OFFICIAL TRANSLATION REPUBLIC OF LITHUANIA LAW On the Accumulation of Occupational Pensions 4 July 2006 No X-745 (As last amended on 5 June 2008 – No X-1589) Vilnius CHAPTER I GENERAL PROVISIONS Article 1. Purpose and Scope of the Law 1. This Law shall regulate the conditions of and the procedure for the organisation of the accumulation of occupational pensions in the Republic of Lithuania. 2. This Law has the objective of harmonising regulation of the accumulation of occupational pensions with the EU legal acts listed in the Annex to this Law. 3. This Law shall apply to all associations acting as associations of participants in occupational pension fund(s) (hereinafter referred to as a “pension association”) in the Republic of Lithuania. The Law on Associations shall apply to pension associations to the extent their status is not regulated by this Law.  Application of this Law in respect of activities of life assurance undertakings engaged in the accumulation of occupational pensions is provided for in Chapter VII thereof. 4. Any obligation assumed by a sponsoring undertaking concerning the accumulation of occupational pensions shall be discharged: 1) through a pension association operating in accordance with this Law or through an equivalent entity (hereinafter referred to as an “equivalent entity”) established in another Member State of the European Union; 2) by concluding a life assurance contract under which occupational pensions shall be accumulated in this life assurance undertaking. 5. The requirements specified in paragraph 4 of this Article shall not be applicable to obligations of a sponsoring undertaking discharged by paying contributions to a pension fund operating in accordance with the Republic of Lithuania Law on the Supplementary Voluntary Accumulation of Pensions and obligations of the sponsoring undertaking arising from insurance contracts that are not regulated by this Law. 6. Where a pension association or an insurance undertaking engaged in the accumulation of occupational pensions accepts contributions from a sponsoring undertaking that is under the jurisdiction of a Member State of the European Union, it shall comply with social security and labour legislation of that Member State applied in the field of occupational pensions and, where established, the investment rules applied in that particular Member State in respect of occupational pension funds of pension associations and equivalent entities of other states. 7. This Law shall not be applicable to pension funds operating in accordance with the Law on the Accumulation of Pensions and the Law on the Supplementary Voluntary Accumulation of Pensions. Article 2. Definitions 1. Equivalent entity shall mean an entity equivalent to a pension association established for the same purpose in another Member State, irrespective of its legal form and how it is called in the home Member State. 2. Defined contributions occupational pension fund (hereinafter referred to as a “defined contributions pension fund”) shall mean an occupational pension fund, where the amount of pension benefits to be paid to the participants depends upon the contributions paid and the change in the value of assets, and the amount of a pension benefit is not guaranteed. 3. Defined benefits occupational pension fund (hereinafter referred to as a “defined benefits pension fund”) shall mean an occupational pension fund under the rules of which the return on investment of a certain amount or a pension benefit of a certain amount are guaranteed or where the amount of pension benefits to be paid to the participants does not depend upon the contributions paid and the change in the value of assets. 4. Unit of account shall be interpreted as defined in the Law on the Supplementary Voluntary Accumulation of Pensions. 5. Biometrical risks shall mean risks related to death, injury caused by an accident, work incapacity, disease and longevity of a participant. 6. Home Member State shall mean a Member State of the European Union in which a pension association or an equivalent entity has its registered office and its main administration or, if this entity does not have a registered office, its main administration. 7. European Union State (hereinafter referred to as a “Member State”) shall be interpreted as defined in the Law on Collective Investment Undertakings. 8. Sponsoring undertaking (a payer of contributions) shall mean any undertaking, agency or organisation, or a natural person who acts as an employer, or a self-employed person who pays pension contributions to an occupational pension fund(s) of a pension association, or has concluded a life assurance contract under which occupational pensions are accumulated.   9. Life assurance undertaking (hereinafter referred to as an “assurance undertaking”) shall mean an undertaking established in the Republic of Lithuania and operating in accordance with the procedure set forth by the Law on Companies and the Law on Insurance or a branch of a life assurance undertaking of other Member States of the European Union established in the Republic of Lithuania and operating in accordance with the procedure set forth by the Law on Insurance. 10. Life assurance contract under which occupational pensions are accumulated shall mean an insurance contract concluded between a life assurance undertaking authorised to engage in the accumulation of occupational pensions and a sponsoring undertaking (policyholder) under which the sponsoring undertaking (policyholder) undertakes to pay a contribution in the amount specified therein and the employees of the sponsoring undertaking (policyholder) (or a self-employed person provided he himself pays pension contributions) become entitled to pension benefits in accordance with the procedure set forth by the insurance contract and this Law. 11. Net assets shall be interpreted as defined in the Law on the Supplementary Voluntary Accumulation of Pensions. 12. Beneficiary shall mean a person receiving pension benefits. 13. Investment derivative instruments shall be interpreted as defined in the Law on Collective Investment Undertakings. 14. Posted worker shall mean a person who is posted to work temporarily in another Member State and who, under the terms of Title II of Regulation (EEC) No 1408/71, continues to be subject to the legislation of the Member State of origin. 15. Minimum period of participation shall mean a minimum period of participation in an occupational pension fund(s) of a pension association set in the Articles of Association of the pension association or the occupational pension fund(s) rules. This period shall not be longer than two years and it shall be considered that a person who has not completed this period does not gain any ownership rights to the share of pension assets accumulated on his behalf in the occupational pension fund, except for the exemptions specified in paragraph 7 of Article 23 and paragraph 2 of Article 26 of this Law.  The minimum period of participation, in the case of concluding a life assurance contract under which occupational pensions are accumulated, shall be a period, not longer than two years, set in the insurance rules and calculated since the moment of insuring the participant. Upon completion of this period, a sponsoring undertaking shall loose the right to be considered the beneficiary in respect of this participant or recover the surrender value accumulated from the contributions paid on behalf of the participant.    