REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA REPUBLIC OF LITHUANIA COMPANY LAW Chapter 1 General Provisions Article 1. Objectives of the Law This 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. A  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. A Company is a legal person. 2. A  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 10 000 litas. 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 a  Company must be situated in the Republic of Lithuania. 6. A  Company may  be established for a period of limited or unlimited duration.  If the  Articles of Association of a Company do not  specify the  period for which it is established, it shall be deemed  to have perpetual existence. The duration of a Company may be extended. Article 3. Incorporators 1. The  incorporators of a 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  a  Company  must  be  its shareholder. If  at least one of the incorporators (investors) of a Company  is a  foreign person,  the laws  of  the  Republic  of Lithuania which  regulate foreign  investment shall also apply to the Company. 2. If  a Company  is formed  by one person, an 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 an  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 formation 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 terms of offering of shares; 7) compensation  of incorporation costs and remuneration for the incorporation; and 8)  the   procedure  for   settling  disputes   between  the incorporators. 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 a 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 a Company shall be a public document. 4. A  Company incorporation  agreement  or  an  act  on  the incorporation of  a Company  concluded  in  accordance  with  the procedure established by this Law shall grant the right to open a settlement account  with a  bank registered  in the  Republic  of Lithuania. 5. Upon  executing a  Company incorporation  agreement,  the incorporators shall draw up the Company's Articles of Association and offer  shares for sale. The incorporators of a public Company shall be  entitled 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, any incorporator as well  as the  persons specified in the incorporation agreement shall be  entitled to  conclude contracts  in  the  name  of  the Company which  is being  incorporated. Upon their approval by the statutory  general   meeting,   said   contracts   shall   create obligations for  the Company.  In  the  event  that  the  meeting refuses to  approve said  contracts, the  incorporators shall  be jointly liable  for the  obligations  thereunder,  whereas  other persons stated  in the incorporation agreement shall be severally liable therefor.  Upon  the  proposal  of  the  incorporator  the general meeting may transfer to the Company the obligations under the contracts 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  through  normal  industrial  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 shall  be a  natural or a legal person who has at least one share in the Company acquired under law. 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 a 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 power  and government in  a special purpose Company must account to at least 70% of votes. 3. The institutions of state power and government possessing controlling interest  in  a  special  purpose  Company  shall  be entitled to establish the following: 1) obligatory works (assignments); 2) quality requirements for goods (services); and 3)  prices   of  goods   (services)  or   price  calculation regulations. 4. Taking  into account the specific character of a Company, the terms  and conditions  set forth  in Par.  3 hereof  must  be provided for in the Company's Articles of Association. Chapter 2 Incorporation, Reorganisation and Liquidation of a Company Article 6. Incorporation of a 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. A  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. A  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 a Company shall be a 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 a Company is registered after the commencement of the  business year,  the day  of  the  end  of  the  Company's business  year   provided  for   in  the  Company's  Articles  of Association shall  be considered  the end  of the  first business year of  the Company.  If a  Company is  crossed off the Register prior to  the end  of the  business year,  the last business year shall end by the day the Company is crossed off 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) contracts  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  who shall  have the right to invite property valuation experts.  The independent auditor shall have the rights established for  the auditor  by this  Law. If  the incorporators deny the  auditor the  required information and explanations, the auditor shall  inform the  statutory meeting  thereof in writing. Each shareholder shall have the right to familiarise himself with the statutory  report and  the auditor's  findings  and  to  make copies thereof. 7. If,  during incorporation,  not all  shares in  a  public Company are  subscribed for  during the  time prescribed  for the subscription for shares, the amount of the authorised capital may be reduced  on the  decision 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 under Par. 3 of Article 2 of this Law.  