STATE AND MUNICIPAL ENTERPRISE                                 
                               LAW                                              
                  OF THE REPUBLIC OF LITHUANIA                                  
                                                                                
                  (As amended by 27 April 1995)                                 
                                                                                
                                                                                
                            CHAPTER 1                                           
                       GENERAL PROVISIONS                                       
                                                                                
                                                                                
     Article 1. Objectives of the law                                           
     This  Law   shall  regulate  the  creation,  administration,               
activities, reorganisation  and liquidation  of enterprises which               
are legally the property of state or municipal authorities.                     
                                                                                
     Article 2. Concept of a State or Municipal Enterprise                      
     1. A  state enterprise shall be an enterprise which has been               
established by  using state  funds or has been transferred to the               
state in  the order  prescribed by  law, the  entire property  of               
which belongs,  under the  right of  ownership to the Republic of               
Lithuania,  however  the  enterprise  administers  the  property,               
utilises and disposes of it in accordance with the property trust               
rights.                                                                         
     2.  A   municipal  enterprise   shall  be   an   enterprise,               
established  from   funds  legally  belonging  to  the  municipal               
enterprise, or shall be one which has in accordance with the law,               
been  transferred  over  to  municipal  ownership,  whose  entire               
property  belongs   to  the   municipal  authority  by  right  of               
ownership, however,  the  enterprise  administers,  utilises  and               
disposes of it in accordance with property trust rights.                        
     3. In  cases where  the regulations  of this  law  shall  be               
applied to  both a  state and  a municipal  enterprise, the  term               
"enterprise" shall be employed.                                                 
                                                                                
     Article 3. Enterprise Status                                               
     1. The  enterprise shall  become a legal person from the day               
of its registration. According to its obligations, the enterprise               
shall be responsible only for that enterprise property, which may               
become an  object of  recovery. This  Law and the statutes of the               
enterprise shall  regulate the enterprise's rights to administer,               
utilise and  dispose of the property entrusted to it by the state               
or the municipal authority. The enterprise shall not be liable to               
state or municipal obligations.                                                 
     2. The  founder shall  have the  right to  determine for the               
enterprise:                                                                     
     1) obligatory jobs (tasks);                                                
     2)  prices   and  tariffs   of  merchandise  (services)  and               
regulations for calculating such;                                               
     3) duties  of the  administrations, whose staff is appointed               
by the founder.                                                                 
     The term  "State Enterprise" must be included in the name of               
a state enterprise, while the name of a municipal enterprise must               
include the  terms "Municipal Enterprise" or the appropriate word               
abbreviation "SE",  or "ME",  must be  included. The  name of the               
enterprise  must   conform  to  requirements  of  the  Firm  name               
regulations confirmed  by  the  Government  of  the  Republic  of               
Lithuania.                                                                      
     Disputes concerning  the name  of  an  enterprise  shall  be               
settled in court.                                                               
     4. An  enterprise shall  have a seal with its name appearing               
on it.                                                                          
     5. An  enterprise  shall  enjoy  the  freedom  of  activity,               
initiative and  decision taking, which has been accorded to it by               
the Constitution  of the  Republic of  Lithuania and  by this and               
other laws  of the  Republic of  Lithuania and  it shall base its               
activity upon  the registered  Articles of Association which have               
been registered in the order prescribed by this Law.                            
     6. An enterprise's economic year corresponds to the calendar               
year.                                                                           
                                                                                
