REPUBLIC OF LITHUANIA                                     
                                                                                
                               Law                                              
                               on                                               
                  Privatisation of State-Owned                                  
                     and Municipal Property                                     
                                                                                
                                                                                
                                                                                
                            Chapter 1                                           
                       GENERAL PROVISIONS                                       
                                                                                
                                                                                
     Article 1. Definitions Used in this Law                                    
     As used in this Law:                                                       
     privatisation  means   the  transfer   of  state-owned   and               
municipal property  (shares, shareholdings and other property) to               
the  ownership  of  privatisation  subjects  under  privatisation               
transactions  entered  into  in  accordance  with  the  procedure               
established by this Law;                                                        
     privatisation  object  means  shares  or  any  other  assets               
belonging to  the state  or a municipality by the right of public               
ownership and  which the  Government of the Republic of Lithuania               
or a municipal council decides to privatise. Housing belonging to               
a municipality may not be a privatisation object;                               
     privatisation subject  means natural  and legal  persons  of               
Lithuania or  a foreign  state,  who  acquire  the  privatisation               
object  under   this  Law.  Privatisation  subjects  may  not  be               
Lithuanian  state  or  municipal  enterprises,  institutions  and               
organisations financed  out of the state or municipal budgets, as               
well as  stock and  close stock  companies, banks  and  insurance               
agencies wherein  more than  50% of  the shares  are held  by the               
state of Lithuania or a municipality;                                           
     privatisation transaction  means  a  contract  entered  into               
pursuant to  this  Law,  under  which  privatisation  institution               
authorised by  the state  or a municipality to act as a seller of               
state-owned or municipal assets, obligates itself to transfer the               
privatisation object  into the  ownership  of  the  privatisation               
subject, and  the privatisation subject commits itself to pay the               
amount of  money agreed  in the contract, and/ or to fulfil other               
obligations to  the benefit  of the Republic of Lithuania, or the               
municipality;                                                                   
     initial  privatisation  means  transfer  of  state-owned  or               
municipal property  under the  Law on  Initial  Privatisation  of               
State Property (hereinafter referred to as LIPSP);                              
     enterprise means any legal person established and registered               
in accordance with the laws of the Republic of Lithuania;                       
     enterprise controlled  by the  state (municipality) means an               
enterprise wherein  more than  50 percent of voting shares belong               
to the state or a municipality;                                                 
     state    (municipality)    controlled    enterprise    under               
privatisation  means   such   state   (municipality)   controlled               
enterprise which  is included  in the  privatisation programme in               
accordance with this Law;                                                       
     founder of  the enterprise  means state  institutions of the               
Republic  of   Lithuania  or   the  municipality   or   governing               
institutions or  other state  institutions which hold state-owned               
(municipal) property or at least one share in a public or private               
company.                                                                        
     Unless otherwise  provided, terms  in bold print used herein               
shall have the definitions specified above.                                     
                                                                                
     Article 2. Objective of the Law                                            
     1. The  objective of  this Law is to establish privatisation               
of state-owned  and  municipal  property  for  money  instead  of               
initial privatisation under LIPSP.                                              
     2. The  state-owned or municipal property owned by the right               
of public  ownership may  be transferred  to other persons as the               
private property  only in  compliance with this Law, unless other               
laws of the Republic of Lithuania provide otherwise.                            
                                                                                
                            Chapter 2                                           
                   Privatisation Institutions                                   
                                                                                