16. Persons of good repute shall be interpreted as defined in the Law on Insurance and the Law on Markets in Financial Instruments. 17. Pension annuity shall be interpreted as defined in the Law on Reform of the Pension System. 18. Pension association shall mean an association operating under this Law with the view to accumulating occupational pensions, established separately from a sponsoring undertaking (employer) or an organisation representing the interests of self-employed persons for the purpose of providing pension benefits, related to occupational activities, to the participants in its pension fund(s) pursuant to the agreement establishing a pension association.  19. Participant in a pension fund (hereinafter referred to as a “participant”) shall mean a member of a pension association who has chosen an occupational pension fund of the association and his occupational activities entitle or will entitle him to receive pension benefits pursuant to the occupational pension fund rules. 20. Pension assets shall be interpreted as defined in the Law on the Supplementary Voluntary Accumulation of Pensions. 21. Management of pension assets shall mean: 1) adopting and implementing the investment decisions; 2) keeping of accounts, internal control of compliance to legal acts, valuation of the net assets, management of the list of participants in an occupational pension fund,  opening, managing and closing of pension accounts, carrying out of operations related to acceptance of pension contributions and payment of pension benefits (except for those performed by the custodian of pension assets), conversion of money into the units of account and conversion of the units of account into money, distribution of income, determination of the value of a unit of account, contract settlements, and keeping of records of completed operations; 3) marketing activities and provision of information in accordance with the procedure set forth in the asset management agreements; 4) other activities related to the activities specified in subparagraphs 1-3 above. 22. Periodic report shall be interpreted as defined in the Law on the Supplementary Voluntary Accumulation of Pensions. 23. Money market instruments shall be interpreted as defined in the Law on Collective Investment Undertakings. 24. Host Member State shall mean a Member State, other than the home Member State, whose social security and labour legislation regulating the accumulation of pensions in occupational pension funds is applicable to the relations between a sponsoring undertaking and the participants. 25. Occupational pensions (pension benefits) shall mean a benefit provided for in the occupational pension fund rules and paid to a participant of this fund upon reaching the pensionable age set out in the rules, or complying with other conditions laid down in the occupational pension fund rules and necessary for becoming entitled to the benefit which is related to occupational activities of the participant and which was, at least in part, accumulated from pension contributions paid by a sponsoring undertaking. Supplements and benefits specified in paragraph 3 of Article 23 and Article 29 of this Law shall not be considered pension benefits. 26. Occupational pension fund (hereinafter referred to as a “pension fund”) shall mean pension assets belonging to the participants in the fund and, in the cases provided for by this Law, the payers of contributions by the right of common partial ownership. 27. Occupational pension fund rules (hereinafter referred to as the “pension fund rules”) shall mean a document approved in accordance with the procedure set forth by this Law defining the procedure for the payment of pension contributions and the investment of pension assets, and stipulating what pension benefits and on what conditions are paid to the participants in a pension fund, as well as other provisions required under this Law. 28. Self-employed persons shall be interpreted as defined in the Law on State Social Insurance. 29. Technical provisions shall mean the amount of assets, calculated in accordance with the procedure set forth by legal acts, corresponding to financial obligations of a pension association in respect of the participants arising from the rules of a defined benefits pension fund of a pension association. 30. Securities shall be interpreted as defined in the Law on Collective Investment Undertakings. CHAPTER II OPERATING PROCEDURES OF A PENSION ASSOCIATION Article 3. Establishment of a Pension Association 1. A pension association shall operate in accordance with its founding documents, laws of the Republic of Lithuania, Government Resolutions and other legal acts. 2. A pension association shall be established by concluding an agreement establishing a pension association: 1) by the employer(s) and employees or their authorised representatives, or 2) by self-employed persons in compliance with legal acts of the home and host Member State. 3. The following information has to be specified in the agreement establishing a pension association: 1) the founders (full names, personal numbers and addresses of natural persons, business names and identification codes of legal entities, as well as their registered offices, full names or business names and personal numbers (identification codes) of their representatives); 2) the name of a pension association; 3) persons who have the right to represent the association, their rights and powers; 4) the date of signing of the Memorandum of Association. 4. The following information may also be specified in the agreement establishing a pension association: 1) property and non-property obligations of the founders, the procedure and terms for their discharge; 2) the procedure for compensating the founding costs; 3) the procedure for settlement of disputes between the founders; 4) the procedure for convening a founding meeting and the procedure for adopting decisions by the founding meeting; 5) other provisions that do not contravene with this Law and other laws. 5. The founders of a pension association shall prepare draft Articles of Association and convene the founding meeting prior to registering it in the Register of Legal Entities and including it in the List of Associations of Participants in Occupational Pension Funds, which are Authorised to Operate in the Republic of Lithuania (hereinafter referred to as the “List of Pension Associations”). The Articles of Association of the pension association shall be adopted and the management bodies shall be set up at the founding meeting.   6. The founders of a pension association on whose behalf a sponsoring undertaking undertakes to pay pension contributions and/or who will pay their pension contributions themselves and sponsoring undertakings shall become members of the pension association as of the moment of concluding an agreement establishing the pension association.  Sponsoring undertakings and legally capable natural persons who have reached the age of 16, united by occupational characteristics or characteristics typical of a branch of economy wherein they are engaged in occupational activities, and who are participants in a pension fund(s) of this pension association may be members of the pension association.  