Įstatymas skelbtas: Žin

Įstatymas skelbtas: Žin REPUBLIC OF LITHUANIA LAW ON financial institutions 10 September 2002  No IX-1068 (As last amended on 22 December 2011 – No XI-1872) Vilnius CHAPTER ONE GENERAL PROVISIONS Article 1. Purpose of the Law 1. This Law shall specify the services which are considered financial services, the requirements set for the founders, participants and heads of the financial undertakings and credit institutions engaged in the provision of financial services, the rights and duties thereof, conditions of, procedure for and peculiarities of the establishment, pursuit of business, termination and restructuring of financial institutions as well as conditions of, procedure for and peculiarities of supervision of the activities of the financial institutions providing licensed financial services. 2. This Law shall be applied to all financial institutions – legal persons of the Republic of Lithuania and the establishments of financial institutions of foreign states operating in the Republic of Lithuania and providing in the Republic of Lithuania the financial services referred to in Article 3 of this Law, unless treaties of the Republic of Lithuania provide otherwise. 3. This Law shall not apply to: 1) the state and municipal institutions and agencies of the Republic of Lithuania providing the financial services specified in laws of the Republic of Lithuania;   2) the providers of postal services providing domestic and international postal remittance services;   3) the Bank of Lithuania, which provides financial services in accordance with the procedure set forth by laws of the Republic of Lithuania. 4. This Law shall implement the legal acts of the European Union listed in the Annex to this Law. Article 2. Definitions   1. Closely related persons shall mean two or more persons who: 1) are related by property relations; 2) hold a qualifying holding in an undertaking’s authorised capital and/or voting rights;   3) are related by other mutual property relations allowing one of the persons to control another person. 2. Persons related by blood as well as by marriage shall mean a person and his spouse, their children (adopted children), parents (adoptive parents), grandparents, grandchildren as well as brothers (adopted brothers) and sisters (adopted sisters) of this person and of his spouse and spouses of these brothers (adopted brothers) and sisters (adopted sisters) as well as the persons who have registered partnership in accordance with the procedure set forth by laws. 3. Person shall mean a natural or legal person. 4. On-balance-sheet financial assets shall mean cash on hand, funds in accounts of banks and other credit institutions, rights of claim to the funds payable to a financial undertaking or to other assets to be returned under loan agreements, acquired debt securities, other payment obligations of a financial undertaking’s client, obligations to return or to transfer financial assets, equity securities or other rights. 5. General provisions shall mean certain accumulated monetary funds which are formed and intended to reduce (cover) possible losses of the activities of a financial institution. 6. Financial guarantee shall mean a guarantee granted by a financial institution in accordance with the procedure set forth by laws, whereby it enters into an irrevocable commitment to disburse the amount of funds specified in the guarantee provided all the conditions specified in the guarantee are fulfilled. 7. Financial undertaking shall mean an undertaking of the Republic of Lithuania or an establishment of a foreign state’s undertaking operating in the Republic of Lithuania in accordance with the procedure set forth by the laws regulating the provision of financial services and mainly engaged in the activities of provision of one or more financial services referred to in paragraph 1 of Article 3 of this Law, with the exception of subparagraph 1. 8. Client of a financial institution shall mean a person that is provided financial services by a financial institution. 9. Assets of a financial institution shall mean the movable and immovable assets indicated in the balance sheet of a financial institution as well as intangible and financial assets. 10. Financial holding company shall mean a financial undertaking, where all undertakings or the majority of the undertakings controlled by it are credit institutions or financial undertakings, and at least one of them is a credit institution and where it is not a mixed-activity holding company defined by the Republic of Lithuania Law on the Supplementary Supervision of Entities in a Financial Conglomerate. 11. Financial assurance shall mean an irrevocable commitment entered into by a financial institution under an assurance agreement drawn up in accordance with the procedure set forth by laws to disburse the amount of funds indicated in the assurance agreement, where a person provided with assurance by the financial institution fails to perform the entire or part of his obligation. 12. Financial mediation (activities of an agent) shall mean the activities on behalf and for the benefit of one or several financial institutions which consist in receiving of deposits and other repayable funds, lending, providing other financial services as well as the activities of a tied insurance intermediator pursued by financial institutions, with the exception of the administration of insured events. 13. Financial assets shall mean the sum total of the values of a financial institution’s on-balance-sheet financial assets and off-balance-sheet claims. 14. Parent undertaking shall mean an undertaking which holds a proportion of the authorised capital and/or voting rights in another undertaking granting the right to control the activities of the undertaking. 15. Net value shall mean: 1) the value of investment acquisition (creation, increase of the value) reduced by the value of amortisation or depreciation and/or by the special provisions made for the amortisation of the risk of this investment; 2) the value of a financial institution’s on-balance-sheet financial assets and/or off-balance-sheet claims at the market price on the open market or, where the on-balance-sheet financial assets and/or the off-balance-sheet claims are not an object of public circulation or where there is no reliable information about their market prices, the value of acquisition reduced by the special provisions made for the assets. 16. Deposit shall mean a positive balance of funds in an account opened by a depositor in a credit institution under a bank deposit or bank account agreement. 17. Receipt of deposits and other repayable funds from non-professional participants of the market shall mean the receipt of funds from the persons not identified in advance for the purposes of management, use and/or disposal thereof subject to repayment with or without interest. The following shall not be considered as the receipt of deposits and other repayable funds from non-professional participants of the market: 1) receipt of funds from payment service users with a view to the provision of payment services; 2) receipt of funds, where the received funds are immediately exchanged to issued electronic money; 3) receipt of funds through the issuance of cards or similar devices used to acquire goods or services exclusively from the issuers of these cards or similar devices. 