     Article 3. Privatisation Institutions                                      
     1. Privatisation institutions shall be the following:                      
     1) Privatisation Commission;                                               
     2)  Lithuanian   State  Privatisation   Agency  within   the               
Government of  the Republic of Lithuania (hereinafter referred to               
as Privatisation Agency);                                                       
     3) Ministries and municipalities;                                          
     4) municipal privatisation commissions.                                    
     2. Decisions  of privatisation institutions on privatisation               
issues, adopted in conformity with their powers and in compliance               
with  this   and  other   laws,  are  mandatory  to  founders  of               
enterprises that are being privatised.                                          
     3. Municipal  Council shall  have the right not to establish               
privatisation institutions  provided for in Article 9 of this Law               
and to  authorise the  mayor to  conclude an  agreement with  the               
Privatisation   Agency,    concerning   the    privatisation   of               
privatisation objects  belonging to the municipality by the right               
of  ownership.   Upon  entering  into  such  agreement  with  the               
Privatisation Agency  , the municipality shall also perform other               
functions of the founder of an enterprise, regulated by this Law.               
     4.  If   the  municipality   council  establishes  municipal               
privatisation institutions  specified in  Article 9  of this Law,               
they shall  have  all  the  rights  and  shall  perform  all  the               
functions  of  the  privatisation  commission  and  Privatisation               
Agency established  by this  Law. The  executive institution of a               
municipality must  submit the  list of  privatisation objects and               
data for  the privatisation programme to the Privatisation Agency               
within the  time limit  established  by  the  Government  of  the               
Republic of Lithuania.                                                          
     5. The  Government of  the Republic  of  Lithuania  and  the               
privatisation commission  shall have no right to make any changes               
in  the   data  submitted   for  compilation   of  the   list  of               
privatisation objects  and drawing  up of privatisation programme               
if these data meet the requirements set forth by this Law.                      
                                                                                
     Article 4. Objective, Establishment and Powers of the                      
               Privatisation Commission                                         
     1. Privatisation  Commission  shall  be  a  temporary  state               
institution  operating  in  accordance  with  this  Law  and  its               
statutes,  approved   by  the   Government  of  the  Republic  of               
Lithuania, which  is formed  exclusively for  the purpose of this               
Law. Upon  the implementation of the tasks set forth by this Law,               
the activities  of the Privatisation Commission may be terminated               
by the decision of the Government of the Republic of Lithuania or               
said  Commission  may  be  reorganised.  The  Government  of  the               
Republic of  Lithuania may  adopt resolutions regulating separate               
spheres of  activities of  the Privatisation  Commission only  in               
cases provided  by this  or other  laws. Privatisation Commission               
shall report to the Government of the Republic of Lithuania.                    
     2. Privatisation Commission shall consist of 13 members - 11               
members shall  be recommended by the Prime Minister and 2 members               
by the  Association of Municipalities. Its members shall comprise               
Ministers, Under-Secretaries  of the  Ministry  of  Finance,  the               
Ministry of  Justice  and  other  Ministries  which  perform  the               
functions of  the founder  of the  enterprise,  director  of  the               
Privatisation Agency or other authorised officials of state power               
and government  institutions. The  chairman of  the Privatisation               
Commission and  its members shall be appointed and dismissed from               
office by  the  Seimas  of  the  Republic  of  Lithuania  on  the               
recommendation of the Prime Minister.                                           
     3. Privatisation Commission shall be entitled to:                          
     1) approve  or disapprove  privatisation programmes prepared               
by Privatisation Agency and to control their implementation;                    
     2) approve or disapprove privatisation transactions;                       
     3) to  perform the  functions of  the Central  Privatisation               
Commission established by LIPSP.                                                
     Privatisation Commission  may adopt  negative resolution  in               
cases specified  in this  Article only  provided  the  drafts  of               
relevant resolutions are prepared not in compliance with this and               
other laws of the Republic of Lithuania and Government decrees or               
they are  drafted with  the  knowingly  adverse  purpose  to  the               
interests of the society .                                                      
     4. Decisions of the Privatisation Commission shall be passed               
by the simple majority vote of all Commission members. Commission               
member shall  have no  right to vote on the issue, provided he or               
members of  his family  have an  interest in  the results  of the               
decision.                                                                       
     Article 5. Powers of Privatisation Agency in Matters of                    
               Privatisation                                                    
     1. Privatisation  Agency shall  be the  institution  of  the               
Government of  the Republic  of Lithuania established pursuant to               
the Law on the Government of the Republic of Lithuania.                         
     2.  When   performing   the   functions   of   privatization               
established by  this Law,  the Privatisation  Agency shall act as               
the  representative   of  the   Government  of  the  Republic  of               
Lithuania, privatising  the state-owned  property. Under separate               
agreements with municipalities, the Privatisation Agency may also               
act  as  a  representative  of  a  separate  municipality,  which               
privatises the property owned by the municipality.                              
                                                                                