     Article 4. Rights of an Enterprise                                         
     An enterprise may:                                                         
     1) engage  in economic  activities within  the  Republic  of               
Lithuania and outside its boundaries as prescribed by law;                      
     2) maintain  a settlement  account and a currency account in               
only one  selected bank  of the  Republic of  Lithuania, and also               
maintain one currency account in any foreign country;                           
     3)  conclude   agreements,  assume  obligations  and  borrow               
monetary funds;                                                                 
     4) dispose of any short-term enterprise assets and that                    
 long-term assets which has been totally deteriorated;                          
     5) upon  permission by  the founder  to  mortgage  long-term               
assets;                                                                         
     6) sell or otherwise transfer enterprise assets in the order               
prescribed by the Law on Privatisation of State Property;                       
     7) determine  its production,  services rendered  and  other               
resource prices,  valuations and tariffs in those instances where               
these are  not prescribed  by this  or  the  other  laws  of  the               
Republic of Lithuania or by the founder;                                        
     8) settle  accounts for  goods, completed  work and services               
supplied, in  any form  agreed upon,  if that does not contradict               
the laws of the Republic of Lithuania;                                          
     9) establish the inner structure of the enterprise;                        
     10) upon permission of the founder, establish branches, join               
in associations  and  consortiums,  solely  with  the  rights  of               
limited partnership,  if that  does not  contradict  the  Law  on               
Competition of the Republic of Lithuania;                                       
     11) hold  other civil rights and obligations, not designated               
by this  Law, if  they do not contradict the laws of the Republic               
of Lithuania.                                                                   
                                                                                
                                                                                
                            Chapter 2                                           
                    Founding of an Enterprise                                   
                                                                                
                                                                                
     Article 5. The Legal Basis for Foundation of the                           
                          Enterprise                                            
     1. The  legal basis for the foundation of a state enterprise               
shall be  the enterprise establishment act, adopted by the Seimas               
of the  Republic of  Lithuania, by the Government of the Republic               
of Lithuania,  or upon its directive - an authorised governmental               
institution. The legal basis for the establishment of a municipal               
enterprise is  the enterprise  establishment act,  adopted by the               
municipal council.                                                              
     The institution, which has adopted the decision (resolution)               
to establish  the enterprise,  shall become  the founder  of  the               
enterprise. The government or the municipal council, in the event               
one of  them is  the founder  of the enterprise, may authorise by               
means  of   the  enterprise   foundation  act,  its  subordinate,               
institutions to carry out all or part of the enterprise founder's               
functions.                                                                      
     2. Establishment  of  an  enterprise  shall  be  subject  to               
regulation by  the Enterprise  Law of  the Republic of Lithuania,               
this Law and other legal acts.                                                  
                                                                                
     Article 6. Enterprise Articles of Association                              
     1. Articles  of Association shall comprise a legal document,               
on which the enterprise bases its activity.                                     
     2. Articles of Association must indicate:                                  
     1) the name of the enterprise;                                             
     2) the location of the enterprise;                                         
     3) economic  activity (production output, labour carried out               
and kinds of services rendered);                                                
     4) the term of enterprise activity;                                        
     5)  founder's   rights  in  determining  obligatory  labour,               
prices, tariffs, and the rules for their computation;                           
     6) size  of the  authorised capital  and the  order  of  its               
exchange;                                                                       
     7) the  order of  formation of  the administration  and  its               
sphere of competence;                                                           
     8) the order of auditor appointment;                                       
     9) regulations governing profit distribution;                              
     10) the order of publicising of enterprise announcements for               
employees;                                                                      
     11) the order of enterprise reorganisation and liquidation.                
     The  Articles   of  Association   may  also   include  other               
regulations, that  do not  contradict the laws of the Republic of               
Lithuania. In cases where the economic activity, projected within               
the Articles  of Association  of the  enterprise, is regulated by               
other laws  of the  Republic of  Lithuania, these  laws  must  be               
observed in preparing these Articles of Association.                            
     3. The  founder of  an enterprise shall confirm the Articles               
of Association. The signature of the head of the enterprise shall               
be certified by the seal.                                                       
     4. Both  the enterprise  administration and the founder have               
the right to take the initiative to change and amend the Articles               
of Association.  The founder shall confirm the changed or amended               
Articles of  Association.  The  changes  and  amendments  of  the               
Articles of  Association shall  come into effect from the time of               
registration in  accordance with  the order prescribed by the Law               
on the Register of Enterprises of the Republic of Lithuania.                    
                                                                                
     Article 7. Registration of an Enterprise                                   
     The  order   of  registration  of  an  enterprise  shall  be               
determined by the Lithuanian Republic Laws on Enterprises, Law on               
the Register of Enterprises and this Law.                                       
                                                                                