If during the time prescribed 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 must  also  be  attended  by  all  the incorporators of  the Company.  If there  is no  quorum,  another meeting shall be called. 10.  The   statutory  general   meeting  shall  approve  the statutory report  of the  Company and  the contracts concluded by the incorporators,  elect the  managing bodies,  the 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  shall  be elected for no longer than 2 business years. 12. Remuneration  for the  incorporation  of  a  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 in court. Article 7. The Company's Articles of Association 1. The  Articles of  Association of  a Company  constitute a 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) business  activities  (types  of  manufactured  products, performed work, rendered services); 4) the  procedure for  transferring registered shares to the ownership of  other persons  in the  cases specified in Par. 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 give to the holder; 7) procedure of payment for shares; 8) procedure  for exchanging  shares of one class for shares of another class; 9) procedure  for electing  the Supervisory Board, the Board and the auditor, 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 announcements of the Company; and 13) the  procedure  for  reorganising  and  liquidating  the Company. The Articles  of Associations  of a Company may also include other provisions,  provided that  they are in compliance with the laws of the Republic of Lithuania. 3. 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. 4. The  Articles of  Association of a 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 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 in 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 valid only upon their registration. 3.  A   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  through 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 no 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 a Company 1. A  Company shall  have the right to establish affiliates. Affiliates shall  be established on the decision of the Company's Board. The  number of  affiliates  of  a  Company  shall  not  be limited. 2. An  affiliate shall be a division of a Company possessing a separate  registered office.  An 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 Articles of Association of the affiliate. 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 a Company shall be registered in accordance with the  procedure established  in the  Law on  the Register  of Enterprises. Article 10. Reorganisation of a Company 1. Reorganisation  is transformation of a 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 a 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; 2)  organising   new  companies   from  the   Company  which terminates its activities; or 3) separating  a part  from the  Company which  is  a  going concern and merging the part with another Company or organising a new Company from the separated part. 5. When  the type  of a  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  the special  purpose status  of  a  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; 3) assumption  of liabilities  and the  period of assumption thereof; 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; 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 terms for issuing shares; 8) property and non-property rights of holders of shares and other securities  after Company  reorganisation and  the terms 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, auditors and experts of Companies during their reorganisation period. The Articles  of Association of each Company which will be a going concern  after the  reorganisation must be drafted together with the plan of reorganisation. 8. 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. 9. Every  Company must  make a  public announcement  of  its projected reorganisation  no 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 to make copies thereof. 10. The resolution to reorganise a Company may be passed and the plan  of reorganisation and the draft Articles of Association may be  at the  same time  approved by  shareholders with no less than 2/3  of votes of every class of shares. Shareholders with no less than  1/2 of  votes of  all classes of shares shall have the right to  appeal in  court the  resolution of the general meeting concerning the refusal to reorganise a Company. 11. A Company against which bankruptcy proceedings have been instituted or  with  respect  to  which  out-of-court  bankruptcy procedure is  applied may  be reorganised  in accordance with the procedure established  by the Law on Enterprise Bankruptcy of the Republic of Lithuania. 12. Public  announcement shall  be  made  of  the  Company's reorganisation no  less than  three times  with an  at least a 2- month interval between the announcements, or each shareholder and creditor shall be given a written notice thereof. 13. 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. Article 11. Liquidation of a Company 1. A Company may be liquidated on the following grounds: 1) the  time of  the Company's  duration as specified in the Articles of Association has expired; 2) the court or the creditors' meeting has passed a decision 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 on the  grounds of  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 which  decides to  liquidate the Company must appoint  its  liquidator  (administrator  of  a  Company  in liquidation).  