subscription agreement. 4.  A share shall not be divisible into smaller parts.  If a shares is held by several persons, all its holders shall be considered to be a single shareholder.  The rights carried by the share shall be exercised by one of the holders by the  general agreement certified by a notary.  All the holders of a share shall be jointly liable for the shareholders' obligations. 5. The shareholder or the securities accounts manager authorised by him must inform the company’s administration prior to the day of the general meeting of the changes in his address and in the requisites of the personal bank account. 6. In order to implement their property and non-property rights, two or more shareholders may conclude the shareholders’ agreement. The agreement must specify the following: 1) the shareholders (full names, names of legal persons) and their addresses; 2) the company’s name; 3) commitments of the shareholders concluding the agreement concerning voting on all or individual items on the agenda of the general meeting, concerning the implementation of non-property rights or resolutions adopted by the meeting; 4) responsibility  for failure to meet the made commitments; 5) the procedure for settling disputes between the shareholders - parties to the agreement; 6) the period of validity of the agreement.  Article 15. Property Rights of Shareholders 1. The shareholder shall have the following property rights: 1) to receive a certain portion of the company's profit (dividend); 2) to receive a portion of assets of the company in liquidation; 3) to receive shares without payment if the authorised capital is increased with the funds of the company; 4)  to have the pre-emption right, except in cases when the general meeting decides not to grant all the shareholders the pre-emption right in acquiring the company’s newly issued shares; 5)  to bequeath all or part of shares to one or several persons; and 6)  to sell or transfer in any other way all or part of the shares to the ownership of other persons. 2.  Shareholders shall have the right to request of the company  the repayment of their contributions in the cases provided for in Paragraphs. 7 and 8 of Article 6, Paragraph 3 of Article 8, Paragraph 3 of Article 40 and Paragraph 4 of Article 42 of this Law. Article 16. Non-property Rights of the Shareholders 1. Shareholders shall have the following non-property rights: 1)  to attend the meetings of shareholders as voting members, unless this Law and the Articles of Association provide otherwise; 2)  to receive information on the business activities of the company; 3)  to appeal in court the resolutions or actions of the general meeting, the Supervisory Board, the Board and the Head of the Administration, which violate the laws, the company’s Articles of Association, the property and non-property rights of the shareholders. 2.  If all the voting shares of the company are of the same par value, each share, except for the special shares whose status is defined in Article 371 of this Law , shall carry one vote at the general meetings. 3. The company’s Articles of Association may provide for a rule according to which shares of certain classes do not carry voting rights. Government or municipal institutions shall be prohibited from acquiring non-voting company shares. 4. The shareholder shall have no right to take part in the voting at the general meeting on issues specified in Paragraph 7 of Article 3 or in Subparagraph 9 of Paragraph 3 of Article 19, in the settlement whereof the shareholder is directly interested. 5.  If the voting shares are of different par value, one share of the smallest par value shall give its holder one vote.  The number of votes given by other shares shall be equal to their par value divided by the smallest par value.  The Articles of Association of the company may prescribe for other rules on the establishment of the number of votes, but the number of votes given by a share  must be proportionate to its par value. 6. The right to vote at the general meetings held prior to the expiry of the term set for the payment of the first issue of shares as specified in the subscription agreement shall be given by the shares paid up according to the procedure set in Paragraph 3 of Article 41 of this Law, thereafter voting rights shall be carried only by fully paid up shares. 7.  At the shareholder’s request the company must present to him for inspection or copying the annual and intermediate financial statements, the reports of the Board on the activities of the company, the minutes of the meetings, and the share register; the company shall  also present minutes of the Supervisory Board and Board meetings to the shareholders who have given a written promise prescribed by the company not to spread confidential information provided that the minutes contain no officially unpublished information on the company’s stock events. Information (except for the public information specified by the laws of the Republic of Lithuania) which  is accorded the status of confidential information by the resolution of the company Board shall be considered confidential. Upon giving a written promise not to spread confidential information, the shareholder who owns shares the total par value whereof accounts for at least 1/20 of the company’s authorised capital or the representative of the shareholders who own shares the total par value whereof accounts for at least 1/20 of the company’s authorised capital shall have the right of access to all minutes of the Supervisory Board or the Board, the transactions entered into by the company, also the offered guarantees, warranties, contracts of long-term pledge and exchange of  tangible property. The shareholders who own shares which carry over 1/2 of all votes shall have the right of access to all company documents. The shareholder or the representative of shareholders shall be liable under law for the divulgence of confidential information. At the shareholder’s request refusal to present the requested documents must be executed in writing. Disputes concerning the shareholder’s right to information shall be settled in court. 