     Article 8. Affiliate of an Enterprise                                      
     1. An  affiliate of  an enterprise shall be a subdivision of               
the enterprise located in another area. An affiliate shall not be               
a legal  person and  it shall  act in  the name  of an enterprise               
which shall  be considered  a  legal  person.  It  shall  act  in               
accordance with the Articles of Association of the enterprise and               
the authorisation  of its  administration  chief  which  must  be               
indicated in  the affiliate regulations. The number of affiliates               
of an enterprise shall be unlimited.                                            
     2. An  affiliate may  have a sub-account. The property of an               
affiliate shall  be calculated in the financial accounting of the               
enterprise and  also in  a separate  financial accounting  of the               
affiliate.                                                                      
     3. An  affiliate shall  be registered in accordance with the               
order prescribed by the Law on the Register of Enterprises.                     
                                                                                
                                                                                
                            Chapter 3                                           
                 Administration of An Enterprise                                
                                                                                
                                                                                
     Article 9. The Management Staff of an Enterprise                           
     1. The  administration shall  constitute a vital part of the               
management staff.  A board may be established per decision by the               
founder.  Per  decision  of  the  chief  of  the  administration,               
specialised  councils  may  be  set  up  within  the  enterprise,               
permanently or  for a  certain limited period of time, which have               
the right to adopt decisions of a recommendatory nature.                        
                                                                                
     Article 10. Administration                                                 
     1. The  administration shall  manage the  enterprise in  the               
order prescribed in the Articles of Association. The chief of the               
administration shall regulate the work rules.                                   
     2. The administration shall base its activity on the laws of               
the Republic of Lithuania, the regulations of the enterprise, the               
enterprise Articles  of Association, the work rules, subdivisions               
and official  regulations, and the decisions of the board (if one               
has been  established) and those of the administration chief. The               
administration staff must protect enterprise secrets.                           
     3. An  enterprise must  have an  administration chief  and a               
chief  finance   officer   (bookkeeper).   The   chief   of   the               
administration may  not simultaneously  carry out the duties of a               
chief finance officer.                                                          
     4. Administrative  activity shall  be regulated by the chief               
(general director, director) of the administration.                             
     5. Work  contracts with the chief of the administration, the               
chief  finance   officer  (bookkeeper)  and  employees  of  other               
offices, to  which the  founder shall  have the  right to appoint               
employees, as  stated in  the  Articles  of  Association  of  the               
enterprise, shall  be drawn  up by  the founder, on behalf of the               
enterprise, in  the order  established by  the Law  on Employment               
Contracts of the Republic of Lithuania.                                         
     6. An  individual who is prohibited by law to have the right               
to occupy  such a  position, shall  not be appointed chief of the               
administration. The  administration chief  shall not be appointed               
chief, management  or supervisory  board member  and inspector of               
any other  type of enterprise. In the event, he is holding such a               
position at  the time  of his appointment, he must resign from it               
within the period of one month.                                                 
     7. The  founder may terminate a work contract with employees               
selected by  him in the order prescribed by the Law on Employment               
Contracts.                                                                      
     8. The  chief of the administration shall draw up collective               
agreements, shall  accept employees into the enterprise and shall               
draw up employment contracts with them.                                         
     9. The chief of the administration, guided by the enterprise               
Articles of  Association and  work rules, shall have the right to               
carry out  transactions. Courses  of action may be denoted in the               
enterprise Articles  of Association and work rules, whereby other               
authorised administration  staff members,  may act  independently               
and  carry   out  enterprise   transactions.  The  chief  of  the               
administration shall  represent the  enterprise in  dealing  with               
state government  and management institutions, the court , and in               
relations with other individuals.                                               
     10. Transactions carried out by the administration chief and               
other administration  staff members,  may be held as no longer in               
effect according,  to the  order and circumstances denoted in the               
Civil Code of the Republic of Lithuania.                                        
     11. The  chief and  the  staff  of  the  Administration  are               
obligated  to  compensate  the  enterprise  for  losses  suffered               
through their  fault, in  the order prescribed by the Laws of the               
Republic of Lithuania.                                                          
                                                                                