The founders of the pension association, who are natural persons, shall loose their membership, if they failed to become participants in a pension fund(s) of the pension association within twelve months since the beginning of their membership.    Article 4. Registration of a Pension Association and Commencement of its Activities 1. A pension association may commence its activities only after the approval from the Securities Commission, granted in accordance with the procedure set forth by it, of the Articles of Association of the pension association, the candidates for members of the management bodies, the pension fund rules, draft agreements on management of pension assets and custody of pension assets is received and the pension association is included in the List of Pension Associations.  2. A pension association is authorised to commence its activities under the pension fund rules only after the approval from the Securities Commission is received and/or prior authorisation from the Securities Commission to accept contributions from a sponsoring undertaking located in another Member State under the pension fund rules drafted in compliance with the requirements of social security and labour legislation applicable to pension funds in another Member State is received in accordance with the procedure set forth in Article 57 of this Law.   Where social security and labour legislation of another Member State establishes different requirements for pension funds, a pension association that accepts contributions under the pension fund rules shall adhere to the requirements established for pension funds in social security and labour legislation of that Member State.     3. After registration in the Register of Legal Entities, an association willing to engage in the activities of a pension association shall submit an application to the Securities Commission requesting to be included in the List of Pension Associations.  The following documents shall be submitted together with the application: the agreement establishing a pension association, the Articles of Association, the pension fund(s) rules of the pension association, information about the members of the management bodies, the chosen manager of pension assets, the custodian of pension assets, draft agreements on management of pension assets and custody of pension assets, the financing plan for each pension fund of the pension association with specified procedure for calculation of contributions and frequency of their payment, obligations assumed by the sponsoring undertaking, the forecast for the development of assets of the pension fund for five years taking into consideration the anticipated changes in the number of participants and beneficiaries and the anticipated profit forecasts, as well as other documents and data the list whereof shall be stipulated by the Securities Commission in the rules approved by it.   4. The Securities Commission shall have the right to refuse to include the entity in the List of Pension Associations, if: 1) the provided documents or data do not comply with the requirements laid down in legal acts or the data submitted is not complete or is false; 2) members of the management bodies, the chosen manager or custodian of pension assets or the intended conditions of the activities of a pension association do not comply with the requirements laid down in this Law and other legal acts or the interests of members of the pension association; 5. The Securities Commission shall notify the applicant in writing about its decision within three months from the submission of all the documents and data. The time limit for consideration of the application shall be calculated from the date of the submission of the last documents or data. Refusal to satisfy the application shall be reasoned and may be appealed against to the court. 6. The words an “association of participants in an occupational pension fund” or any other combination of these words or their derivatives may only be used in the name of an entity which is included in the List of Pension Associations, or in its advertisement. 7. A pension association must have at least one pension fund. Article 5. The List of Pension Associations 1. The Securities Commission shall manage the List of Pension Associations.  The Securities Commission shall publish the data about pension associations that are included in the List of Pension Associations, or about the ones that are removed from this List, in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios. 2. The following data shall be contained in the List of Pension Associations: 1) the name, code, registered office and the date of commencing the activities of a pension association; 2) the latest version of the Articles of Association of a pension association; 3) information about the management bodies of a pension association and its members; 4) information about a pension fund(s) of a pension association; 5) information about the manager of pension assets; 6) information about the custodian of pension assets; 7) the list of the Member States under whose jurisdiction the pension association of sponsoring undertakings has the right to accept contributions in accordance with the procedure set forth in Article 57 of this Law and the related information; 8) other data specified in the rules approved by the Securities Commission. 3. The Securities Commission shall have the right to remove a pension association from the List of Pension Associations, if: 1) a sanction to prohibit activities of a pension association and to remove the pension association from the List of Pension Associations is imposed in accordance with the procedure set forth by this Law; 2) a pension association failed to commence its activities within twelve months from the date of inclusion whereof in the List of Pension Associations; 3) upon the request of a pension association, provided it has discharged all the obligations in respect of the participants in a pension fund(s) or all the participants in a pension fund(s) have transferred to pension funds of another pension association or life assurance undertaking to continue the accumulation of occupational pensions under a life assurance contract, or terminated the participation in pension funds of the pension association; 4) a pension association is liquidated, reorganised,  or restructured. Article 6. Articles of Association of a Pension Association 1. The Articles of Association of a pension association is a founding document and a pension association shall operate in conformity with it.   2. The following information has to be specified in the Articles of Association of a pension association: 1) the name of a pension association (the words an “association of participants in an occupational pension fund” or any other combination of these words or their derivatives have to be in the name of the association); 2) legal form of a pension association (an association); 3) registered office of a pension association; 4) objectives and type of activities have to be clearly and explicitly defined; 5) general conditions for membership in a pension association and participation in its pension funds; 6) the procedure for transfer from one pension fund of a pension association to another pension fund of the association; 7) the conditions and the procedure for establishment and dissolution of pension funds; 8) general rights and duties of the participants in a pension fund(s); 9) the competence of the general meeting of the members of a pension association, the