18. Investment shall mean movable and immovable as well as intangible assets, proportions of the authorised capital and/or voting rights as well as subordinated loans which may be converted into a financial institution’s new shares or granted to financial institutions. 19. Proportion of the authorised capital and/or voting rights granting the right to control the activities of an undertaking shall mean a proportion of an undertaking’s authorised capital and/or voting rights which is directly and/or indirectly managed by a person or the relations between the person and the undertaking due to which the person: 1) holds a majority of the voting rights of that undertaking’s participants, or 2) as a participant of the undertaking, has the right to elect or remove the manager of the undertaking, the majority of members of a management or supervisory body of this undertaking; 3) according to provisions of the undertaking’s founding documents or the agreements concluded with the undertaking may exercise a decisive influence on the undertaking; 4) as a participant of the undertaking and on the basis of the agreements concluded with other participants, has the right to decide on the use of the majority of the voting rights of the undertaking’s participants; 5) in the opinion of the supervisory authority, he exercises a decisive influence on the undertaking. 20. Proportion of the authorised capital and/or voting rights shall mean at least one share, unit or other means issued by an undertaking and confirming participation in the management of the undertaking’s capital or the voting right acquired together with these means or a proportion of the undertaking or assets (capital) thereof (where no means confirming participation in the management of the undertaking’s capital have been issued). 21. Supervision on a consolidated basis shall mean supervision of a parent undertaking and of a financial group controlled by it exercised on the basis of consolidated financial statements and other reports meant for supervision which shall be prepared and submitted to the supervisory authority by the parent undertaking. 22. Controlled undertaking shall mean an undertaking in which another person holds a proportion of the authorised capital and/or voting rights granting the right to control the activities of the undertaking. All undertakings controlled by parent undertakings shall also be considered as the undertakings controlled by the parent undertaking of all these undertakings. 23. Credit rating services shall mean the processing of relevant data performed for the purposes of solvency and financial risk assessment and debt management, assessment of a person’s solvency and financial risk, also determination of the person’s credit rating, with the exception of credit ratings subject to Regulation (EC) No 1060/2009 of the European Parliament and of the Council on credit rating agencies. 24. Credit institution shall mean an undertaking which holds a licence to engage in receiving of deposits and other repayable funds from non-professional participants of the market and lending thereof and is engaged therein. 25. Qualifying holding in the authorised capital and/or voting rights shall mean a proportion of an undertaking’s authorised capital and/or voting rights which is managed directly and/or indirectly, where it makes up 10 per cent or more of the undertaking’s authorised capital and/or voting rights or which enables to exercise a decisive influence on the management of that undertaking. 26. Licensed financial services shall mean the financial services subject to a licence issued in accordance with the procedure set forth by laws. 27. Liquid assets shall mean the assets which may be immediately sold at the market price or at a price close to the market price with minimum depreciation risk. The price close to the market price shall be the highest price at which the parties related to a financial institution and known as the parties intending to purchase (sell) assets may directly (outside the market) exchange the assets placed on the market. 28. Mixed-activity holding company shall mean a parent undertaking (but not a financial holding company, a credit institution or mixed-activity financial holding company as defined in the Republic of Lithuania Law on the Supplementary Supervision of Entities in a Financial Conglomerate) at least one of the controlled undertakings whereof is a credit institution. 29. Off-balance-sheet claims shall mean the assets (claims) not specified on the balance sheet of a financial institution: the financial undertaking’s rights of claim to the sums of money payable to the financial institution and to other assets to be returned or otherwise transferred according to future, option and other transactions. 30. Non-professional participants of the market shall mean all persons, with the exception of the Bank of Lithuania, financial institutions, insurance undertakings as well as other persons qualified to assess the borrowing risk. 31. Indirect control shall mean the control arising through other controlled undertakings or through the undertakings controlled by the controlled undertakings. 32. Interest shall mean a sum of money paid for a granted loan, a deposit held, debt securities, the assets transferred for use or other debt-claim, i.e., a percentage set by an agreement and calculated from the amount of the deposit held or the granted loan, the par value of the debt securities or the value of the assets transferred for use or of other debt-claim. 33. Option transaction shall mean a transaction granting the right, but not the obligation, to purchase or sell the subject of the transaction at the agreed price on or prior to the agreed date. 34. Subordinated loan shall mean a loan granted for a time period of at least one year, provided all of the following conditions are fulfilled: 1) the loan has been received in money’s worth; 2) under the loan agreement, the lender undertakes not to demand repayment of the loan from the borrower prior to the expiry of the time limit specified in the agreement for repayment thereof;   3) (Repealed as of 30 January 2007); 4) the loan agreement provides that, in the event of the winding up or bankruptcy of the borrower, the claim of the lender under the loan agreement shall be satisfied only upon the satisfaction of claims of other creditors of the borrower. 35. Administration of money shall mean the collection, transportation and storage of cash, counting of coins and banknotes, verification of their authenticity and suitability for circulation as well as packing prior to return to circulation. 