8.  Shareholders the total par value of whose holdings amounts to not less than 1/10 of the authorised capital or the institution which holds the special shares shall have the right to appoint an expert (a group of experts) to inspect the company's activities and accounting papers in order to establish whether or not there are any indications of insolvency or fraudulent bankruptcy, or waste of the company’s assets, entry into unprofitable transactions, infringement of the shareholders’ rights, including, among all other things, unjustified payment of wages or granting of concessions or privileges (when this causes reduction of the company’ profit or brings about losses). The inspection expenses shall be covered by the shareholders who appoint the experts. If the expert (the group of experts) confirms the facts stated in the shareholders’ application, the company must refund the inspection expenses, but not in excess of 1/4 of the damage caused to the company or its shareholders. Disputes concerning the experts’ findings shall be settled in court. When carrying out the inspection the experts shall enjoy the same rights as the company inspector (auditor). Article 17. Proxies 1. The shareholder shall have the right to authorise another person to vote for him as his proxy at the general meeting or perform other legal acts.  The proxy of the shareholder-natural person must be certified by a notary, whereas the proxy of the shareholder-legal person or of an enterprise must be certified by the manager's signature and the seal. The inspector of the company the shares whereof are held by the person who is appointing the proxy may   not act as the proxy. 2.  The proxy to represent a shareholder at the meeting must be presented to the person who is responsible for the registration of the participants in the meeting; the person shall record in the list of registration the name of the person who certified the proxy and the date when it was certified as well as its number and term of validity. 3. Shares owned by the state or municipality may be represented in the company, in the manner established by the Government of the Republic of Lithuania, by the authorised central or local government public servants, state-owned or municipal enterprise employees, who may be members of managing bodies of the company. CHAPTER FOUR MANAGEMENT OF THE COMPANY Article 18. Managing Bodies 1. The managing bodies of the company shall include the general meeting, the Supervisory Board, the Board,  and the head of the Administration. 2. On the resolution of the general meeting a public company may decline to form either the Supervisory Board or the Board. Where only the Board is formed, it shall be formed pursuant to the procedure established for the formation of the Supervisory Board in Paragraphs 2, 3, and 5 of Article 24 of this Law. In the public company in which the state or municipality: 1) owns special shares or shares carrying not less than 2/3 of all votes, the Board must be formed; 2) owns shares carrying in excess of 1/2, but less than 2/3 of all votes, the Supervisory Board and the Board must be formed.  3. The private company, except for the company in which the state or municipality owns special shares, may decline, on the resolution of the general meeting, to form either the Supervisory Board or the Board. Where either one or both the managing bodies are not formed, their functions, rights and responsibility shall be assigned to other managing bodies. If the Supervisory Board and the Board are not formed, the head of the private company’s Administration shall be elected by the general meeting. Where only the Board is formed, its members shall be elected, re-elected and dismissed in accordance with the procedure established for the formation of the Supervisory Board in Paragraph. 2, 3 and 5 of Article 24 of this Law. In the private company in which the state or the municipality owns special shares the formation of the Board is mandatory. 4. If any of the company's  managing bodies is not formed, the division of functions, rights and responsibility among the other managing bodies must be specified in the company's Articles of Association. 5. The general meeting shall have no right to charge other managing bodies to resolve the issues assigned to its competence. The general meeting shall have the right to resolve issues assigned to the competence of the Supervisory Board and the Board only  when asked to do so by the said managing bodies. 6. The managing bodies of the company shall have no right to adopt a decision or perform other actions which violate the company’s Articles of Association or contradict the objects of the company specified in the Articles of Association, manifestly go beyond normal production-business risks, are clearly unprofitable (purchase of goods, services or works at prices exceeding market prices or their underselling, waste of the company’s assets) or are unmistakably ineffective from the economic point of view.    Article 19. General Meeting 1.  The supreme managing body of the company shall be the general meeting.  All the shareholders of the company, irrespective of the number and class of shares they hold, shall have the right to attend the company's general meeting.  