The  managing  bodies  of  the  Company  shall  be divested, as  of the  day of the liquidator's appointment, of the powers to  manage  the  Company  and  their  functions  shall  be performed by the liquidator. 3. The  liquidator shall,  in accordance  with the procedure established by the Law on the Register of Enterprises, inform 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  a   Company  in   liquidation,  the  words  Öin liquidation" shall precede its name. 4. A  Company in  liquidation may  conclude  only  contracts which are  related to  its liquidation as well as those contracts which are provided for in the liquidation resolution. 5. The  liquidation of a Company shall be announced publicly no less  than three times at no shorter than 2-month intervals or each  shareholder   or  creditor  shall  be  personally  notified thereof. 6.  The   distribution  of   the  Company's  assets  to  the shareholders may  be carried  out only upon the expiration 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 in the Law on Mortgage of the Republic of Lithuania. 8. After  the payment  of the required taxes into the budget 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 held by them by  ownership right.  Any contingent  assets shall  later be distributed in  an analogous manner. If the shares of the Company carry different  rights, said  rights shall be taken into account during the distribution of assets. 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 power and government bodies, 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, make up the accounts as of the beginning  of the liquidation period (the liquidation balance sheet); 2) complete the discharge of the obligations under contracts concluded previously  and draw  up  new  contracts  within  their powers; 3) terminate contracts 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) have  the liquidated  Company struck  off the Register in accordance with  the procedure  established by  the  Law  on  the Register of Enterprises. 3. If  the liquidation  of the  Company  lasts  for  several years, within  3 months  of the  end of  each business  year  the liquidator shall  make up the annual accounts 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 change the liquidator. Chapter 3 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 ÖPublic  Company" (in  Lithuanian -  akcine bendrove or the acronym - AB) or ÖPrivate Company" (in Lithuanian - uzdara akcine bendrove or the acronym - UAB). The name of an investment Company must include  the words  ÖInvestment Company"  (in  Lithuanian  - investicine akcine  bendrove or the acronym - IAB). The name of a Company must  be in  compliance with  the regulations of names of enterprises,  institutions  and  organisations  approved  by  the Government. Disputes  over the name of a Company shall be settled in court. 2. A Company may: 1) have  accounts in  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; 3) buy  or acquire  in any  other way  and hold by ownership right, as  well as  issue, transfer,  exchange, or use in any way investment and  credit 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  sums  of ownership capital  and borrow money at the interest rate fixed by an agreement; 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. Companies may  also have  other civil rights and obligations which are  not established in this Law, provided that said rights and obligations  are in  compliance with the laws of the Republic of Lithuania. 3. 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. 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. 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 obliging  all or some of the shareholders to make additional contributions shall be invalid if at least one of them does not agree with the resolution. 3. If  a Company  is being  liquidated 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 share 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  a  general agreement certified by a notary. All the holders of a share shall be jointly liable for the shareholders' obligations. Article 15. Property Rights of Shareholders 1. A 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 a  priority in  acquiring  newly  issued  shares unless the Company's Articles of Association provide otherwise; 5) to  bequeath all  or part  of shares  to one  or  several persons; 6) to  sell or  transfer in  any other  way all  or part  of shares to the ownership of other persons; and 7) to  have  other  property  rights  provided  for  in  the Company's Articles of Association. 2. Shareholders  shall have  the right  to  request  of  the Company  the  repayment  of  their  contributions  in  the  cases provided for  in Pars. 7 and 8 of Article 6, Par. 3 of Article 8, Par. 3 of Article 40 and Par. 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 or the Articles of Association provide otherwise; 2) to  receive information on the business activities of the Company; 3) to  appeal in  court the resolutions of a general meeting or the Board; and 4) other non-property rights provided for in the Articles of Association. 2. If  all the  voting shares of the Company are of the same par value,  each share  shall carry  one vote  at the meetings of shareholders. 