36. Taking of risk (transactions having possible risk characteristics) shall mean: 1) lending, purchase of debt securities;   2) discount of bills, cheques and other liabilities;   3) granting of a financial guarantee, financial assurance or the means to secure the performance of all other obligations as issued by a financial institution (in order to secure the performance of its or other persons’ obligations), the acceptance of other financial institutions’ financial guarantees or financial assurances;   4) assumption of all obligations according to which the financial institution undertakes to pay according to a payment claim accepted by it or to accept them for redemption, where the buyer requires them;   5) acquisition of a proportion of the authorised capital and/or voting rights of other undertakings irrespective of the purpose and the period of time for which the proportion is acquired;   6) purchase of claims according to payment obligations;   7) transfer of the assets belonging to the financial institution by the right of ownership for use by other persons under to a financial lease (leasing) agreement; 8) issuance and acquisition of financial derivatives; 9) keeping of funds in higher-risk credit institutions; 10) other actions specified in legal acts of the supervisory authority. 37. Lease of safes shall mean the lease of safes located in permanently guarded premises to the persons keeping their valuables therein. 38. Lending shall mean: 1) transfer of a sum of money to a debtor under a loan or crediting agreement;   2) purchase, advance payment (including factoring and forfeiting) or discounting of a pecuniary claim arising from an irrevocable payment obligation, with or without the taking of lending risk, irrespective of a person into whose accounting these claims are included and who collects monetary funds according to the claims. 39. Special provisions shall mean the amount by which the value of assets and off-balance-sheet claims is reduced and which corresponds to the probability of likely losses. 40. Group of interrelated clients shall mean: 1) two or more clients of a financial institution who, unless specified otherwise, constitute a single risk, because one of the clients directly and/or indirectly controls the other client or other clients, or 2) two or more clients of a financial institutions between whom there is no relationship of control as described in subparagraph 1 of this paragraph, but who are to be regarded as constituting a single risk because they are so interconnected that, if one of them were to experience financial problems, in particular funding or repayment difficulties, the other or all of the others would also be likely to encounter funding or repayment difficulties. 41. Trade in precious metals shall mean the trade in: 1) fine gold (the gold of a fineness of not less than 999,9 per thousand);   2) fine silver and platinum (the silver and platinum of a fineness not less than 999,9 per thousand);   3) gold, silver and platinum in bars or in another form which is recognised on the international markets of precious metals, irrespective of fineness thereof;   4) for numismatic purposes, the coins of precious metals which have or have not been in circulation. 42. (Repealed as of 1 January 2012). 43. Pursuit of the provision of financial services shall mean: 1) declaration of the provision of financial services in the documents regulating economic activities (founding documents, licences, patents, etc.); 2) the activities mainly consisting of the provision of financial services. Article 3. Financial Services 1. Financial services shall be: 1) receipt of deposits and other repayable funds;   2) lending (including mortgage loans);   3) financial lease (leasing);   4) payment services; 5) issuing and administering travellers’ cheques, bankers’ drafts and other means of payment, insofar as this activity is not covered by the services indicated in subparagraph 4 of paragraph 1 of this Article; 6) provision of financial assurances and financial guarantees;   7) conclusion of transactions, at one’s own or a client’s expense, on the money market instruments (cheques, bills, deposit certificates, etc.), a foreign currency, financial future and option transactions, the establishment of a currency exchange rate and interest rate, public securities and precious metals; 8) investment services; 9) financial mediation (activities of an agent); 10) administering of money; 11) credit rating services; 12) lease of safes; 13) currency exchange (in cash); 14) settlement of payments between credit institutions (clearing); 15) storage and administering of monetary funds;   16) provision of advice to undertakings on the capital structure, production strategy and related issues as well as the advice and services related to reorganisation, restructuring and purchase of the undertakings; 17) provision of the services related to securities emissions; 18) issuance of electronic money; 19) administration of investment funds, closed-end investment companies, pension funds or investment companies with variable capital; 20) safekeeping, accounting and administration of financial instruments for the account of clients, including custodianship and related services such as cash or collateral management. 2. Licensed financial services shall be defined by laws of the Republic of Lithuania. 3. It shall be prohibited to provide licensed financial services without a licence. 4. Only a credit institution shall have the exclusive right to: 1) receive deposits and other repayable funds from non-professional participants of the market; 2) borrow from non-professional participants of the market in excess of the size of the equity capital; 3) (repealed as of 28 December 2009); 4) (repealed as of 1 January 2012). 5. Financial institutions may provide financial services in a foreign currency, where provided for by laws of the Republic of Lithuania. Article 4. Financial Institution 1. A financial institution shall be a financial undertaking or a credit institution. 2. (Repealed as of 1 May 2004). 3. The activities of a financial institution which is engaged in the provision of licensed financial services shall be supervised by the Bank of Lithuania (hereinafter referred to as the “supervisory authority”). 4. Financial institutions shall act in compliance with the Constitution of the Republic of Lithuania, this Law, the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions as well as a legal person of an appropriate legal form on the basis whereof a financial institution is established and operates and other legal acts. 5. Where the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions lay down other provisions than those laid down by this Law, the provisions of the laws regulating the provision of financial services and pursuit of the activities of financial institutions shall be applied. 6. The procedure laid down in paragraph 2 of Article 20, paragraph 3 of Article 44, paragraph 4 of Article 45 and paragraph 2 of Article 46 of this Law shall not apply to financial institutions engaged exclusively in provision of non-licensed financial services specified by the Law of the Republic of Lithuania on Credit Agreements for Consumers. CHAPTER TWO ESTABLISHMENT, REGISTRATION AND LICENSING OF A FINANCIAL INSTITUTION Article 5. Establishment of a Financial Institution Financial institutions shall be established in compliance with the laws of the Republic of Lithuania regulating the establishment and pursuit of the activities of a legal person of an appropriate legal form as well as other laws of the Republic of Lithuania, unless this Law provides otherwise. Article 6. Founders 1. A founder of a financial institution may only be a person fulfilling all of the following conditions: 1) is acquiring a proportion of the authorised capital and/or voting rights of the financial institution being established;   2) may prove that the funds used for the acquisition of the authorised capital and/or voting rights of the financial institution being established are his legitimate income;   3) meets other requirements set by this Law as well as other legal acts for founders of financial institutions. 