     Article 6. Duties of Privatisation Agency                                  
     1. Privatisation Agency shall:                                             
     1) compile  annual draft  list of  privatisation objects and               
submit it  to the  Government of  the Republic  of Lithuania  for               
approval;                                                                       
     2) on  the recommendation  of the founder of the enterprise,               
determine the method of privatisation;                                          
     3) on  the recommendation  of the founder of the enterprise,               
determine the terms and conditions of privatisation of a separate               
privatisation object or a group of such objects;                                
     4) at least once a quarter, prepare privatisation programmes               
and submit them to the Privatisation Commission for approval, and               
after they  are approved,  arrange the  implementation  of  these               
programmes;                                                                     
     5) appoint  its representative  to the  commission formed by               
the founder  of the  enterprise, which  assesses the value of the               
privatisation object;                                                           
     6) issue  Information  Bulletin  of  Privatisation,  wherein               
official announcements  shall be  published. Information Bulletin               
of Privatisation  must contain  information  about  privatisation               
object, specified in Article 14 as well as additional information               
as deemed necessary by Privatisation Agency;                                    
     7) on  the recommendation  of the founder of the enterprise,               
and in  conformity with  the procedure  set forth  in Article 15,               
allow  or   disallow  the  enterprise  controlled  by  the  state               
(municipality),  which   is   being   privatised,   to   conclude               
transactions;                                                                   
     8) arrange the advertising of the privatisation object;                    
     9) alongside  with  the  founder  of  the  enterprise,  seek               
investors for privatisation object;                                             
     10) conduct the keeping of records of privatisation works in               
Lithuania;                                                                      
     11) sign privatisation transactions.                                       
                                                                                
     2. Within the scope of its powers, Privatisation Agency must               
ensure that  each privatisation  transaction be most efficient on               
the  macroeconomic   level  (business   guarantees,  investments,               
employment guarantees, financial revenues, etc.)                                
                                                                                
     Article 7. The Rights of Privatisation Agency in the                       
               Sphere of Privatisation                                          
     1. Privatisation Agency shall have the right to:                           
     1) approve or reject restructuring project of the enterprise               
controlled by  the state  (municipality), prepared by the founder               
of the enterprise;                                                              
     2)  hire   experts   by   competition   for   carrying   out               
privatisation tasks;                                                            
     3) propose  to the  founder of the enterprise to replace the               
head of  the administration  or (and) the Board of the enterprise               
controlled by  the state  (municipality) under  privatisation, if               
this enterprise failed to submit information established by legal               
documents;                                                                      
     4) upon coming into effect of the privatisation transaction,               
issue (or to delegate this right to an authorised representative)               
documents to  persons who  have  acquired  privatisation  objects               
(shares of enterprises), that certify the ownership right;                      
     5) represent  the Government of the Republic of Lithuania in               
court in  cases concerning  privatisation transactions  signed by               
the Privatisation  Agency, as  well as privatisation transactions               
concluded under LIPSP;                                                          
     6) establish agencies abroad for the implementation of tasks               
set forth by this Law.                                                          
     2. Privatisation Agency shall have the right to obligate the               
founder of the enterprise to:                                                   
     1)   prepare    proposals   concerning   the   privatisation               
restructuring   (parcelling,    debt   coverage,    creation   of               
infrastructure,  etc.)   ,  if   upon  the   valuation   of   the               
privatisation object  (enterprise)  ,  it  turns  out  that  such               
restructuring shall  enhance the  possibility to  privatise it or               
shall increase  the selling  price of  the  privatisation  object               
(enterprise);                                                                   
     2) according to the procedure established by laws, appeal to               
court with  regard to  the invalidation of transactions concluded               
by the  enterprise controlled  by the  state  (municipality),  in               
violation of this and other laws, and compensation for damage.                  
                                                                                
     Article 8. Duties of the Founder of the Enterprise in                      
               the Sphere of Privatisation                                      
     The founder of the enterprise shall have to:                               
     1)  submit   to  the   Privatisation  Agency  lists  of  the               
privatisation objects  intended for privatisation within the time               
limits  established   by  the   Government  of  the  Republic  of               
Lithuania;                                                                      
     2) prepare  restructuring projects  of privatisation objects               
(enterprises)  and   upon  the   approval  of  the  privatisation               
programme, monitor the implementation of restructuring;                         
     3) according  to the  list of privatisation objects approved               
by  the   Government  of   the  Republic  of  Lithuania,  collect               
information on  the privatisation  object ,  determine its value,               
perform  expert   examination  of   all  the  documents  of  this               
privatisation object,  as well  as prepare the draft programme of               
the  privatisation   of  this   object  and   submit  it  to  the               
Privatisation Agency;                                                           
     4) propose privatisation method;                                           
     5) propose terms and conditions of privatisation;                          
     6) seek for the investor for the privatisation object;                     
     7) give  recommendations  to  the  Privatisation  Agency  in               
accordance with  the procedure  established by Article 15 of this               
Law, concerning  the transactions  concluded  by  the  enterprise               
controlled by the state (municipality);                                         
     8) monitor  the implementation of privatisation transactions               
until all terms and conditions are met, or take measures provided               
by laws  against the  privatisation subjects  who default  on the               
terms and conditions of privatisation transaction.                              
                                                                                