procedure for convening the general meeting and the decision-making process; 10) other bodies of a pension association, their competences, the procedure and time limits for their formation, election and removal from office of their members, as well as their rights, duties and responsibilities; 11) the procedure for the submission of documents of a pension association and other information to the participants in a pension fund(s), if it is not provided for in the Articles of Association that this procedure will be established in the pension fund rules; 12) the procedure for giving notifications of a pension association, if it is not provided for in the Articles of Association that this procedure will be established in the pension fund rules; 13) the procedure for amending the Articles of Association of a pension association and the procedure for the approval of and amendments to the pension fund rules; 14) the period of activities of a pension association, if it is limited; 15) the procedure for using the funds of a pension association as well as the procedure for the control of the activities of the pension association; 16) pension association liquidation procedure; 17) the financial year of a pension association, which has to coincide with the calendar year; 18) the date of signing of the Articles of Association. 3. The Articles of Association of a pension association may also contain other provisions that do not contravene with this Law and other legal acts. 4. The Articles of Association of a pension association may be amended only after receiving a prior approval from the Securities Commission. Article 7. Activities and Duties of a Pension Association 1. A pension association may not engage in activities that are not related to occupational pensions. A pension association shall operate in compliance with the principles of solidarity and equality of its members. 2. Persons subject to the provisions of legal acts of the Republic of Lithuania on social security and labour may participate only in the defined contributions pension funds. 3. In carrying out its activities, a pension association must: 1) act fairly in the interests of its members and market credibility; 2) act with care,  professionally and prudently; 3) have and apply the required measures and procedures; 4) adequately and appropriately reveal information related to membership in a pension association and participation in a pension fund to the participants; 5) try to avoid conflicts of interests and, in the case it is not possible to avoid them, ensure fair treatment of the participants; 6) ensure that pension association management procedures, the system for keeping the accounting records and the accounting system would be reliable and that it would be possible to see parties to all transactions, payers of contributions,  the amounts of contributions, the distribution of the share of the transaction between the sponsoring undertaking and the participant, that content of a transaction, its time and place and whether the assets are invested in compliance with the pension fund rules and the requirements laid down in other legal acts; 7) have mechanisms for internal control that are adequate for their activities; 8) keep the documents evidencing the  carried out transactions for at least ten years since the day they took place, unless other legal acts provide for a longer period of time; 9) ensure that persons responsible for decision-making would be of good repute and have qualifications and work experience as established by the Securities Commission. Article 8. Specific Features of Reorganising or Restructuring of a Pension Association 1. A pension association may be reorganised or restructured provided this does not threaten the interests of the existing participants in a pension fund(s) and pension beneficiaries. 2. Upon the decision of the general meeting of members of a pension association, a pension association may be restructured only if it has transferred all its pension funds and the obligations arising from all pension fund rules to other pension associations and, respectively, the participants in pension funds become members of these pension associations, or if all pension funds are dissolved for the purpose of restructuring the pension association, and the authorisation from the Securities Commission specified in paragraph 3 of this Article is obtained. 3. Before taking a decision to reorganise or reconstruct a pension association, an authorisation from the Securities Commission has to be obtained. The Securities Commission shall take the decision on the authorisation to reorganise or restructure a pension association within thirty working days from the submission of all the required and properly executed documents. The following documents shall be submitted to the Securities Commission: a relevant application, the conditions of reorganisation of a pension association and draft Articles of Association of pension associations that will be operating after the reorganisation  (in the case of reorganisation); documents certifying transfer of all the pension funds and all the obligations arising from the pension fund rules to other pension associations or the dissolution of all the pension funds for the purpose of restructuring the pension association; draft founding documents of a legal entity of a new legal form into which the pension organisation will be restructured (in the case of restructuring) and other documents specified by the Securities Commission. 4. The conditions of reorganisation of a pension association have to provide the information required under the provisions of the Civil Code of the Republic of Lithuania and also the number of pension funds and their participants, the data about transferable and acceptable pension funds and the pension assets that they are composed of, the manager and the custodian of pension assets, as well as the conditions of and terms for transfer and acceptance of obligations of the pension association, property and non-property rights of the participants in a pension fund(s) after reorganisation and the conditions and terms of acquiring these rights and duties.   The conditions of the reorganisation must be approved by the general meeting of members of the pension association and the Securities Commission. 5. A pension association shall announce about reorganisation or restructuring in accordance with the procedure set forth by the Securities Commission. 6. Information about the process and terms of reorganisation or restructuring shall be provided to each member of a pension association, a participant in a pension fund or the Securities Commission upon their request. Article 9. Specific Features of Bankruptcy of a Pension Association 1. Bankruptcy procedure of a pension association shall be carried out only in judicial procedures. 2. The Securities Commission shall have the right to file a petition with the court on initiating bankruptcy proceedings in respect of a pension association. In such case, the court shall, within fifteen days from the day of the receipt of the petition, make a ruling to initiate bankruptcy proceedings or to refuse to initiate it.    Having made the ruling to initiate bankruptcy proceedings, the court or the judge shall immediately notify thereof the Securities Commission. 