2. A founder of a financial institution may not be a natural person convicted of particularly serious or serious crimes or of crimes against the financial system, economy and business practice, property, property rights and property interests or of other crimes, where his conviction has not been spent. Article 7. Participants of a Financial Institution Holding a Qualifying Holding in the Authorised Capital and/or Voting Rights   1. A participant of a financial institution holding a qualifying holding in the financial institution’s authorised capital and/or voting rights may be a person who: 1) alone or acting under the influence of another person, is not going to pose a threat to the safety and soundness of activities of the financial institution and who can guarantee the sound management and control of the activities of the financial institution as provided for by laws of the Republic of Lithuania;   2) by his property, management, blood as well as marriage and operational relations and the structure of participants, could not impair the control of activities of the financial institution exercised by the participants of the financial institution;   3) meets other requirements set by this Law as well as other legal acts of the Republic of Lithuania for participants of a financial institution. 2. The procedure for acquiring, increasing, transferring and reducing a qualifying holding in the authorised capital and/or voting rights of a financial institution providing licensed financial services shall be set forth by the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions. Article 8. Requirements to Ensure Activities of a Financial Institution 1. A financial institution may provide financial services, where it has in place an adequate: 1) accounting organisation;   2) internal control system;   3) personnel; 4) technical, information and technological security means and premises;   5) management and organisational structure;   6) insurance of property. 2. The provisions of paragraph 1 of this Article shall also be applied to the subsidiary undertakings of institutions, branches, other structural divisions or to the work stations located in a place other than the registered office of the financial institution and providing financial services to clients. Article 9. Procedure for Registering a Financial Institution 1. A financial institution shall be registered in the Legal Entities’ Register in accordance with the procedure set forth by laws of the Republic of Lithuania. A financial institution the establishment whereof is subject to an authorisation of the supervisory authority as provided for by the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions shall be registered in the Legal Entities’ Register only upon the receipt of this authorisation. A financial institution registered in the Legal Entities’ Register shall be considered to have been established. 2. The registered office of a financial institution registered in the Legal Entities’ Register of the Republic of Lithuania must be in the Republic of Lithuania. 3. A registered financial institution or an undertaking in operation which has taken a decision on the provision of financial services may commence the provision of financial services only upon obtaining of a licence (authorisation) to provide them, where laws of the Republic of Lithuania establish that such a licence (authorisation) is necessary. 4. A licence (authorisation) to provide financial services shall be issued to a financial institution in accordance with the procedure set forth by the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions. 5. Laws of the Republic of Lithuania may establish that an authorisation of the supervisory authority is necessary in order to: 1) register amendments to founding documents in the cases specified by this Law and other laws of the Republic of Lithuania;   2) reorganise a financial institution;   3) wind up a financial institution;   4) restructure a financial institution;   5) open bankruptcy proceedings against a financial institution;   6) elect or appoint persons members of the supervisory board and the board, including the chairperson and the head of the administration, as well as the auditor or the examiner;   7) acquire, for investment and management purposes, a qualifying holding in the authorised capital and/or voting rights of another undertaking or to increase it in the cases specified by laws of the Republic of Lithuania;   8) set up branches, representative offices or other structural divisions of a legal person in a place other than the registered office of the financial institution, in the Republic of Lithuania or abroad;   9) sell or otherwise transfer all or a part of its obligations under deposit agreements or all or a part of other obligations of the financial institution arising upon the transfer of settlement for issued financial instruments (hereinafter referred to as “the transfer of a portfolio of obligations);   10) no longer pursue the provision of all or a part of financial services. 6. Laws of the Republic of Lithuania may also specify other cases when an authorisation of the supervisory authority is necessary. Article 10. Withdrawal of a Licence 1. The supervisory authority must withdraw a licence issued to a financial institution to provide licensed financial services, where the financial institution: 1) has obtained the licence fraudulently or otherwise breaching laws;   2) pursues the activities prohibited by laws. 2. The supervisory authority shall have the right to withdraw a licence issued to a financial institution to provide licensed financial services, where the financial institution: 1) has not made use of the licence within 12 months of the issuance of the licence to provide financial services;   2) pursues other activities not provided for in paragraph 1 of Article 3 of this Law;   3) does not meet the requirements set by this Law and other legal acts of the Republic of Lithuania for the safe and sound activities of respective financial institutions;   4) has breached the financial accounting, management and control requirements set by legal acts of the Republic of Lithuania, the provisions of this Law as well as other legal acts or instructions of the supervisory authority regarding the safe and sound activities of a financial institution;   5) has become insolvent and/or its activities pose a threat to interests of its clients or violate them, interfere or may interfere with the settlements or operations carried out on the money and capital markets;   6) does not pursue licensed activities for a period of time exceeding 6 months;   7) is unable to perform its obligations according to the commitments entered into or there are data indicating that it will not be able to do so in the future; 8) its participants take a decision on the return of the licence to provide licensed financial services;   9) in other cases specified by laws of the Republic of Lithuania. 