     Article 9. Powers of Municipal Privatisation                               
               Commissions in the Sphere of Privatisation                       
     1.  Decision   to  include   an  enterprise   owned  by  the               
municipality or  any other  assets transferred into the ownership               
of the municipality, into the list of privatisation objects shall               
be passed by the municipal council.                                             
     2. Municipal privatisation commissions may be established by               
the decision  of the  municipal council  if the property owned by               
the municipality  is not  transferred to the Privatisation Agency               
under contract and according to the procedure established by this               
Law for the purpose of privatisation.                                           
     3. The composition of the municipal privatisation commission               
shall  be   established  by   the  municipal  council.  Municipal               
privatisation commissions  shall perform  at the  municipal level               
the same  functions as  privatisation commission and shall report               
to the municipal council.                                                       
     4. The  statutes of  the municipal privatisation commissions               
shall be approved by the municipal council.                                     
     5. Municipal  privatisation commissions  shall take over the               
functions of  city (district)  privatisation agencies established               
for the purpose of implementation of the LIPSP.                                 
     6.  Municipal   executive  institution   authorised  by  the               
municipal  council   shall  perform,   at  municipal  level,  the               
functions of  the Privatisation  Agency assigned  by this Law, if               
the municipal  property is  not transferred  to the Privatisation               
Agency according to the procedure established by this Law for the               
purpose of privatisation.                                                       
     7. Information  about the  municipal  privatisation  objects               
must be  published according to the procedure established by this               
Law.  For  the  publishing  of  information  in  the  Information               
Bulletin of  Privatisation, the Privatisation Agency may charge a               
fee which  shall not  exceed the  average  cost  of  advertising.               
Municipality  may   publish  in  other  information  media  other               
information about  privatisation objects  as defined by this Law,               
deemed necessary by the municipality.                                           
                                                                                
     Article 10. Privatisation Funds                                            
     1. Privatisation funds shall consist of :                                  
     1) receipts from privatisation transactions;                               
     2)  interest   on  payments   deferred  under  privatisation               
transactions;                                                                   
     3)  interest   on  credits   and  loans   granted  from  the               
Privatisation  Fund   for  the  promotion  of  small  and  medium               
business;                                                                       
     4) other  revenues (aid  from  international  organisations,               
receipts from additional services, use of data base, etc.)                      
     Privatisation funds  referred to  in par.  1 of this Article               
shall be transferred to the account of the Privatisation Fund.                  
     3. Financial  resources of  the Privatisation  Fund shall be               
used for:                                                                       
     1) payment for services rendered by hired experts;                         
     2) Savings Restoration and Compensation Fund;                              
     3) credits  and loans  for the promotion of small and medium               
business and other investments in the Lithuanian economy;                       
     4) covering  of the expenses related to the technical supply               
of  Privatisation   Commission,  Privatisation  Agency,  and  the               
founder of the enterprise established by this Law, as well as for               
the  incentives   to  the  employees  engaged  in  privatisation,               
publishing of  Information Bulletin  of  Privatisation,  and  the               
fulfilment of other functions established by this Law.                          
                                                                                
     4. The  resources of  the Privatisation  Fund shall  be used               
according to the estimate which shall be approved each quarter by               
the Government  of the  Republic of Lithuania upon the submission               
by the  Ministry of  Finance. The  Government of  the Republic of               
Lithuania shall  also establish  the procedure for accounting and               
application of resources of the Privatisation Fund.                             
     5. The  Government of  the  Republic  of  Lithuania  by  its               
resolution shall  establish  annually  the  amount  of  financial               
resources that  it shall spend on the incentives to the employees               
of the  Privatisation Agency,  Privatisation Commission,  and the               
founder of the enterprise, as well as the procedure for providing               
incentives. In  establishing incentives  procedure the Government               
must take  into account the amount of investments into Lithuanian               
economy, that result from privatisation transactions.                           
     6.  Privatisation   receipts  from   the  privatisation   of               
municipality-owned property  shall be  transferred to  a  special               
account of the municipality. The procedure for the application of               
these funds shall be established by the municipal council.                      
                                                                                