3. Where a petition on initiating bankruptcy proceedings is filed with the court by other persons in accordance with the procedure prescribed by the laws, the court shall receive the conclusion of the Securities Commission on the insolvency of a pension association before making the decision to initiate bankruptcy proceedings. 4. The Securities Commission shall present the candidate to the post of bankruptcy administrator of a pension association to the court. Article 10. Specific Features of Liquidation of a Pension Association 1. Upon the decision of the general meeting of members of a pension association, the pension association may be liquidated only if it has transferred all its pension funds and the obligations arising from all pension fund rules to other pension associations and, respectively, the participants in pension funds become members of these pension associations, or if all pension funds are dissolved for the purpose of liquidating the pension association and the authorisation from the Securities Commission to liquidate the pension association is obtained as well as the approval of the candidate to the position of a liquidator.     2. The Securities Commission shall take a decision on the authorisation to liquidate a pension association and on the approval of a candidate to the position of a liquidator within thirty working days from the submission of all the required and properly executed documents. The following documents shall be submitted to the Securities Commission: a relevant application, documents certifying transfer of all the pension funds and all the obligations arising from the pension fund rules to other pension associations or the dissolution of all the pension funds for the purpose of liquidating the pension association, the data about a potential liquidator and other documents specified by the Securities Commission. 3. The Securities Commission and the manager of the Register of Legal Entities shall be notified in writing about the decision to liquidate a pension association within three working days from the general meeting of the members of a pension association in which the decision was taken and shall receive the data about the appointed liquidator.   4. A pension association shall announce about the liquidation in accordance with the procedure set forth by the Securities Commission.  Information about the process and terms of liquidation shall be provided to each member of a pension association or a participant in a pension fund upon their request. 5. Liquidation of a pension association shall be enforced by decision of the court after receiving the conclusion of the Securities Commission on liquidation of the pension association. The Securities Commission shall present a candidate to the post of a liquidator to the court. 6. The liquidator of a pension association under liquidation shall be responsible for distribution of assets composing pension funds that were not transferred to other pension associations (when the obligations arising from the pension fund rules were not transferred to other pension associations). 7. A liquidated pension association shall be removed from the List of Pension Associations and the Register of Legal Entities immediately after the distribution of pension assets is completed.   8. The Securities Commission shall have the right to receive all the data and explanations concerning the process of liquidation of a pension association. CHAPTER III MANAGEMENT OF A PENSION ASSOCIATION Article 11. Bodies of a Pension Association 1. A pension association shall obtain civil rights, assume civil duties and fulfil them through their management bodies. 2. A pension association has to have a general meeting of members of a pension association and a collegial management body – the Board. Other bodies may be formed as well, including a one-man management body. 3. The general meeting of members of a pension association shall not be entitled to delegate the task of dealing with issues falling within its exclusive competence to other bodies of a pension association. 4. The management bodies of a pension association must act in the interests of participants in a pension association and its pension funds, and the beneficiaries, as well as act in compliance with laws and other legal acts, the Articles of Association of the pension association and the pension fund rules. 5. Minutes must be taken of all the general meetings of members of a pension association and the meetings of the Board. Article 12. General Meeting of Members of a Pension Association 1. The general meeting of members of a pension association shall have an exclusive right: 1) to amend the Articles of Association of the pension association; 2) to elect and remove from office members of its management bodies; 3) to establish pension funds and adopt decisions on dissolution of a pension fund(s), unless the Articles of Association of the pension association provide otherwise; 4) to approve the annual financial statements of the pension association and the activity report of the pension association; 5) to adopt decisions on restructuring or termination (reorganisation or liquidation) of the pension association; 6) to approve and amend the pension fund rules, unless the Articles of Association of the pension association provide otherwise; 2. The decisions of the general meeting of members of a pension association specified in sub-paragraphs 1-5 of this paragraph shall be considered adopted, if at least 2/3 of members participating in the meeting vote for them. 3. The decision of the general meeting of members of a pension association to amend the Articles of Association of the pension association may be taken only after receiving a prior approval from the Securities Commission. 4. The ordinary general meeting of members of a pension association shall be held each year, but not later than within four months after the close of the financial year. 5. The Board and 1/10 of members of a pension association shall have the right of initiative to convene the general meeting of members of the pension association. 6. The general meeting of members of a pension association may be convened by decision of the court, if it was not convened in accordance with the procedure set forth by this Law and the Articles of Association and if the Securities Commission applied to the court for this matter.  7. Members of the management bodies and other collegial bodies of a pension association who are not members of the pension association can participate in the general meeting of members of the pension association without the right to vote. Article 13. The Board and the Formation thereof 1. The Board of a pension association shall be a collegial management body of the pension association. 2. The Board shall be formed in such way as to ensure proper and proportionate representation of interests of sponsoring undertakings and participants in pension funds. 3. Members of the Board, acting on behalf of a pension association and for its interests, shall act with proper care and qualifications, in conformity with this Law, other legal acts, the Articles of Association and the pension fund rules, in accordance with principles of justice, reasonableness and fairness and avoid conflicts of interest. 4. In the case when a pension association accepts contributions from a sponsoring undertaking located in another Member State, the Board shall ensure that the pension association complies with social security and labour legislation of that Member State applied in the field of occupational pensions. 