3. Taking account of the contents of an infringement, the consequences of the infringement and of the imposition of a sanction for the security, stability and soundness of the system of financial institutions and upon the taking of a decision on the withdrawal of a licence granted to a financial institution to provide financial services, the supervisory authority may propose that its participants wind up the financial institution or initiate bankruptcy proceedings against it as well as may itself initiate the bankruptcy proceedings against the financial institution. CHAPTER THREE FINANCIAL INSTITUTIONS OF FOREIGN STATES Article 11. Activities of Financial Institutions of Foreign States in the Republic of Lithuania 1. A financial institution of a foreign state may establish in the Republic of Lithuania controlled undertakings or acquire the authorised capital and/or voting rights of the undertakings in operation and set up branches and representative offices. 2. A financial institution of foreign states may provide financial services in the Republic of Lithuania only upon the receipt of an authorisation and/or licence to provide financial services issued by an institution specified by laws of the Republic of Lithuania (where the laws establish that such an authorisation or licence is necessary). Prior to the granting of an authorisation or licence to provide financial services to a financial institution of a foreign state in the cases specified by the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions, the foreign institution exercising supervision thereof must be consulted with in advance. 3. The conditions of and the procedure for the operation of financial institutions of foreign states in the Republic of Lithuania shall be set forth by the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions. 4. It shall be prohibited to refuse an authorisation to provide financial services or to register a financial institution of a foreign state or to otherwise restrict the activities of financial institutions of foreign states in the Republic of Lithuania or to hinder them for the reasons of economic expediency or congested market, where all the requirements set by this Law and other laws of the Republic of Lithuania for the establishment or registration of the financial institutions of foreign states in the Republic of Lithuania have been met. Article 12. Right of the Financial Institutions Licensed in the Member States of the European Union to Provide Financial Services in the Republic of Lithuania 1. A financial institution licensed in a Member State of the European Union may establish a branch in the Republic of Lithuania, where the foreign supervisory authority has forwarded to the supervisory authority of financial institutions of the Republic of Lithuania an operating plan of the institution and has specified the types of activities, the intended address of the branch, the structure as well as information about the heads of the branch. Upon the receipt of such a notification, the supervisory authority of financial institutions of the Republic of Lithuania shall prepare for the exercise of supervision and specify to the financial institution the activity requirements which it must comply with. The branch may be established upon the receipt by the financial institution of the said notification from the supervisory authority of financial institutions of the Republic of Lithuania, and where no notification is received – two months from the submission of the information provided for in this paragraph by the foreign supervisory authority to the supervisory authority of financial institutions of the Republic of Lithuania. 2. Where a financial institution referred to in paragraph 1 of this Article has already established at least one branch in the Republic of Lithuania, the procedure set forth by this Article shall not be applied to the establishment of other branches thereof. 3. A financial institution licensed in a Member State of the European Union may commence the provision of financial services in the Republic of Lithuania without establishing a branch one month from the submission of an operating plan of the financial institution by the foreign supervisory authority to the supervisory authority of financial institutions of the Republic of Lithuania. 4. In the event of a change in any of the particulars on a financial institution referred to in paragraph 1 of this Article, the institution must notify thereof the supervisory authority of financial institutions of the Republic of Lithuania at least one month in advance. A financial institution which provides services without establishing a branch must notify the supervisory authority of financial institutions of the Republic of Lithuania of a change in its operating plan in advance. CHAPTER FOUR PARTICIPANTS OF A FINANCIAL INSTITUTION   Article 13. Participant of a Financial Institution 1. A participant of a financial institution shall be a person on behalf whereof a proportion of the financial institution’s authorised capital and/or voting rights has been acquired, irrespective of whether he has acquired the proportion of the financial institution’s authorised capital and/or voting rights on his own behalf for the benefit of a third party or in another representative capacity. 2. A participant of a financial institution may only be a person whose identity or legal registration has been confirmed by relevant documents. 3. A person shall become a participant of a financial institution and acquire all rights and duties which are granted to him by the proportion of the authorised capital and/or voting rights of the financial institution acquired by him: 1) in the case of the establishment of the financial institution – as of the day of registration of the financial institution, and in the case of the establishment of a financial institution which is going to engage in the provision of licensed services – as of the receipt of a licence. Until the receipt of the licence, the participant of the financial institution may have and acquire only the rights and duties which are not related to the provision of the licensed services; 2) in the case of an increase of the authorised or share capital – as of the day of full settlement for the proportion of the financial institution’s authorised capital and/or voting rights which is being acquired, and where laws establish that the amendments to founding documents related to the increase of the authorised capital and/or voting rights must be registered – as of the day of registration of the amendments to the financial institution’s founding documents related to the increase of the authorised capital and/or voting rights;   3) in other cases – as of the arising of the rights of ownership to the proportion of the financial institution’s authorised capital and/or voting rights. Article 14. Rights and Duties of Participants of a Financial Institution 1. The rights and duties of participants of financial institutions shall be established by the laws of the Republic of Lithuania regulating pursuit of the activities of a legal person of an appropriate legal form on the basis whereof a financial institution operates and by the founding documents of these institutions, unless other laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions provide otherwise. 