                                                                                
                            Chapter 3                                           
            PREPARATION OF OBJECTS FOR PRIVATISATION                            
                                                                                
     Article 11. Gathering of Information on the Objects of                     
               Privatisation                                                    
     1.  The  founder  of  the  enterprise  must  submit  to  the               
Privatisation Agency  documents and  information  concerning  the               
privatisation  object   (with  the  exception  of  commercial  or               
industrial secret) according to the procedure established by this               
Law. The  information containing  industrial or commercial secret               
must be  submitted only  during the negotiations on privatisation               
transaction  with   the  prior  written  obligation  of  all  the               
participants of the negotiations to keep this secret confidential               
for the period established in the obligation.                                   
     2.  Public  information  established  by  the  laws  of  the               
Republic of  Lithuania may  not be  an industrial  or  commercial               
secret.                                                                         
                                                                                
     Article 12. Valuation of the Privatisation Object                          
     1. The  value  of  the  object  of  privatisation  shall  be               
assessed for  the purpose  of  determining  its  initial  selling               
price,  on   the  basis   of  which   the  Privatisation   Agency               
(municipality) shall enter into privatisation transactions.                     
     2. The  object of  privatisation  shall  be  valued  by  the               
commission formed  by the  founder of  the enterprise, comprising               
persons having  a qualification certificate of the valuator, or a               
natural or  legal person  having a  licence for  the valuation of               
property, who  is hired  by the  founder of  the enterprise  on a               
competitive basis.  Licences entitling  to value  the objects  of               
privatisation shall  be issued by state institution authorised by               
the Government  of the  Republic of  Lithuania. The Privatisation               
Commission shall  have the right to hire on the competitive basis               
an independent  valuer for  the assessment  of the  value of each               
object of privatisation.                                                        
     3. The object of privatisation may be valued by applying one               
of the  following methods  or a  combination of  several  of  the               
following methods:                                                              
     1) comparable  value (analogous  selling price), the essence               
of which  is a comparison, i.e. the market value is determined by               
comparing real transaction prices of analogous goods, taking into               
account the  differences between  the object  to be valued and an               
analogous object ;                                                              
     2) replacement  value (cost),  the basis  of  which  is  the               
calculation of the price at which they could be replaced, broadly               
in their existing state, according to the technologies and prices               
used at the time of valuation;                                                  
     3) price  - earnings  based value (income capitalisation) or               
discount cash  flow, when  the asset  is valued  as  a  profit  -               
yielding business  rather than  the total of separate assets. The               
forecasting  of   future  cash  flows  and  their  present  value               
constitute the basis of this method;                                            
     4) special  value method  is applied  for the  valuation  of               
unique objects  of  art  and  history,  jewellery  and  antiques,               
various  collections   (they  are  valued  according  to  special               
technologies of valuation of this type of property);                            
     5) other methods used in international practice and approved               
by the Government of the Republic of Lithuania.                                 
     The  procedure   for  the  application  of  the  methods  of               
valuation of  privatisation  objects  specified  above  shall  be               
established by the Government of the Republic of Lithuania.                     
     4. When  assessing the  value of  the shares (assets) of the               
enterprise controlled  by the  state (municipality), the value of               
the plot  of land used by said enterprise must also be taken into               
account.                                                                        
     5. As the initial price of the privatisation object is not a               
minimal selling  price of  the object,  the Privatisation  Agency               
shall have  the right, with the prior agreement of the founder of               
the enterprise  and the approval of the Privatisation Commission,               
to reduce  the selling price of the privatisation object provided               
its privatisation  failed within  time limits  set forth  in  the               
privatisation programme.                                                        
                                                                                