3. The  Articles of  Association of  the Company may provide for a  rule according  to which some types of shares do not carry the right to vote. 4. A  shareholder shall  have no  right to  take part in the voting at  the general  meeting on  issues specified in Par. 7 of Article 3 or in item 9 of Par. 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, with the exception of cases specified in Par. 3 hereof. 6. Only  shares with  1/4 of  the issue  price paid up shall give their  holders voting  rights at  the general  meeting  held prior to  the expiry of the term set for the payment of the first issue of  shares as  specified  in  the  subscription  agreement; thereafter voting  rights shall  be carried only by fully paid up shares. 7. At  the request of a shareholder the Company must present to him  for inspection  or copying  the annual  and  intermediate accounts, the  reports of  the Board  on the  activities  of  the Company, the  minutes of  the meetings,  and the  share register. Other  documents  of  the  Company  must  be  presented  for  the shareholder's inspection if they do not contain official secrets, the divulgence  whereof would  cause the Company material losses. Denial of  information for  any other reason shall be prohibited. At  the   shareholder's  request,  the  refusal  to  present  the requested papers  for inspection  must be  presented in  writing. Disputes over  the shareholder's  right to  information shall  be settled in court. 8. Shareholders  the  total  par  value  of  whose  holdings amounts no  less than  1/10 of  the authorised capital shall have the right  to appoint  an expert  (a group of experts) to inspect the Company's  activities and  accounting papers.  The inspection expenses shall  be covered  by the shareholders who appointed the experts. If  the expert  (the group  of experts)  proves that the facts stated  in the  shareholders'  application  are  true,  the Company must refund the inspection expenses. Article 17. Proxies 1. A  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 authorisation of the shareholder- natural person  must  be  certified  by  a  notary,  whereas  the authorisation of the shareholder-legal person or of an enterprise must be  certified by  the manager's  signature and  a seal.  The auditor of  the Company the shares whereof are held by the person who is appointing a proxy may not act as 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. Chapter 4 Management of the Company Article 18. Managing Bodies 1. The  managing bodies  of  a  Company  shall  include  the general meeting,  the  Supervisory  Board,  the  Board,  and  the Administration. 2. On the resolution of the general meeting a public Company may form  either the Supervisory Board or the Board. In the event that only the Board is formed, it shall be formed pursuant to the procedure established  for the formation of the Supervisory Board in Article 24 of this Law. 3. On  the resolution  of the  general  meeting,  a  private Company may  refrain from forming either the Supervisory Board or the Board.  In the event that neither of these managing bodies is formed, the functions of the Board shall be delegated to the head of the Administration and the general meeting. If the Supervisory Board  and   the  Board   are  not   formed,  the   head  of  the Administration of  a private  Company shall  be  elected  by  the general meeting. 4. If  any of  the Company's  managing bodies is not formed, the division of functions among the other managing bodies must be specified in the Company's Articles of Association. Article 19. General meeting 1. The  supreme managing  body of  a 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 whose  securities accounts are  operated  by  stockbroking  firms  may  attend  the general  meetings   presenting  abstracts   of  their  securities accounts concerning shares held by them. 3. Only the general meeting shall have the right to: 1) amend  and supplement  the Articles of Association of the Company; 2) elect  the auditor,  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) remove  from office  members of the Supervisory Board and the Board,  the auditor,  and the  head of the Administration who have been elected by the general meeting; 4) fix  the salary  of the auditor, the annual payments from the profit to the members of the Board and the Supervisory Board; 5) approve  the annual  accounts, adopt  a resolution on the distribution of profit; 6) increase  or  reduce  the  authorised  capital,  exchange shares of one class for shares of another; 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; and 10) at the request of the Board, consider issues assigned to the Board, which pertain to the activity of the Company. 4. The shareholders (or their proxies) attending the general meeting shall  be registered by signing in the registration list. The registration list 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 by the chairman, secretary and at least one shareholder authorised to do so by  the meeting.  The list  of the participants in the general meeting and ballot-papers of shareholders who voted in advance in writing shall be appended to the minutes. 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 the total number of votes. If  the meeting  does not  have a quorum, a repeat meeting must be called within 15 days which 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 holding 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 a general meeting shall be valid for convening the repeat meeting. 