2. Laws of the Republic of Lithuania may also establish the following additional duties to participants of a financial institution: 1) to pay additional contributions in order to increase the authorised capital of the financial institution or to cover the losses incurred by it; 2) to sell, reorganise, restructure or wind up the financial institution; 3) to reduce the authorised capital of the financial institution; to sell or to otherwise transfer the proportion held in the financial institution’s authorised capital and/or voting rights. Article 15. List of Participants of a Financial Institution 1. The administration of a financial institution must draw up and manage a list of participants of the financial institution. The list must contain the following information: 1) on a participant of the financial institution: the surname, name, address of the place of residence, citizenship, personal code and/or name and number of a personal identification document of a natural person; the business name, the undertaking’s registration code, location of the registered office, surname and name of the head of the administration of a legal person;   2) where a proportion of the authorised capital and/or voting rights of the financial institution is held by several persons – the data referred to in subparagraph 1 of paragraph 1 of this Article on every participant and a person representing him;   3) the number of the proportions – shares or units of interest – held by a participant in the authorised capital and/or voting rights of the financial institution, par value of the shares or size of the units of interest, other possible identification data (the type and class of the shares, emission number, its registration number) as well as the property and non-property rights granted;   4) the date of the acquisition of proportions of the authorised capital and/or voting rights;   5) the date of entering of the data on the acquisition of proportions of the authorised capital and/or voting rights in the list of participants of the financial institution;   6) data on a decision taken by the supervisory authority to allow to acquire and hold a qualifying holding in the authorised capital and/or voting rights of the financial institution, to increase or to reduce it, where provided for by laws of the Republic of Lithuania. 2. Data of a list of participants of a financial institution must be updated at least once per month. A person must also be appointed to continuously record occurred changes, provide information about the data entered in the list and related to participants of financial institutions to the persons who have been granted such a right in accordance with the procedure set forth by laws or by a decision of the management bodies of a financial institution and register every submission of such information. 3. The data required to identify the indirect holding of 5 per cent or more of the authorised capital and/or voting rights of a financial institution must be entered in a list of participants of the financial institution. The persons holding or acquiring 5 per cent or more of the authorised capital and/or voting rights of the financial institution must notify the administration of the financial institution of the proportion of the authorised capital and/or voting rights which is indirectly held by them and the data required for identification thereof. CHAPTER FIVE BODIES OF A FINANCIAL INSTITUTION Article 16. Bodies of a Financial Institution The bodies of a financial institution, structure, composition, procedure for the formation, convening and operation, duties and rights as well as limitations of liability thereof shall be established by the Civil Code of the Republic of Lithuania and the laws of the Republic of Lithuania regulating pursuit of the activities of a legal person of an appropriate legal form on the basis whereof the financial institution operates and founding documents thereof, unless this Law and other laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions provide otherwise. Article 17. General Meeting of a Financial Institution’s Participant 1. At the general meeting of participants of a financial institution, the following persons shall not have the right to vote: 1) owners of a qualifying holding in the authorised capital and/or voting rights of the financial institution without an authorisation of the supervisory authority to acquire or hold a qualifying holding in the authorised capital and/or voting rights of the financial institution, where this authorisation is necessary under the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions;   2) the participants of the financial institution whose voting rights have been suspended on the grounds provided for by the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions as well as by activities of supervisory authorities or by a decision of a court. 2. A proportion of voting rights held by the participants of financial institutions referred to in paragraph 1 of this Article shall not be counted towards a quorum. 3. The general meeting of participants of a financial institution may, by at least 2/3 of votes, take a decision to transfer the right to dispose of all assets of the financial institutions to the management bodies of the financial institution, where this decision has been provided for in the founding documents of the financial institution. 4. The management body of a financial institution which is subject to the obligation to convene meetings under laws of the Republic of Lithuania and the founding documents must convene an extraordinary general meeting of participants of the financial institution, where: 1) the equity capital of the financial institution falls below than the minimum authorised capital established by legal acts of the Republic of Lithuania;   2) the equity capital of the financial institution is insufficient to ensure safe and sound activities of the financial institution;   3) the supervisory authority which sets the time limits for the convening of the meeting and agenda thereof so requires;   4) in other cases specified by laws of the Republic of Lithuania. 5. Where the supervisory authority takes a decision to request that an extraordinary general meeting of participants of a financial institution is convened, it must be convened within the time limits specified by the supervisory authority without regard to the time limits laid down by the laws of the Republic of Lithuania regulating pursuit of the activities of a legal person of an appropriate legal form on the basis whereof the financial institution operates. Article 18. Collegial Management Bodies of a Financial Institution 1. The collegial management bodies of a financial institution shall be the supervisory board and the board. 