     Article 13. List of Privatisation Objects and the                          
               Privatisation Programme                                          
     1.  The   list  of   privatisation  objects  is  a  document               
containing the  title, registered office, code, principal type of               
activities, authorised  capital,  the  amount  of  capital  being               
privatised (in nominal terms and in percentage) and the number of               
employees on the pay-roll of the privatisation object.                          
     2. The  list of  privatisation  objects  shall  be  approved               
annually by  the Government  of the  Republic of Lithuania on the               
recommendation of the Privatisation Agency.                                     
     3. Privatisation programme is the document specifying:                     
     1) the method of privatisation;                                            
     2) time period of privatisation;                                           
     3) short  description of privatisation object, the shares or               
assets of  which are  being sold  (the capital and its structure,               
the assets  and their structure, nominal value of shares owned by               
the  state   (municipality),  profitability   of  the  authorised               
capital, the  volume of production (annual turnover), the type of               
principal activities,  information on the market share and export               
share of  production (services)  of  the  enterprise,  number  of               
employees, geographical location) and the claims of third persons               
to the privatisation object;                                                    
     4) terms and conditions of privatisation.                                  
     The  Government  of  the  Republic  of  Lithuania  shall  be               
entitled  to   establish  other  requirements  for  privatisation               
programmes.                                                                     
     4. The enterprise controlled by the state (municipality) may               
be included  in the  privatisation programmes  only when they are               
corporatised in  the manner  provided by  the Company Law and re-               
registered as stock companies. This provision, by the decision of               
the founder  of the  enterprise, may  not  be  binding  upon  the               
enterprise  controlled  by  the  state  (municipality)  which  is               
planned to  be privatised  by the method of lease with the option               
to purchase.                                                                    
     5. The  property to  which natural  and  legal  persons  and               
religious communities  claim to restore their rights of ownership               
in accordance  with the  procedure established by the laws of the               
Republic of  Lithuania, as  well as enterprises which pursuant to               
the Republic  of Lithuania  "Law on  Enterprises  which  are  not               
Planned to  be Corporatised  or Privatised  by the Year 2000" are               
included in the list of enterprises which shall not be privatised               
or corporatised.                                                                
     6. The objects that are protected by the state in accordance               
with the laws of the Republic of Lithuania may be included in the               
privatisation programmes  only upon  co-ordinating the  terms and               
conditions of  their use with the relevant institution performing               
the function of state supervision of these objects.                             
     7. The  privatisation object  may be  removed from  the list               
approved by  the Government  of the Republic of Lithuania or from               
the  privatisation   programme  approved   by  the  Privatisation               
Commission only  after it has been offered for sale at least once               
in conformity with this Law but failed to be sold during the time               
period specified in the privatisation programme.                                
                                                                                
     Article 14. Publishing of Information on Privatisation                     
               Objects                                                          
     1. Information on the privatisation object must be published               
in the  Information Bulletin  of Privatisation.  The announcement               
must contain the following information:                                         
     1) privatisation programme;                                                
     2) the  name, position, address, telephone and fax number of               
the  employee   of  the   Privatisation   Agency   (municipality)               
responsible for the implementation of privatisation programme;                  
     3) the  time of  visit to  the enterprise  controlled by the               
state (municipality)  that is  being  privatised  and  the  name,               
position, address,  telephone and  fax number  of the employee of               
this  enterprise,  responsible  for  the  implementation  of  the               
privatisation programme;                                                        
     4) procedure  for the acquisition and payment for the set of               
privatisation documents;                                                        
     5) the  place of  public auction  or public subscription for               
shares.                                                                         
     The Privatisation  Agency may also announce in this Bulletin               
and other mass media other (additional) information.                            
     2. The  obligatory information  on the privatisation object,               
referred to  in par.  1  of  this  Article  must  appear  in  the               
Information Bulletin  of Privatisation  not later  than  30  days               
prior to the beginning of privatisation.                                        
                                                                                
     Article 15. Restrictions on the Activities of the                          
               Enterprise Controlled by the  State                              
               (Municipality) under Privatisation                               
     The  enterprise   controlled  by  the  state  (municipality)               
included in  the privatisation  programme shall  have  no  right,               
without prior  consent of the Privatisation Agency, to enter into               
transactions (including  lending and  borrowing, leasing, as well               
as  agreements   concerning  the  supply  of  raw  materials  and               
materials, acquisition  of capital  goods, or any other transfer)               
for the  period of  9 months,  if the  total value  of assets  in               
regard to  which  the  transaction  (transactions)  is  concluded               
exceeds more  than 10  percent of  its statutory capital. If such               
transactions are  concluded without  the  prior  consent  of  the               
Privatisation Agency,  they shall  be invalid  since they  pursue               
goals clearly  contrary to  public interest. If such transactions               
are entered  into with  the prior  consent of  the  Privatisation               
Agency on  the recommendation  of the  founder of the enterprise,               
Privatisation Agency  must immediately  inform the  privatisation               
subjects in  the same manner as is provided the information about               
the enterprise  controlled  by  the  state  (municipality)  under               
privatisation.                                                                  
                                                                                