2. Upon  familiarising themselves  with the  agenda and  the draft resolution,  shareholders who  are entitled  to vote at the general meeting  may inform  the meeting in writing of their vote Öfor"   or    Öagainst"   individual   resolutions   only.   Such communications shall be included in the quorum of the meeting and added to the voting results only provided that the issue has been put to the written vote. 3. Voting  at the  general meeting  shall  be  open.  Secret voting shall  be mandatory  on the  issues on  which at least one shareholder requests  a secret vote to be taken, provided that he is supported by at least 2 shareholders. 4. The  resolutions of  the meeting  shall be  adopted by  a simple majority  vote of  those present,  with the  exception  of cases  provided  for  in  this  Law  which  require  a  qualified majority: resolutions  on issues  specified in Par. 10 of Article 10, items  1, 6,  7 of Par. 3 of Article 19, and item 6 of Par. 1 of Article 48 of this Law require an at least 2/3 majority vote. Article 21. Calling a General Meeting 1. A  general meeting  shall be  organised by the Board. The right of  initiative to  call a  meeting shall  be vested  in the Supervisory Board,  the Board, and the shareholders the par value of whose  shares is  no less than 1/10 of the authorised capital, unless the  Articles of Association provide for a smaller portion of the authorised capital. 2. The  Board must  call a  regular annual  general  meeting within 3 months of the end of the business year. 3. An extraordinary meeting must be called if: 1) the  net assets  of the Company diminish up to 1/2 of the authorised capital; 2)  provisions  are  made  for  the  reorganisation  of  the Company; 3) the Company is announced or announces itself to be not in the position to satisfy its financial liabilities; or 4) it  is requested  by the  shareholders with  the right of initiative or the Supervisory Board. The Articles  of Association  may  also  provide  for  other reasons for convening the extraordinary meeting. 4. The  persons who  are demanding that a general meeting be called shall  submit an  application to  the Board indicating the reasons and objectives for calling a meeting, a draft agenda, and 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 otherwise the issues proposed on the agenda, it must  announce about the calling of the general meeting within 10 days of the submission of the application 5. A general meeting may be called on a court decision if: 1) a  meeting has not been called within 3 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 Par. 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 items 1 and 3 of Par. 3 hereof. 6. The Board must notify about the general meeting according to the  procedure established  by the  Articles of Association no later than  30 days  prior to the day of the meeting. If a repeat meeting is  called, the  shareholders must be informed thereof no later than  10 days  before the meeting. A general meeting may be called without observing the above requirements provided that all the shareholders  entitled to  vote or  their proxies  give their consent thereto. 7. The notice about the general meeting must state: 1) the name of the Company and the address of its registered office; 2) the place and the date of the meeting; and 3) the draft agenda. 8. The  shareholders must  have a  possibility for reviewing the documents  related to the agenda of the meeting no later than 7 days before the meeting . Article 22. Agenda of the General Meeting 1. The  draft agenda  of the general meeting may be revised. In the  event that  the agenda  of the meeting referred to in the notice on the calling of the meeting is revised, the shareholders must be  informed of the changes in the agenda in the same manner in which notice of the general meeting is given and no later than 10 days prior to the meeting. 2. The  meeting shall  have no right to adopt resolutions on issues which  are not  on the  agenda if not all shareholders who have the voting right attend the meeting. 3. Shareholders  the par  value of  whose shares  is no less than 1/20 of the authorised capital, shall be entitled to request the inclusion of additional items of business in the agenda. This group of  shareholders shall  also have  the  right  to  nominate candidates  for  the  Supervisory  Board  or  the  Board,  and  a candidate for the auditor's post. The Articles of Association may provide for  a smaller  par value  of the  shares which gives the shareholders this right. 4. Only  the agenda  of a meeting which failed to take place shall be valid at the repeat meeting. Article 23. Invalidity of the Resolutions of a General Meeting 1. On  the declaration  of the  shareholders, the members of the  Board,   the  Supervisory   Board,  and   the  head  of  the Administration, the  resolutions of  a  general  meeting  may  be declared invalid by court if: 1) the issue on which the resolution is adopted has not been included in  the agenda  of the  meeting in  accordance with  the procedure established by law; 2) the  resolution adopted  by  the  meeting  has  not  been registered in  the Register  of Enterprises  of the  Republic  of Lithuania in the cases and within the period prescribed by laws; 3) the  procedure of  calling  a  meeting  or  adopting  the agenda, prescribed  by Articles  21 and  22 of this Law, has been violated; and 4) the  resolution is not in compliance with the Articles of Association of  the Company,  this Law,  or  other  laws  of  the Republic of Lithuania. 