2. Minutes shall be taken of sittings of the supervisory board and the board of a financial institution in accordance with the procedure set forth by the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions as well as by other laws. Article 19. Administration of a Financial Institution 1. The procedure for forming the administration of a financial institution, powers, functions and duties as well as working procedure thereof shall be specified by the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions as well as pursuit of the activities of a legal person of an appropriate legal form on the basis whereof the financial institution operates. 2. The administration of a financial institution, unless the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions provide otherwise, must be made up of two persons – the head of the administration and his deputy (hereinafter referred to as “the heads of the administration”), who, in accordance with the founding documents, job descriptions, resolutions of the higher management bodies and the rules of procedure of the administration, have the right to conclude transactions on behalf of the financial institution. The founding documents of a financial institution and the rules of procedure of the administration must specify the areas of activities in which: 1) only both heads of the administration acting jointly and in concert may act and conclude transactions;   2) the head of the administration and his deputy or the persons authorised by them may act and conclude transactions independently. Article 20. Heads of a Financial Institution 1. Heads of a financial institution shall be: 1) members of the supervisory board;   2) members of the board;   3) examiner;   4) heads of the administration; 5) employees of the financial institution as well as other persons who, in accordance with the financial institution’s founding documents, resolutions of the board and the rules of procedure of the administration and by a decision of the heads of the administration, have been authorised to independently take decisions on the provision of financial services and to conclude, on behalf of the financial institution, the transactions specified by the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions or by other legal acts adopted in compliance therewith and having risk characteristics;   6) head of the internal audit service. 2. Where supervision of the activities of a financial institution is exercised, in accordance with the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions, by the supervisory authority, only the persons holding an authorisation granted therefor in advance by the supervisory authority may become heads of financial institutions. The supervisory authority shall have the right to specify the cases when a prior authorisation of the supervisory authority to become the head of a financial institution shall not be required. Powers of the head of a financial institution may be suspended by a decision of the supervisory authority, he may be removed from the office of the head of the financial institution, or the body of the financial institution which has elected, appointed or authorised him may be imposed an obligation to revoke the said person from office, to terminate an employment contract concluded therewith, to divest him of the powers, and the financial institution may be imposed a sanction, where he has been elected, appointed or granted powers without a prior authorisation of the supervisory authority or this authorisation has been cancelled upon the transpiration of at least one circumstance specified in paragraph 3 of this Article. 3. The supervisory authority shall have the right to refuse an application for the office of the head of a financial institution or to cancel a prior authorisation, where a person who has submitted the application: 1) holds or held a qualifying holding in the authorised capital and/or voting rights of the financial institution or was the head of the financial institution subject to sanctions by the supervisory authority in order to restore its liquidity and solvency or wound up by reason of insolvency or by a court’s decision for the infringements of law as specified by laws of the Republic of Lithuania; 2) once or on several occasions violated the provisions of this Law or of other laws and legal acts of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions and has been imposed an administrative penalty more than once per year (with the exception of the cases when, according to other laws of the Republic of Lithuania, it is considered that he has not been imposed the administrative penalty) or convicted of particularly serious or serious crimes, crimes against the financial system, crimes against the economy and business practice, crimes against property, property rights and property interests or of other crimes, where his conviction has not expired or, by a decision of the supervisory authority, he has been removed from the office of the head of the financial institution and five years have not lapsed since then; 3) may not hold the office of the head of the financial institution, because the time period for which the court has prohibited him to hold the office has not expired;   4) has obligations or exercises the functions which pose a threat to the safety and soundness of activities of the financial institution;   5) does not meet the requirements set for heads by other laws and legal acts of the Republic of Lithuania. 4. Members of the management bodies of a financial holding company must be of good repute, hold the required qualification and sufficient experience in order to hold this office. A person shall not be deemed to be of good repute where: 1) the person has been convicted of a grave or serious crime or of a crime or misdemeanour against the financial system, economy and business practice, against property, property rights and property interests and the conviction has not expired or has not been expunged; 2) he abuses narcotic, toxic, psychotropic substances or alcohol. Article 21. Liability of Members of the Supervisory Board and the Board of a Financial Institution   Members of the supervisory board and the board of a financial institution shall, in accordance with the procedure set forth by laws of the Republic of Lithuania, be responsible for ensuring the compliance of activities of the financial institution with provisions of this Law and other legal acts of the Republic of Lithuania. Article 22. Competence of the Management Bodies of a Financial Institution and the Granting of Powers Founding documents of a financial institution must specify the competence of the management bodies of the financial institution to act on behalf of the financial institution, including the management, use and disposal of assets thereof as well as conclusion of the transactions related to the provision of financial services and the procedure for granting and revoking the powers to act on behalf of the financial institution. Article 23. Internal Control of a Financial Institution 1. The internal control of the activities of a financial institution shall be ensured in the financial institution by a sound and adequate internal control system and by an independent and adequate internal audit service, which may be made up of one or several persons. 