                                                                                
                            Chapter 4                                           
                    METHODS OF PRIVATISATION                                    
                                                                                
     Article 16. Methods of Privatisation                                       
     1. Privatisation methods shall be as follows:                              
     1) public subscription for shares;                                         
     2) public auction;                                                         
     3) open tenders;                                                           
     4)  sale   of  state   and  municipal   property  by  direct               
negotiations;                                                                   
     5) lease with the option to purchase.                                      
     2. Privatisation  Agency shall  have  the  right,  upon  co-               
ordinating with  the founder  of the  enterprise, to  change  the               
method of  privatisation in  the process  of privatisation  or to               
apply a  combination of  methods provided by this Law. The change               
of privatisation  method must  be approved  at the  Privatisation               
Commission, and  information about  the privatisation object must               
be announced in the manner specified in Article 14 of this Law.                 
     3.  Implementation   procedure  of   privatisation   methods               
regulated  by  this  Law  and  the  forms  of  the  privatisation               
documents shall  be established by the Government of the Republic               
of Lithuania.                                                                   
                                                                                
     Article 17. Public Subscription for Shares                                 
     1. Public  subscription for shares is a method of selling of               
shares where  the shares are sold in an open manner, i.e. neither               
the number  of purchasers  nor the number of shares subscribed by               
them  is  limited,  and  the  selling  price  of  the  shares  is               
determined according to the supply and demand ratio.                            
     2. When shares of stock companies are sold at National Stock               
Exchange,  they   shall  be  sold  through  a  state  (municipal)               
brokerage company  in conformity  with the  rules established  by               
this stock exchange.                                                            
     When applying  the method  of the  public  subscription  for               
share and  when the  shares are  not sold  at the  National Stock               
Exchange, the founder of the enterprise must:                                   
     1) prepare  and publish  the prospectus of the privatisation               
object in  compliance with the requirements set by the Securities               
Commission, which are applied to the prospectus of securities ;                 
     2) announce in the Information Bulletin of Privatisation and               
at the  place where  the shares  are being  sold, the nominal and               
issue price  of shares,  their number,  the place,  time, and the               
beginning and end of the subscription for shares.                               
                                                                                
     Article 18. Public Auction                                                 
     1.  Public   auction  is   the  method  of  selling  of  the               
privatisation object,  when the  number of privatisation subjects               
participating in the auction is unlimited and the purchaser shall               
be that bidder who offers the highest price.                                    
     2. The purchaser shall acquire the right of ownership to the               
purchased property when he:                                                     
     1) pays  the price offered at the auction in compliance with               
the provisions of this Law;                                                     
     2) fulfils  or obligates  under the  agreement to fulfil all               
terms and  conditions of  the acquisition  of property  that were               
known to him or had to be known to him prior to the auction;                    
     3) the  acquired property  is registered  in the  event such               
registration is  required  by  other  laws  of  the  Republic  of               
Lithuania or the Government Decrees.                                            
     3. Privatisation  Agency must  present to the public auction               
all shares  held by  the state or municipality in a stock company               
or close stock company that is being privatised.                                
                                                                                
     Article 19. Open Tender                                                    
     1. Open  tender is the transfer of one or more privatisation               
objects to  the tenderer  who is  recognised winner in accordance               
with the  procedure established  by  this  Law  and  offered  the               
highest price, having taken into account his written proposals as               
to further  operation  of  the  enterprise  and  which  meet  the               
requirements of the tenders, announced in advance.                              
     The right  of ownership  to the  privatisation object  shall               
pass to  the winner  of the tender upon the coming into effect of               
the privatisation transaction. The privatisation transaction must               
establish the  obligations of  the winner  of the  tenders, which               
must be in full conformity with his previous tender proposals.                  
     2. The  method of  open tender may be applied in privatising               
the enterprises  controlled by the state (municipality) the value               
of which,  determined pursuant to Article 12 of this Law, exceeds               
50 000  Lt, as  well as  in privatising  shareholdings  in  these               
enterprises where the shareholding comprises more than 10 percent               
of the  statutory capital  of the  enterprise controlled  by  the               
state  (municipality)   that  is   being  privatised,   or   when               
shareholdings of  several enterprises  are sold  under  the  same               
privatisation transaction.                                                      
                                                                                