Members of the Board and the Supervisory Board as well as the head of the Administration, even if they are not shareholders, may also attend the general meeting without the right to vote. 2. The shareholders of a public company may attend the general meetings upon presenting statements of their securities accounts concerning shares owned by them. The right to operate securities accounts shall be vested in the brokerage companies and other economic entities specified by law (hereinafter referred to as brokerage companies). 3. Only the general meeting shall have the right to: 1)  amend and supplement the Articles of Association of the company (except for the case for in Paragraph 4 of Article 30 of this Law); 2)  elect the auditor, inspector,  members of the Supervisory Board, in the event that the Supervisory Board is not formed - members of the Board, and if neither the Supervisory Board nor the Board is formed - elect the head of the Administration; 3) dismiss members of the Supervisory Board and the Board, the inspector (auditor), and the head of the Administration who have been elected by the general meeting. If the company is operating at a loss, the general meeting must consider the suitability for the appropriate office of the Supervisory Board or the Board members or the head of the Administration (where the Supervisory Board and the Board is not formed); 4)  fix the salary of the inspector and the conditions of payment of auditor’s fees, the annual payments (bonuses) from the net profit to the members of the Board and the Supervisory Board pursuant to the provisions of Paragraph 4 of Article 47 and Article 48 of this Law; 5)  approve the annual financial statements, the business report of the Board (if the Board is not formed - the head of the Administration); 6)  increase the authorised capital - determine the class and amount of the newly issued shares and set the minimum issue price or reduce the authorised capital (except for the case specified in Paragraph 4 of Article 30 of this Law),  exchange shares of one class or type for shares of another, adopt a resolution to issue convertible debentures; 7)  liquidate or reorganise the company; 8)  appoint an expert (a group of experts) for the inspection of the incorporation of the company and  management of its affairs; 9)  approve the valuation of non-pecuniary (property) contributions; 10) with regard to a specific share issue, decline to grant pre-emption right to all the shareholders; 11) adopt a resolution on the distribution of the profit except for the case provided in Paragraph 7 of Article 48; and 12) adopt  a resolution on the transfer of a certain part of the company’s assets for arrears of payments into the state, municipal and state social insurance fund budgets 4.  The shareholders (or their proxies) attending the general meeting shall be registered by signing in the register.  The register must indicate the number of votes possessed by each shareholder.  The list shall be signed by the chairman and secretary of the meeting. 5.  The minutes of the general meeting shall be signed within 3 working days by the chairman, secretary and at least one shareholder authorised to do so by the meeting. Shareholders with at least 1/20 of the the votes at the general meeting shall have the right to appoint their representative to sign the minutes of the general meeting. For that purpose they must file with the chairman of the meeting an application signed by the shareholders. The person authorised (appointed) to sign the minutes shall have the right to present in writing his comments or opinion regarding the facts stated in the minutes. Disputes concerning the invalidity of the minutes of the general meetings or parts of the minutes shall be settled in court. The minutes of the general meeting must be accompanied by the list of the attending shareholders, their respective powers as well as ballot-papers of the shareholders who voted by ballot in advance and documents proving that the shareholders had been notified of the convening of the general meeting. The minutes (copy) of the general meeting which adopted resolutions changing the data on the company kept with the Enterprises Register of the Republic of Lithuania must be within 15 days after the meeting filed, together with the appendices, with the registrar of the Register of Enterprises of the Republic of Lithuania. Minutes of the general meetings are official documents stored and kept in accordance with the procedure established by the Law on Archives. Falsification of the above minutes shall make a person liable under law. Article 20. Quorum of the General Meeting and Adoption of Resolutions 1.  The general meeting may adopt resolutions if the attending shareholders have more than 1/2 of all votes. The quorum is established on the basis of the shareholders register data prior to the official opening of the meeting and shall not be established anew or revised in the course of the general meeting.  If the meeting does not have a quorum, a repeat meeting must be called within 15 days which meeting shall have the right to adopt resolutions on all the items of the agenda irrespective of the number of shareholders present.  If the consent of shareholders of shares of a certain class is necessary for the adoption of a resolution, the decision on the consent may be adopted by the meeting of the shareholders of the respective class, provided that the meeting is attended by shareholders who hold more than a half of the shares of said class. The procedure for calling the general meeting shall be valid for convening a repeat  meeting. 2.  Upon familiarising themselves with the agenda and the draft resolution, shareholders with having the right to vote may inform the meeting in writing of their vote "for" or "against" with respect to each individual resolution.  Such communications shall be included in the quorum of the meeting and added to the voting results. 