5. The number of the members of the Board shall be set in the Articles of Association of a pension association. The Board must have at least 3 members. 6. Persons of good repute who have acquired higher education, know legal acts regulating the activities of pension associations and are aware of the basic investment principles may be elected as members of the Board.  The Articles of Association of the pension association may set additional requirements for persons to be elected as members of the Board. The Securities Commission has to approve in advance the candidates for members of the Board. 7. The Board shall be formed for a period no longer than five years. The same member of the Board may be elected only for two consecutive terms of office. 8. At least half of the members of the Board shall be elected from the participants in pension funds or their representatives and the others – from persons proposed by a sponsoring undertaking(s). When electing members of the Board from the participants in pension funds or their representatives, only the participants in pension funds (or their authorised representatives) may participate in the voting.  When electing the members of the Board from persons proposed by a sponsoring undertaking(s), only the sponsoring undertakings shall have the voting right. 9. A member of the Board may be dismissed before his term in office expires in accordance with the procedure under which he was elected. The Securities Commission shall have the right to request a dismissal of a member of the Board who has breached the duty of acting in the best interests of a pensions association and the participants in its pension funds.   10. Where a member of the Board resigns or is dismissed before his term of office expires, a new member of the Board shall be elected for this post until the expiry of the term of office of the present Board. 11. The Board shall elect the Chairman from its members. The Chairman shall act on behalf of the Board. Article 14. Competence of the Board and the Rules of Procedure 1. The Board of a Pension Association shall: 1) establish pension funds and adopt decisions on dissolution of a pension fund(s), if such right is stipulated in the Articles of Association of the pension association; 2) approve and amend the pension fund rules, if such right is stipulated in the Articles of Association of the pension association; 3) regularly revise the principles of the investment policy of a pension fund(s) of a pension association, and, where necessary, initiate the amendments thereof to meet the objectives of activities of the pension association;   4) having agreed with the Securities Commission, select the manager of pension assets and conclude an agreement on management of pension assets with him;  5) having agreed with the Securities Commission, select the custodian of pension assets and conclude an agreement on custody of pension assets with him; 6) select an audit company to audit the annual financial statements of the pension association and conclude an agreement with him; 7) ensure the provision of information provided for in this Law and other legal acts to the participants; 8) appoint the administrator and remove him from office (paragraph 4 of Article 21 of this Law); 9) perform other functions delegated to it in the Articles of Association or the decisions of the general meeting of members of a pension association. 2. The Board shall be responsible for timely convocation and organisation of the general meeting of members and also, within its competence, for compliance with other provisions of this Law. 3. The Board shall ensure that the alphabetical list of all the participants according to each pension fund of a pension association would be present in the registered office of the pension association (in the location of its permanent management body). This list shall be available to all the participants upon their request. 4. The meetings of the Board shall be convened by the Chairman.  The meetings can also be convened by the decision of at least 1/3 of the members of the Board. 5. The Board may adopt decisions when at least ½ of its members are present at the meeting. The members of the Board shall have equal rights. The Board shall adopt decisions by a simple majority vote of the members participating at the meeting. During voting each member shall have one vote. In the event of a tie, the chairman of the Board shall have the casting vote. In the case of deciding on the amendments to the pension fund rules, when such right is granted to the Board under the Articles of Association of a pension association, seeking to reduce the rights of the participants in pension funds or to increase their duties, the decision has to be adopted unanimously. 6. A detailed procedure for the formation of the Board, the rules of procedure and the requirements for the members of the Board have to be provided for in the Articles of Association of a pension association. CHAPTER IV A PENSION FUND Article 15. The Pension Fund Rules 1. A pension association shall carry out pension accumulation activities in its pension funds under the pension fund rules.   2. The pension fund rules may be amended only after receiving a prior approval from the Securities Commission in accordance with the procedure set forth by it. 3. The following information has to be specified in the pension fund rules: 1) a group of persons entitled to become recipients of pension fund benefits (participants); 2) a sponsoring undertaking(s); 3) the conditions of and the procedure for starting and terminating the participation in a pension fund, and the minimum period of participation, if applicable; 4) rights and duties of a sponsoring undertaking(s); 5) specific rights of the participants in a pension fund and the beneficiaries not covered in the Articles of Association of a pension association; 6) types of pension benefits, ways of payment thereof and the possibilities of choosing them, the procedure for payment of pension benefits including the age from which a person becomes entitled to pension benefits and the right of the participants in a pension fund to defer the time limit for the payment of pension benefits;    7) the rules for and frequency of calculation of the net assets of a pension fund and the value of a unit of account, and the procedure for declaring the value; 8) the procedure for converting pension contributions and the funds belonging to a participant in a pension fund, which are being transferred to another pension fund of the same or another pension association or life assurance undertaking under a life assurance contract, into the units of account and also the procedure for converting the units of account into money; 9) the investment policy of a pension fund; 10) the procedure for transferring into another pension fund of the same or another pension association or a life assurance undertaking to continue the accumulation of occupational pensions under a life assurance contract; the procedure for transferring the funds belonging to a participant  who is transferring to another pension fund to that pension fund or life assurance undertaking to continue the accumulation of occupational pensions under a life assurance contract; 11) measures to be undertaken, if a sponsoring undertaking fails to fulfil its obligations; 12) the criteria