     Article 11. Management                                                     
     1. Management  shall be  established  per  decision  of  the               
founder. The  size of  management staff,  its obligations, rights               
and area of responsibility, and order of salary payment, shall be               
determined in the enterprise Articles of Association.                           
     2.  Management  shall  be  a  collective  structure  with  a               
chairperson  supervising   its  activity.   Only  the   chief  of               
administration may  occupy this position. The order of management               
work activity  shall be  regulated by  the management work rules,               
which it has adopted.                                                           
     3. The  founder shall  confirm and  revoke management  staff               
member appointments,  based upon a proposal by the administration               
chief. Members  of the  management staff  shall be appointed to a               
term not  to exceed  4 years. Only an employee of that enterprise               
or a  representative of  the founder  may become  a member of the               
management staff.  Only one  representative of  the  founder  may               
become a  member of  the management  staff.  The  number  of  the               
management  staff   member's  term  of  office  is  not  limited.               
Additional requirements  for members  of the management staff may               
be included in the Articles of Association.                                     
     4.  A   member  of  the  management  staff  may  tender  his               
resignation prior  to the  expiry  of  his  term  of  office,  by               
submitting it  in writing  to the  management no  later  than  14               
calendar days in advance.                                                       
                                                                                
     Article 12. Control of Financial Activity                                  
     1.  The   financial  activity  of  an  enterprise  shall  be               
controlled through  audit. An  audit of the annual activity shall               
be obligatory,  while the  audit of  activity encompassing  other               
periods may  be carried  out at  the initiative of the founder or               
the administration.                                                             
     2. The  audit may  be conducted  by an  auditor -  an actual               
person, having  a certificate  of qualification,  or an  auditing               
enterprise, which has the right to render auditing services.                    
     3. The  founder shall  arrange the auditing service contract               
with the  auditors. Their  services shall be compensated from the               
enterprise funds.                                                               
     4. The auditor shall furnish the chief of the administration               
and the founder with the completed auditing accounts.                           
     5. The  state contract  institutions shall  be empowered  to               
verify the  activities of  the enterprise, in a manner prescribed               
by law.                                                                         
     6. The  administration of  an enterprise shall be obliged to               
furnish the  auditor and  state  control  institutions  with  the               
enterprise documents requested by them.                                         
                                                                                
                                                                                
                            Chapter 4                                           
                       Enterprise Capital                                       
                                                                                
     Article 13. Conditions for Use of Capital                                  
     1. The  capital of a state enterprise shall consist of state               
capital  and   borrowed  capital,  the  capital  of  a  municipal               
enterprise shall  consist of  municipal  enterprise  capital  and               
borrowed capital.                                                               
     2. The state or municipal enterprise capital, which has been               
appraised in  the order  prescribed  by  the  Government  of  the               
Republic of Lithuania, shall be considered the authorised capital               
of an  enterprise. The  amount of  authorised  capital  shall  be               
inscribed in the enterprise Articles of Association.                            
     3. The  enterprise shall  not have  the right  to reduce the               
authorised capital  through use  of state (municipal) capital for               
payment of salaries, bonuses or other expenses.                                 
     4. The enterprise shall ensure the safekeeping and effective               
utilisation of the state (municipal) capital entrusted to it. The               
authorised capital  of an  enterprise  may  be  reduced  only  in               
circumstances provided for by this law.                                         
     5. An  enterprise which  has hidden  funds, from  which  the               
authorised capital  was to  have been  taken  must  increase  the               
authorised capital  accordingly and  to  pay  a  penalty  sum  of               
capital, equivalent to the sum of hidden capital into the budget.               
The state  control institution  shall designate  the  penalty  in               
keeping with  the order  prescribed by  law.  The  chief  of  the               
administration of  an enterprise  and the  chief finance  officer               
(bookkeeper) must  personally pay  50 percent of the penalty. The               
remaining parts  of the  penalty shall  be taken  from the profit               
segment  intended   for  other   necessities  of  the  enterprise               
                                                                                
(bonuses, social  and cultural  fund) (in accordance with Chapter               
18, part 3 of this Law).                                                        
     6. The  enterprise must  insure, in  the order prescribed by               
law, the  state  (municipal)  capital  held,  with  an  insurance               
company,  or   an  enterprise   registered  in  the  Republic  of               
Lithuania.                                                                      
     7. The enterprise shall be prohibited from investing capital               
in other enterprises.                                                           
     8. Enterprise  funds shall  be accrued and kept in a banking               
facility registered in Lithuania.                                               
     9. Fulfilment  of other  individual obligations shall not be               
secured by enterprise property.                                                 
                                                                                