3. Voting at the general meeting shall be open. On the issues on which at least one shareholder requests a secret vote to be taken, provided that he is supported by shareholders possessing at least 1/20 of the votes, secret voting shall be mandatory to all shareholders, except for the person representing the shares owned by the state or municipality. The person must always vote in writing on the items on the agenda of the general meeting.  4.  The resolutions of the general meeting shall be adopted by a simple majority vote of the shareholders present, with the exception of the following cases: 1) the election of the Supervisory Board or the Board in accordance with the regulations set out in Paragraph 2 of Article 24; 2) the adoption of resolutions on the issues specified in Paragraph 11 of Article 10, Subparagraphs 1, 6, 7, 9, 10 and 11 of Paragraph 3 of Article 19, Paragraph 3 of Article 31, the adoption whereof require a 2/3 majority  vote (since 1 May 2001 - a 3/4 majority vote); also on the resolutions of the Board specified in Paragraph 7 of Article 27; 3) the adoption of the resolution not to grant all the shareholders the pre-emption right, which resolutions requires a 3/4  majority vote in favour (the company’s Articles of Association may provide for  a larger majority  vote in favour); 4) the adoption of resolutions which requires approval of the holders of preference shares or special shares. 5. The company’s Articles of Association may provide for a larger than 2/3 majority (3/4 or 4/5 of votes) required to adopt resolutions on the amendment and supplementing of the company’s Articles of Association, increase or reduction of the authorised capital, reorganisation or liquidation of  the company, distribution of profit, issuing of convertible debentures. As of 1 July 1998, the newly incorporated companies must provide in their Articles of Association for an at least 3/4 majority of votes in favour required to adopt resolutions on the issues specified in Subparagraph 2 of Paragraph 4 hereof. As of 1 May 2001, the provision shall be applicable to all companies. 6. If in the cases specified in Paragraph 4 of Article 16 of this Law the shareholder is not in the position to cast his vote, the results of the voting shall be established not according to the number of votes of the attending shareholders, but according to the number of votes of shareholders who have the right to participate in deciding the issue. Article 21. The Convening of  General Meetings 1. The general meeting shall be convened on the resolution of the Board, and if the Board has not been formed - on the resolution of the Supervisory Board. If neither the Board nor the Supervisory Board has been formed in the private company, or if the number of the company’s Board members is not more than one half of their number specified in the Articles of Association, the general meeting must be convened on the decision of the head of the Administration. The general meeting must be convened on the decision of the head of the Administration if the company’s Supervisory Board or the Board fails to convene the meeting in the instances and within the time limits provided by this Law.   The right of initiative to convene the general meeting shall be vested in the Supervisory Board and the shareholders with no less than 1/10 of the the votes,  unless the Articles of Association provide for a smaller amount of votes as well as the institution which holds the special shares. The general meeting may be convened on the resolution of shareholders with more than 1/2 of the votes or holding the special shares if the persons who attempted to initiate the convening of the meeting did not receive a favourable decision of the company’s managing bodies.  2. The Board must convene the regular annual general meeting each year within 4 months of the end of the business year. 3. The  extraordinary general meeting must be called if: 1)  the amount of the company’s equity capital   becomes smaller than the authorised capital specified in the Articles of Association by over  1/4; 2) the number of the Supervisory Board, Board members becomes half their number  specified in the Articles of Association  or less (because of the retirement or inability to continue in office); 3) the company’s inspector (auditor) resigns or is unable to continue in office without having examined the company’s annual financial accounts papers; 4) it is requested by the shareholders with the right of initiative or by the Supervisory Board: 5) it is required under other laws or the company’s Articles 4. The persons who are demanding that the general meeting be convened shall submit an application to the Board indicating the reasons and objectives for calling the meeting, a draft agenda and drafts of the resolutions, also  proposals as to the time and place of the meeting.  If the Board fails to come to an agreement with the persons initiating the meeting on settling the issues proposed on the agenda in any other manner, it must convene the general meeting within 40 days of the filing of the application. 5.  The general meeting may be called on the court decision if: 1)  the meeting has not been called within 4 months of the end of the business year and a shareholder has brought the matter to court; 2)  the persons who initiated the meeting  refer the matter to court after failing to get a favourable decision from the Board in accordance with the procedure established by Paragraph 4 hereof; and 3)  the creditors of the company have appealed to court on the grounds of failure to call an extraordinary general meeting in the cases specified in Subparagraph 1 of Paragraph 3 hereof. 6.  The Board must publish a notice about the convening of the general meeting in the periodicals s …