for the selection of the manager of pension assets and the custodian of pension assets, the condition of and the procedure for their selection and replacement; 13) methodology for the calculation of the remuneration to the manager of pension assets and the custodian of pension assets, its maximum amount and the payment procedure, a finite list of other expenses covered from the pension fund assets and the procedure for their calculation, as well as maximum amounts;  14) the procedure for the submission of the reports to the participants in the cases provided for by this Law and also the forms of, the procedure for and the fee for the delivery of other notifications to the participants in the pension fund (when this fee is collected from a participant in the pension fund in the cases provided for by this Law); 15) the procedure for amending the pension fund rules; 16) the conditions of and the procedure for dissolution of a pension fund, and the procedure for distribution of pension assets of the dissolved pension fund; 17) the procedure for publication of information; 18) other information prescribed by the Securities Commission. 4. The pension fund rules may also contain other provisions that do not contravene with this Law and other laws. 5. It shall be prohibited to provide for any restrictions in the pension fund rules in relation to the right of the participants to terminate their participation, to restrict the possibility for a participant to transfer the funds to a pension fund of another pension association or a life assurance undertaking to continue the accumulation of occupational pensions under a life assurance contract, except for the cases when the pension fund rules provide for a minimum period of participation.  It shall be prohibited to limit the participant’s right of ownership to the share of contributions paid by deducting them from the participant, and the share of the increment (loss) of investments in respect of these contributions.    6. Before choosing a pension fund, a person shall receive copies of the Articles of Association of a pension association and the rules of all its pension funds. 7. The participants in pension funds may at any time get access to the Articles of Association of a pension association, the pension fund rules and the amendments thereof. 8. Each participant in a pension fund shall be notified in writing about the amendments made to respective pension fund rules not later than within one month after amending them. If, within two months from the receipt of such notification, a participant does not express any objections, it shall be considered that he agrees with the amendments. A participant who objects to the amendments made to the pension fund rules shall have the right to terminate the payment of contributions paid by him personally, but his participation in the pension fund continues. Article 16. Pension Accounts A pension account shall be opened for each participant in a pension fund. The units of account belonging to a participant of a pension fund shall be recorded in the account. Article 17. Units of Account and their Conversion 1. Each pension fund shall have its units of account. 2. Units of account express the share of the pension fund assets calculated for a participant. 3. Pension contributions, as well as funds transferred from another pension fund, shall be converted into units of account and entered into a pension account. The conversion shall take place not later than on the next day after the receipt of funds into the pension fund account at the value of a pension fund account unit valid on the day of the receipt of funds. 4. Units of account (the parts thereof) do not have nominal value.  The value of a unit of account is expressed in Litas or Euros.  The value of a unit of account shall be established by dividing the net assets of a pension fund by the total number of the units of account of the pension fund. The total value of all the units of account of the pension fund shall always be equal to the value of the net assets of the pension fund.  The value of the units of account shall be expressed to four decimal places and rounded pursuant to the mathematical rounding rules. 5. Where the funds, or a part thereof, calculated for a participant have to be paid to the participant in the cases provided for in this Law and other legal acts, the units of account shall be converted to money. The funds shall be paid or transferred not later than within one month after the receipt of the respective document under which the payment has to be made, or after the arising of legal grounds for such payment.  The conversion shall take place at the value of units of account calculated on the day of converting the units of account. Article 18. Pension Fund Assets 1. The pension fund assets shall belong by common partial ownership to the participants of a pension fund and the beneficiaries, except for the cases when the minimum period of participation has not yet expired and therefore a participant has not yet acquired the ownership rights to the share of the pension assets accumulated in the pension fund on his behalf. Until the expiry of the minimum period of participation, the share of the pension assets accumulated on behalf of the participant in the pension fund from contributions paid by the sponsoring undertaking shall belong by the right of ownership to the sponsoring undertaking.   2. The share of a participant or a beneficiary in the common ownership shall be established considering the share of assets expressed in units of account. 3. Management of a pension fund(s) of a pension association shall be delegated to the manager of pension assets, specified in Article 31 of this Law, who manages, uses and disposes of pension assets by holding the property in trust. 4. The assets of each pension fund of a pension association shall be accounted separately from those of other pension funds of the pension association and from own assets of the pension association.  5. It shall be prohibited to divert the recovery according to obligations of the manager of pension assets, the custodian of pension assets, the sponsoring undertaking and the participants in a pension association and a pension fund to the pension fund assets. 6. Pension assets accumulated in a pension fund may be used only fore the purpose of covering the obligations assumed in respect of the participants in the pension fund.  In the case when a pension association accepts contributions from a sponsoring undertaking located in another Member State, the assets accumulated on the grounds of these contributions shall be accounted separately. 7. After a participant’s in a pension fund death, the share of pension assets belonging to him by the right of ownership shall be inherited in accordance with the procedure set forth by laws. 8. Only the transactions specified in this Law may be concluded in respect of the pension fund assets. 9. The value of the net assets of a pension fund shall be regularly, at least once per month, calculated in accordance with the procedure set forth by the pension fund rules to establish the value of a unit of account of the pension fund each time when pension contributions are paid or payments are made. 10. The Securities Commission shall establish the procedure for and the principles and periodicity of the calculation of the value of the net assets of a pension fund.     11. The pension fund assets cannot be transferred to the members of the management bodies of a pension association, the manager of pension assets, the sponsoring undertaking, the supervisor of the manager of pension assets and the sponsoring undertaking, members of the supervisory board or the employees of the pension association (and their spouses).   