     Article 14. Interest on Use of Capital                                     
     1. An enterprise shall use the state or municipal capital in               
return for interest paid from enterprise profit.                                
     2. The Government of the Republic of Lithuania shall set the               
standard for  a state  enterprise for  interest  on  the  use  of               
capital, while  the municipal council shall set this standard for               
the municipal enterprise.                                                       
     3. State  enterprises shall  pay the interest for the use of               
capital to the state budget while the municipal enterprises shall               
pay into  the municipal  budget. Accounting shall be conducted in               
the order  established by  the  Government  of  the  Republic  of               
Lithuania.                                                                      
                                                                                
     Article 15. Increase of Enterprise Capital                                 
     1.  State  (municipal)  capital  may  be  increased  at  the               
enterprise:                                                                     
     1) from  the profit  portion, designated for the increase of               
authorised capital,  in the  order prescribed  in the Articles of               
Association of the enterprise;                                                  
     2) through investments from the (state, municipal) budget;                 
     3) from  other state  or municipal monetary and non-monetary               
(property) contributions;                                                       
     4) from assistance granted from other entities.                            
     The enterprise  capital may be increased per decision of the               
founder in  cases exemplified in items 3 and 4, while in the case               
of state  enterprises, also  per a  decision of the Government of               
the Republic of Lithuania.                                                      
     2. Having  increased the  state capital, an enterprise shall               
be obligated to register the increased, authorised capital of the               
enterprise. The  increased authorised  capital of  the enterprise               
shall become effective from the time of its registration.                       
                                                                                
     Article 16. Decrease of Enterprise Capital                                 
     1. The  authorised capital  of a  state  enterprise  may  be               
decreased per  decision of  the Government  of  the  Republic  of               
Lithuania, while  that of a municipal enterprise may be decreased               
per decision of the municipal council. The funds, obtained from a               
decrease of  the capital of a state enterprise, shall be returned               
to the  state budget, while following a decrease at the municipal               
enterprise capital  - it  shall  be  returned  to  the  municipal               
budget.                                                                         
      2.  The decision  to decrease  an  enterprise's  authorised               
capital must  be publicly  announced three times, at no less than               
30-day intervals,  or it  must be  presented in  writing to  each               
enterprise creditor.                                                            
     3. While  decreasing the  authorised capital, the enterprise               
shall be obligated to furnish additional guarantees on fulfilment               
of its obligations to each creditor who so desires.                             
     4.  The  changes  in  the  Articles  of  Association  of  an               
enterprise, reflecting  the decrease in authorised capital, shall               
be registered  in the  order prescribed by the Law on Register of               
Enterprises and  not prior to the elapse of six months, after the               
first, and  30 days after the third public announcement, or after               
a period of 3 months after all creditors have been informed that,               
upon their request, they shall be accorded additional guarantees.               
Authorised  capital  shall  be  considered  decreased  only  when               
changes in  the Articles  of Association  shall be entered in the               
Enterprise register.                                                            
                                                                                
                                                                                
                            Chapter 5                                           
           Enterprise Finances and Profit Distribution                          
                                                                                