2. The internal control system of a financial institution shall be made up of: 1) adequate organisational structure enabling to ensure vertical and horizontal relationships;   2) adequate internal information system;   3) the personnel liability and competence specified in internal regulatory documents;   4) double internal control of activity procedures;   5) top management information system permitting timely decision-making; 6) risk control and risk management. 3. Aims of the internal audit service shall be as follows: 1) to assess compliance with the requirements set by legal acts of the Republic of Lithuania and internal regulations;   2) to verify and assess the adequacy and efficiency of the financial institution’s internal control system;   3) to evaluate whether the sets of financial statements of the financial institution reflect the actual situation; 4) to assist the board of the financial institution in defining orientations and their implementation measures;   5) to determine whether the activities of the financial institution are efficient, whether its selected policies are reasonable and whether the application of its selected measures is sufficiently efficient;   6) to submit to the board of the financial institution analysis as well as evaluation materials and recommendations on issues of the management of the financial institution, organisation of the activities of establishments being audited and efficiency thereof. 4. The functions, liability, rights, duties and working procedure of employees of the internal audit service and the permanent internal control system of a financial institution shall be specified by laws of the Republic of Lithuania, the legal acts issued by the supervisory authority, the founding documents of the financial institution, the rules of procedure thereof, employment contracts, job descriptions and other internal documents of the financial institution. 5. The internal audit service must forthwith notify the management bodies of a financial institution and, where necessary, the supervisory authority of discovered infringements of laws and other legal acts of the Republic of Lithuania which pose a threat to interests of the clients of the financial institution and to safe and sound activities of the financial institution. CHAPTER SIX CAPITAL OF A FINANCIAL INSTITUTION AND APPROPRIATION OF PROFIT Article 24. Capital of a Financial Institution The capital of a financial institution shall consist of the equity capital and the loan capital. Article 25. Loan Capital The loan capital of a financial institution shall be made up of the funds which the financial institution has acquired by the right of ownership through borrowing by issuing long-term debt securities (bonds) or concluding loan agreements where the term to maturity of the borrowed funds is longer than 1 year and the agreements have all characteristics of a subordinated loan. Article 26. Equity Capital 1. The equity capital of a financial institution shall be made up of contributions of participants of the financial institution for proportions of the financial institution’s authorised or share capital and/or voting rights acquired by them and of the profit of the financial institution. 2. The equity capital of a financial institution, unless the laws of the Republic of Lithuania regulating the provision of financial services and pursuit of the activities of financial institutions provide otherwise, shall consist of: 1) authorised capital (paid-up share capital) or share capital;   2) capital reserves;   3) tangible fixed assets revaluation reserve; 4) financial assets revaluation reserve; 5) mandatory reserve or reserve capital;   6) loss reserve;   7) other reserves;   8) retained earnings (loss). Article 27. Authorised Capital 1. The authorised capital or share capital of a financial institution shall be formed, increased and reduced in accordance with the procedure set forth by the laws of the Republic of Lithuania regulating pursuit of the activities of a legal person of an appropriate legal form on the basis whereof the financial institution operates as well as the provision of financial services, unless this Law provides otherwise. 2. The authorised capital or share capital of the financial institutions being established shall be formed by paying for the proportions of the authorised capital and/or voting rights being acquired in money’s worth only. They shall be transferred to a cumulative account opened for this purpose in the name of founders in one of the credit institutions holding a licence to provide financial services in the territory in the Republic of Lithuania. Accumulated funds shall be transferred to a financial institution’s account upon the registration of an undertaking being established in the Legal Entities’ Register and, where this has been specified by laws of the Republic of Lithuania, upon the receipt of a licence to provide financial services. 3. A financial institution operating in accordance with the procedure set forth by the Republic of Lithuania Law on Companies shall be allowed to acquire its issued shares in its own name, where a special non-distributable reserve was built-up for this purpose from the profit of the previous financial year. However, the sum of the par values of the shares already held and being acquired may not exceed 5 per cent of the authorised capital, and expenditure thereon may not exceed the amount of the special retained reserve built-up. 4. The proportions of the authorised capital and/or voting rights acquired on behalf of a financial institution or by the undertakings controlled by it and issued by the financial institution shall not grant the right to participate in the management of the financial institution. Article 28. Reserves 1. The capital reserves of a financial institution shall consist of share premium account (the excess over the par value) or of other cash contributions by participants of the financial institution to obtain the right to a proportion of the authorised capital and/or voting rights of the financial institution, where the contributions are not part of the authorised capital. 2. The capital reserves of a financial institution shall be formed from a difference in earnings obtained after selling new proportions of the authorised capital and/or voting rights at issue price above their par value or from other cash contributions by owners of the financial institution to obtain the right to a proportion of the authorised capital of the financial institution and/or to participation in management thereof, where the contributions are not part of the authorised capital. 3. At the close of the financial year, participants of a financial institution may take a decision on the use of the capital reserves to cover the losses incurred by the operations related to the sale of own issued proportions of the authorised capital and/or voting rights and on inclusion thereof in the result available for appropriation or on use thereof to increase the authorised capital. 4. The tangible fixed assets revaluation reserve shall be the amount of the increase in the value of tangible fixed assets resulting after the revaluation of the assets. 5. The financial assets revaluation reserve shall be changes in the value of a financial institution’s available-for-sale financial assets which have …