2. A  resolution of  the general  meeting may be appealed in court no  later than  within 30  days of  the day when the person learned or should have learned about its adoption. Article 24. Formation of the Supervisory Board 1. The  number of  members of the Supervisory Board shall be prescribed by  the Articles  of Association  of  a  Company;  the number must be no less than 3 and no more than 15. 2. The  Supervisory Board  shall be  elected by  the general meeting. During  the  election  of  the  Supervisory  Board  each shareholder shall  have the number of votes which is equal to the number of  votes carried by the shares held by him as established pursuant to  Article 16  of this  Law multiplied by the number of members  of   the  Supervisory   Board.  The   shareholder  shall distribute the  votes at  his discretion,  giving them for one or several candidates. Candidates who receive the greatest number of votes shall be elected. 3. The  Supervisory Board  shall be elected for the term not exceeding 4  years. A  member of  the Supervisory  Board  may  be released from  his duties  or  re-elected  for  another  term  of office. The  term  of  office  of  the  Supervisory  Board  shall commence with the closing of the meeting at which it was elected. 4. Only legally capable natural persons may serve as members of the  Supervisory Board.  Each candidate  for  the  Supervisory Board must  inform the shareholders where he is employed and what post he holds. A person who is a member of the Board, the head of the Administration  of the  Company, or a person who, pursuant to the laws  of the  Republic of  Lithuania, has no right to perform these duties may not be a member of the Supervisory Board. 5. The  general meeting  shall have the right to remove from office the  entire Supervisory Board in corpore or its individual members. If,  during  the  removal  from  office,  at  least  one shareholder votes  against the removal of individual members, the entire Supervisory Board must be re-elected. 6. The Supervisory Board shall have the right to appoint its own member  to serve  on the  Board for  a term  not exceeding  6 months. If  the same member of the Supervisory Board is appointed to temporarily  serve on  the Board,  the overall duration of his service on  the Board  may not  exceed 12  months in 4 successive years. While  serving on  the Board,  a member of the Supervisory Board may  not perform  the duties of a member of the Supervisory Board. 7. The  Supervisory Board shall have no right to delegate or transfer its functions to other persons or the managing bodies of the Company. 8. A  member of  the Supervisory  Board may  resign from his office prior  to the  expiry of  his term  upon giving  a written notice thereof to the Supervisory Board at least 14 calendar days in advance. 9.  The  general  meeting  may  remunerate  (make  quarterly payments to) members of the Supervisory Board for their work only out of the profit of the Company. Article 25. Powers of the Supervisory Board 1. The Supervisory Board shall: 1) appoint or remove form office members of the Board; 2)  at  the  request  of  the  Board  decide  on  the  issue concerning the  termination of  the employment  contract  with  a member of the Supervisory Board employed in the Company; 3) analyse  the  work  of  the  Board,  the  utilisation  of financial  resources,   the  organisation   of   production   and management, the  profitability of capital, remuneration for work, the correctness  of depreciation  deductions,  the  prospects  of financial position; 4)check the accounting and other papers of the Company; 5) make proposals and comments to the general meeting on the annual  accounts   of  the  Company,  the  draft  of  the  profit distribution, and the report of the Board to the general meeting; 6) represent  the Company in court proceedings when disputes between the  Company and  its Board, or a member of the Board, or the head of the Administration or the Company agent are examined; 7) submit  proposals to  the Board to revoke the resolutions adopted by  it if they are not in compliance with the laws of the Republic of  Lithuania or  the Articles  of  Association  of  the Company; and 8) consider  other issues  provided for  in the  Articles of Association of  the Company  or in the resolutions adopted by the general meeting. 2. The  Supervisory Board shall have the right to appoint an expert (or  group of  experts)  or  ask  a  government  financial institution to  check and  assess the  Company's accounting.  The general meeting  of the  Company may specify a sum of money which may be paid to experts in remuneration for their work. 3.  At   the  request   of   the   Supervisory   Board   the Administration  of   the  Company  and  the  Board  must  present documents concerning  the activities  of the  Company and  create conditions for  inspecting the  Company's assets.  Members of the Supervisory  Board  must  preserve  the  confidentiality  of  the Company's secrets divulged to them in the course of their duties. 4. Members of the Supervisory Board shall have equal rights. During voting  each member shall have one vote. In the event of a tie vote the chairman's vote shall be decisive. 