     Article 17. Finances                                                       
     1. The  enterprise shall  make use  of internal and external               
sources  of   financial  resources.   The  internal  sources  are               
attributed deductions and profit. External sources are attributed               
funds  from   the   borrowed   capital,   state   and   municipal               
contributions and  also the  financial assistance  obtained  from               
other sources.                                                                  
     2.  The   enterprise  shall   determine  the   standards  of               
depreciation of  the available  long-term property  (material and               
non-material)  wear  and  tear  (depreciation),  by  taking  into               
account the  actual change  in the effectiveness of this property               
and also  the minimum and maximum economic standards set forth by               
the Government  of the  Republic of  Lithuania. The founder shall               
confirm these  standards. Following  early write off assets (that               
have not been totally depreciated), their remnants are attributed               
to enterprise losses.                                                           
     3. The  enterprise must  form a profit reserve fund. This is               
formed  by  applying  no  less  than  5  percent  of  the  annual               
deductions from profit, remaining after the payment of obligation               
taxes. The  reserve fund is increased every year until it reaches               
1/20 of the authorised enterprise capital.                                      
     4. Losses  and debts resulting from the economic activity of               
the enterprise shall be covered from:                                           
     1) the undistributed profit of the enterprise;                             
     2) the profit reserve fund;                                                
     3) subsidies  obtained from  the state  and municipality  in               
cases, when  the Government  of the  Republic of Lithuania or the               
founder determine  obligatory  assignments  for  the  enterprise,               
prices of production and services, valuations and tariffs.                      
     5. Enterprise  officials, whose  activities or  lack thereof               
have caused  the  loss  of  state  or  municipal  property,  have               
violated the order of depreciation or profit distribution or have               
resulted in  the incorrect payment of taxes, are held accountable               
in the order prescribed by law.                                                 
                                                                                
     Article 18. Distribution of Profit                                         
     1. Enterprise profit shall be distributed not later than two               
months after the close of the economic year.                                    
     2. Enterprise profit shall be distributed as follows:                      
     1) in taxes for the budget as prescribed by law;                           
     2) in insurance payments on state and municipal capital held               
by the enterprise;                                                              
     3) in deductions payable to the enterprise profit reserve.                 
     3. The remaining share of the profit shall be transferred to               
augment the authorised capital of the enterprise according to the               
ratio established  by the  founder and  at least  25 percent - to               
other enterprise needs (premiums, social and cultural means etc.,               
to finance and compile reserves).                                               
     4. The enterprise shall not have the right to use its profit               
for other purposes, until it has paid taxes as prescribed by law.               
Bonuses for  enterprise workers  may  be  paid  out  during  each               
quarter, if  sufficient profit  has been  obtained. In the event,               
creditors have  not been  reimbursed within  the established time               
limits, worker's bonuses shall not be paid out from the profits.                
                                                                                
                                                                                
                            Chapter 6                                           
         Reorganisation And Liquidation of an Enterprise                        
                                                                                
     Article 19. Enterprise Reorganisation                                      
     1. Reorganisation  - this shall constitute the rearrangement               
and liquidation  procedures of  an enterprise  as a legal person.               
New enterprises,  or associations  which  have  been  established               
during the  reorganisation process  and are continuing activities               
shall be  the successors acquiring all the rights and obligations               
of the reorganised enterprises.                                                 
     2. Enterprises may be reorganised as follows:                              
     1) by joining enterprises together;                                        
     2) by dividing enterprises;                                                
     3) by changing the type of an enterprise;                                  
     4) by altering the subordination of an enterprise.                         
     3. It  is possible  to reorganise  enterprises by  means  of               
joining, as follows:                                                            
     1) to  join other  (one or  several) enterprises  which  are               
terminating their  activity as  legal persons,  to an enterprise,               
which is continuing its activity;                                               
     2) from  enterprises, which are terminating their activities               
as legal persons, by creating a new enterprise.                                 
     4. Enterprises may be reorganised through division:                        
     1) by parcelling out an enterprise, which is terminating its               
activity,  to  other  enterprises,  which  are  continuing  their               
activity;                                                                       
     2) by  creating new enterprises from an enterprise, which is               
terminating its activity;                                                       
     3) by separating parts of an enterprise, which is continuing               
its activity,  and joining  them to  other enterprises,  or  from               
which new enterprises are created.                                              
     5. When the type of an enterprise is altered, the enterprise               
may be  reorganised into  a joint-stock association - by dividing               
enterprise property  into shares  and registering the shares with               
the Securities Commission.                                                      
     6. An  enterprise may  be  reorganised  while  changing  its               
subordination:                                                                  
     1) from  a state to a municipal enterprise - by transferring               
property to a municipal enterprise;                                             
     2) from  a municipal to a state enterprise - by transferring               
the property to a state enterprise;                                             
     7. The right to reorganise an enterprise is held by:                       
     1)  Government  of  the  Republic  of  Lithuania  for  state               
enterprises only;                                                               
     2) the municipal council - for municipal enterprises only;                 
     3) the founder;                                                            
     4) the enterprise management staff.                                        
     8. Subordination  of an  enterprise may  be  changed  (sixth               
section of this Paragraph) in the order established by legal acts               
of the Seimas of the Republic of Lithuania.                                     
     9.  A   draft  plan   shall  be   prepared  for   enterprise               
reorganisation, excluding the instances noted in part six of this               
Paragraph. The draft plan for reorganisation shall indicate:                    
     1)  the   name  and   location  of   each  enterprise  under               
reorganisation;                                                                 
     2) the initiator of the reorganisation;                                    
     3) the nature of reorganisation;                                           
     4)  the   substantiation   for   reorganisation   of   every               
enterprise;                                                                     
     5) an  appraisal of  the property  of each  enterprise under               
reorganisation;                                                                 
     6) the assumption of obligations and time terms;                           
     7) the  rights granted  to enterprise management and experts               
for the duration of the reorganisation;                                         
     8) the reorganisation periods.                                             
                                                                                