It shall also be prohibited to acquire assets from persons specified in this paragraph using the funds from the pension fund. Article 19. Deductions from Pension Assets 1. Remuneration for management and having the custody of pension assets, as well as other expenses related to the management of pension assets may be covered from pension assets. 2. Only the expenses that are related to management of pension assets and having the custody of them and whose finite list is provided for in the pension fund rules may be covered from pension assets. The total amount of these expenses cannot exceed the maximum amounts set in the pension fund rules. Article 20. Specific Features of Pension Funds Managed in accordance with Social Security and Labour Legislation of other Member States Pursuant to the requirements of social security and labour legislation of another Member State (the host Member State), Chapter IV and Chapter V shall not apply to pension funds of a pension association established in the Republic of Lithuania, if compliance with the requirements of these Chapters would mean breach of social security and labour legislation of the host Member State. In any case, the pension association shall immediately notify the Securities Commission about the changes in the pension fund rules, the terms and conditions and other equivalent documents. Article 21. Dissolution of a Pension Fund 1. A pension fund may be dissolved by decision of a body authorised by a pension association or the court, if: 1) a sponsoring undertaking(s) fail to perform the assumed obligations; 2) the number of the participants in the pension fund has decreased to the extent that its further management does not comply with the interests of the remaining participants in the pension fund; 3) there are other serious reasons due to which further management of the pension fund does not comply with the interests of its participants. 2. A prior authorisation from the Securities Commission has to be obtained in order to dissolve a pension fund. 3. The Securities Commission shall have the right to apply to the court for the dissolution of a pension fund. 4. An entity, which has adopted the decision to dissolve a pension fund, shall appoint an administrator responsible for the sale of the pension assets of the dissolved pension fund and for  settlement with the participants. 5. The participants in the pension fund of this association, the sponsoring undertakings and the Securities Commission shall be notified in writing about the decision of the court, or the body authorised by the pension association, to dissolve the pension fund not later than within three days from adopting such a decision.  6. Upon taking the decision to dissolve the pension fund, the date for dissolving the pension fund shall be set.  The date shall be not earlier than three months after taking the respective decision.   Upon taking the decision to dissolve the pension fund, the duty of the sponsoring undertaking to pay contributions shall cease from the day of entry into force (coming into effect) of the decision.   7. The participants in a pension fund, which is to be dissolved, shall be notified hereof not later than one month prior to the dissolution of the pension fund and information about the possibilities of participating in other pension funds of the same or another pension association or accumulating occupational pensions in life assurance undertakings shall be provided.  Until the day when the pension fund is dissolved, a participant shall have a right to transfer to another pension fund established in accordance with this Law by transferring the share of the pension assets belonging to him or to transfer these funds to a life assurance undertaking and continue the accumulation of occupational pensions under a life assurance contract. 8. The assets of a pension fund, which is to be dissolved, shall be distributed to the participants in proportion to the value of the assets calculated for them according to the data of the day when the pension fund is dissolved. The pension assets of the pension fund shall be sold and the participants shall be paid in cash.  The pension assets of the pension fund, which is to be dissolved, shall be sold in the regulated market, or at the auction, in accordance with the rules set by the Securities Commission seeking the best result possible for the participants. 9. Not later than within two weeks after the dissolution of the pension fund, the administrator shall submit to the Securities Commission a report on the discharge of duties stipulated in this Article. 10. Where a pension association has only one pension fund, when making the decision on the dissolution of the pension fund, the issue of restructuring or liquidating the pension association has to be settled as well. CHAPTER V MEMBERSHIP IN A PENSION ASSOCIATION AND PARTICIPATION IN A PENSION FUND Article 22. Beginning of the Membership in a Pension Association and Participation in a Pension Fund 1. Membership in a pension association and participation in a pension fund shall begin upon joining a pension association and selecting a pension fund of the pension association, as provided for in the Articles of Association or the pension fund rules.   A person may become participant in a pension fund of a pension association only if he becomes member of that pension association. 2. A pension association shall be responsible for proper selection and training of the persons providing information about the accumulation of pensions in occupational pension funds and/or concluding agreements with the participants in pension funds and it shall ensure that these persons have relevant qualifications. 3. If the task of providing information about the accumulation of pensions in occupational pension funds and/or concluding agreements with the participants in pension funds on behalf of the pension association is delegated to the manager of pension assets, the requirements laid down in paragraph 2 of this Article shall also apply in respect of the manager of pension assets.  The Securities Commission shall have the right to set qualification requirements for persons providing information about the accumulation of pensions in occupational pension funds and/or concluding agreements with the participants in pension funds on behalf of the pension association. 4. The Articles of Association and/or the pension fund rules may provide for a minimum period of employment relations with a sponsoring undertaking upon the completion of which a person is entitled to become member of the pension association and participant in the pension fund.  This period may not exceed twelve months. 5. The Articles of Association and/or the pension fund rules may provide for a minimum age requirement and a person who has not reached this age cannot become member of the pension association and participant in the pension fund.  This age cannot be more than twenty-one years. Article 23. Protection of the Rights and Interests of the Participants in Pension Funds 1. It shall be prohibite …