5. If  a member of the Supervisory Board is unable to attend a meeting,  he may  take a  written vote  Öfor" or  Öagainst" the resolution  which   is  being  voted  on  provided  that  he  has familiarised himself with the draft resolution. 6. If  the meeting  of the  Supervisory Board is attended by more than  half of its members, the meeting may adopt resolutions by a simple majority vote of those present, with the exception of resolutions on removing from office members of the Board. In this case resolutions shall be adopted by a 2/3 vote of those present. 7. The  Supervisory Board must meet at least once quarterly. Its regular  meetings shall  be called  following the schedule by the chairman  of the Supervisory Board or, in his absence, by the vice chairman.  They shall  call extraordinary  meetings  at  the request of  no less  than 1/3  of the  members of the Supervisory Board. The procedure for calling meetings shall be established in the work regulations of the Supervisory Board. 8. Members  of the  Supervisory Board shall be liable in the manner established  by  law  for  concealing  violations  of  the Company's business  activities, inadequate  control  of  business activities, if  that provided  conditions for  the Board  or  the Administration to  evade laws of the Republic of Lithuania or the Articles of Association of the Company. Article 26. Formation of the Board 1. The  number of  the Board  members, which may not be less than 3,  shall be  established by  the Articles of Association of the  Company.   The  Board  shall  be  a  collegiate  body  whose activities are directed by its chairman. 2. Only  legally capable natural persons may be appointed or elected as  members of  the Board.  Each candidate  for the Board members must  notify  the  Supervisory  Board  of  his  place  of employment and duties. The following persons may not be appointed or elected as members of the Board: 1) members  of the  Supervisory Board of the same Company or its holding Company registered in the Republic of Lithuania, with the exception of the case provided for in Par. 5 of Article 24 of this Law; and 2)  a  person  who,  under  the  laws  of  the  Republic  of lithuania, may not serve in the office. The Articles  of Association  of  a  Company  may  prescribe additional requirements to a member of the Board. 3. The  Board and  its chairman  shall be  appointed by  the Supervisory Board  for a  term not  exceeding  4  years;  in  its absence, said  officers shall  be elected by the general meeting. There is  no limitation on the number of terms of office a member of the Board may serve. 4. By  notifying the  Board in  writing at least 14 calendar days in  advance, a  member of the Board may resign from his post before the expiry of his term of office. 5.  The   general  meeting  may  remunerate  (pay  quarterly payments to)  members of  the Board  for their  work on the Board only out  of the  profit of the Company. The members of the Board shall receive  a salary  if they  have entered into an employment contract with the Company. Article 27. Powers and Liabilities of the Board 1. The  procedure of  work of the Board shall be established in the  work regulations  adopted by  the Board.  The  Board  may represent the  Company in  court, arbitration  bodies  and  other institutions. The  powers of  the Board  and its members shall be established by the Articles of Association of the Company. 2. The Board shall consider and approve: 1) the structure of the Company and the titles and duties of the Company's officers; 2) posts  in which  persons are  employed  only  by  holding competitions as well as candidates for said posts; 3)  the   candidates  for   the  post   of   the   head   of Administration, his  deputies (directors)  and  their  respective salaries; and 4)  the   office   regulations   for   the   head   of   the Administration, deputy  heads (directors),  regulations  for  the subdivisions  of   the  enterprise,   work  regulations  for  the Administration. 3.  The   Board  shall  analyse  and  approve  the  material submitted by the Administration and the auditor on: 1) the  strategy of  production, technical, research, design and experimental work as well as other business activities; 2) the organisation of management and production; 3) the  sources of  accumulation of  financial resources and ways of their use; 4) contracts to which the Company is a party; and 5) quarterly  and annual results of business activities, the Company's draft accounts, income and expenditure estimates, draft of the  distribution  of  profit,  stock-taking  data  and  other records of valuables; and 6) results of audits. 4. The  Board must  timely hold  general meetings,  draw  up their agenda,  present to  the shareholders  the Company's annual accounts, the  draft of the distribution of profit, report on the activities of  the Company  and other  required  information  for considering the items on the agenda. 5.  The   Board  must  invite  the  head  of  the  Company's Administration  to   every  meeting   and  to  provide  him  with possibilities  to   familiarise  himself   with  the  information concerning the items on the agenda. 6. The  Board  shall  be  prohibited  from  restricting  the auditor's powers  or from  interfering with his work in any other way. 7. A resolution of the general meeting shall be required for the decisions  of the  Board concerning  the sale,  transfer,  or lease of a portion of the Company's long-term assets amounting to more than 1/10 of value of the Company's authorised capital. 8. …