     Along with  a reorganisation  draft plan,  a draft  plan  of               
association articles  must be  prepared for  each enterprise  and               
company that will continue activity, following reorganisation.                  
     10. Founders  of the  enterprises undergoing  reorganisation               
and those  enterprises which  are to  continue activity following               
reorganisation, shall  confirm the draft plan for reorganisation,               
employing the  means prescribed  in parts  three and four of this               
paragraph. The  Government of  the Republic  of  Lithuania  shall               
confirm the  draft plan for reorganisation of a state enterprise,               
by employing  the means  outlined in part five of this paragraph,               
the municipal  council shall  act similarly  in  the  case  of  a               
municipal enterprise. Institutions which are to confirm the draft               
plan for  reorganisation have  the right  to appoint  experts  to               
examine the draft plan for reorganisation. The experts shall have               
the  right   to  receive   from   the   enterprises,   undergoing               
reorganisation, any information relevant to this matter.                        
     11. A  reorganisation commission  is set  up to carry out an               
authorised draft plan for reorganisation. It shall be formed by a               
mutual  decision   of  the  founders  of  the  enterprises  being               
reorganised  and  the  enterprises  or  companies  which  are  to               
function following reorganisation, who also appoint the chairman.               
     12. Reorganisation  of  an  enterprise  shall  be  announced               
publicly three  times at  no less  than a  two-month interval, or               
each creditor may be given a written notice.                                    
     13.  Following   reorganisation,   active   enterprises   or               
companies must  be registered  in the pertinent order established               
by the  Law on  Enterprises  and  the  Law  on  the  Register  of               
Enterprises.                                                                    
                                                                                
     Article 20. Liquidation of an Enterprise                                   
     1. The basis for liquidation of an enterprise must be:                     
     1) expiry of the time limit of enterprise activity as stated               
in the Articles of Association;                                                 
     2) a  court decision  or a  decision taken  at a  creditor's               
meeting, to liquidate a bankrupt enterprise. In this instance the               
enterprise shall be liquidated in the order prescribed by the Law               
on Enterprise Bankruptcy of the Republic of Lithuania;                          
     3) a  court decision  to  liquidate  an  enterprise  due  to               
violations of  the law as outlined in the laws of the Republic of               
Lithuania;                                                                      
     4) a  decree by  the Government of the Republic of Lithuania               
(for state  enterprises) or  a decision  by the municipal council               
(for municipal  enterprises) (if  no charges  of  bankruptcy  are               
filed against the enterprise).                                                  
     2. The  institution which has made the decision to liquidate               
the enterprise  appoints a  liquidator (an  administrator of  the               
enterprise  being   liquidated).  The  management  staff  of  the               
enterprise loses its authority to govern the enterprise, from the               
day the liquidator is appointed and its functions are carried out               
by the liquidator.                                                              
     3. Following  the order prescribed in the Law on Register of               
Enterprises, the  liquidator, shall  inform the register official               
who had  registered the  enterprise,  about  the  change  of  the               
enterprise status  and shall  provide some  data  concerning  the               
liquidator. Once  an enterprise shall have acquired the status of               
an enterprise  under liquidation,  the word  "under  liquidation"               
shall be included preceding its name.                                           
     4. An  enterprise under liquidation may enter only into such               
transactions which  are connected  to its liquidation process and               
also those  others that  are  provided  for  in  the  liquidation               
decision.                                                                       
     5. The  liquidation  of  an  enterprise  shall  be  publicly               
announced three times at intervals of no less than two-months, or               
each creditor shall be informed in writing.                                     
     Following the  elapse of  an interval  of no  less than  two               
months from  the third  public announcement about the liquidation               
of the  enterprise, or  notification of  all  the  creditors  and               
having concluded accounting with creditors and workers the assets               
of an  enterprise property  that remains  is transferred  to  the               
founder.                                                                        
                                                                                
     Article 21. Authority of the Liquidator                                    
     1. The  liquidator shall  enjoy the rights and duties of the               
enterprise  chief.   He  shall  represent  the  enterprise  under               
liquidation  in   dealings  with  government  and  administrative               
institutions, in  court and  in relations  with legal  and actual               
persons.                                                                        
     2. The enterprise liquidator:                                              
     1) shall  make up  the financial accountability (liquidation               
balance) of  the enterprise,  from the  onset of  the liquidation               
period;                                                                         
     2) shall  finish fulfilling  the obligation according to the               
previously drawn  up transactions  and concludes new transactions               
according to his own competence;                                                
     3)  shall  complete  transactions  with  the  creditors  and               
debtors of the enterprise;                                                      
     4) shall  transfer the  remaining assets of an enterprise to               
the founder;                                                                    
     5)  shall   draw  up  a  statement  on  liquidation  of  the               
enterprise;                                                                     
     6)  shall  terminate  the  registration  of  the  liquidated               
enterprise in  the order  prescribed by  the Law  on Register  of               
Enterprises.                                                                    
     3. In  the event  the liquidation  of an  enterprise extends               
over a  period of  several years, the liquidator shall, following               
the conclusion  of each economic year draw up an annual financial               
accountability statement  and liquidation  account, over a three-               
month period. The founder shall confirm these documents.                        
     4. The liquidator shall be responsible also to third parties               
for losses, which are incurred through his fault.                               
                                                                                
                                                                                
                            Chapter 7                                           
                        Final Provisions                                        
                                                                                
                                                                                
     Article 22.                                                                
     1. State  enterprises  which  are  among  those  enterprises               
authorised, by the Seimas of the Republic of Lithuania, which are               
not intended to be either privatised or to be made into companies               
prior to  2000, must  adjust their  Articles  of  Association  in               
accordance with  this Law and to register them within a six-month               
period from  the date  this Law  comes into  effect, in the order               
prescribed by  the Law  on Register  of Enterprises.  Articles of               
Association of  these enterprises shall be valid, until their re-               
registration, so  far as they do not contradict this Law (Amended               
27 April 1995).                                                                 
     2. Functions  of the founder of enterprises which fall under               
the regulation  of the  municipal governments,  as established by               
this  Law,  shall  be  performed  by  the  appropriate  municipal               
council, until  such time as the enterprises shall be transferred               
to the property of municipal governments.                                       
     3. The state enterprises and state joint-stock companies are               
prohibited  from  paying  out  salaries  and  bonuses,  and  from               
designating these  funds  for  other  running  expenses  and  the               
creation or  increase of  stock capital,  until such time as they               
shall be  re-registered, in  accordance with the Law on State and               
Municipal Enterprises of the Republic of Lithuania or the Company               
Law of the Republic of Lithuania.                                               
     4. To  hold as non-valid the Law on State Enterprises of the               
Republic of  Lithuania and  the Decree  of the Supreme Council of               
                                                                                
the Republic  of Lithuania  "On the Order of Effectiveness of the               
Law on State Enterprises of the Republic of Lithuania".                         
                                                                                
     I promulgate  this Law adopted by the Seimas of the Republic               
of Lithuania.                                                                   
                                                                                
                                                                                
                                                                                
Algirdas Brazauskas                                                             
President of the Republic                                                       
Vilnius                                                                         
21 December 1994                                                                
No.I-722