     Article 20. The Selling of the State and Municipal                         
               Property through Direct  Negotiations                            
     1.  The  selling  of  privatisation  object  through  direct               
negotiations is such a method of privatisation when privatisation               
transaction is concluded with one purchaser in the event only one               
purchaser takes part in a public auction or open tender.                        
     2. Direct  negotiations may  also be applied when the offers               
of other  purchasers do  not meet  the  privatisation  conditions               
announced in advance.                                                           
     3. Once direct negotiations are initiated, the new terms and               
conditions of  privatisation must be announced in accordance with               
the procedure  established in  Article 14 of this Law, as well as               
the time  limit within  which other  privatisation  subjects  may               
submit their offers.                                                            
                                                                                
     Article 21. Lease with an Option to Purchase                               
     1. Privatisation  object shall  be sold  by this  method  by               
announcing  open  tender  for  the  lease  of  this  object.  The               
provisions of this law shall not apply to those natural and legal               
persons who  lease any  state-owned or  municipal property not in               
compliance with this Law.                                                       
     2.Privatisation subject shall acquire the right of ownership               
to the  privatisation object  only after  he pays for this object               
the full  price and fulfils the conditions of acquisition of this               
object, set forth in the privatisation transaction.                             
     3. Lease  period shall  be established  in the privatisation               
transaction, but it may not exceed 25 years.                                    
     4. The  amount of  annual rent  shall be  established in the               
privatisation transaction, but it may not be less than the amount               
calculated in  the manner provided for in Article 12 of this Law,               
divided from  the period of lease. Privatisation transaction must               
stipulate  that   the  unpaid   balance  of   the  value  of  the               
privatisation object,  if it  must be  paid in  litas, each  year               
shall be adjusted according to the annual market price index.                   
     When the  payment for  the privatisation  object is  made in               
other currency  than that  specified in  Article 22  of this Law,               
this amount shall be adjusted according to the market price index               
of the  country the  national currency  of which  is used for the               
payment.                                                                        
     5. Privatisation transaction must stipulate that the payment               
for the privatisation object shall be made by applying one of the               
following methods:                                                              
     1) by paying the rent only;                                                
     2) by  paying the rent and upon the expiration of the lease,               
by purchasing out the privatisation object.                                     
     6. Privatisation transaction must stipulate that:                          
     1) if  the rent  is not  paid when  due, an  interest of 0.5               
percent shall  be paid  for each  over-due day.  If the amount of               
arrears  exceeds   the  amount   which  must   be  paid   by  the               
privatisation subject  for 6 month period, and (or) the period of               
                                                                                
indebtedness for the rent due exeeds 6 months, the lease shall be               
terminated and the sum paid shall not be refunded;                              
     2) the lessee must insure the leased property;                             
     3) the  lessor shall  have no right to sub -lease the leased               
property  without  the  prior  consent  of  the  founder  of  the               
enterprise;                                                                     
     4) the  lease shall  be terminated and the payment shall not               
be refunded  if the  terms and  conditions provided  for  in  the               
privatisation transaction are not met with.                                     
     7. The model form of lease with the option to purchase shall               
be established by the Government of the Republic of Lithuania.                  
                                                                                
     Article 22. Payment for the Privatisation Object                           
     1. Privatisation  subjects may  pay  for  the  privatisation               
objects acquired  by  them  only  in  the  national  currency  of               
Lithuania -litas, and privatisation subjects which are registered               
abroad -in  litas, US  dollars, German  marks, French  francs and               
British pounds.                                                                 
     2. The  procedure and  the time limits for the payment shall               
be set forth in the privatisation transaction. The payment may be               
made in  instalments but  the final  payment may not be postponed               
until later  than the  period of  5 years.  When this  payment is               
postponed, the  privatisation transaction  must contain  a clause               
indicating the  interest rate  and the  procedure for the payment               
thereof. If  the privatisation object is paid for by a Lithuanian               
natural person  or a  group thereof,  pursuant to the "Law of the               
Republic of  Lithuania on  the Declaration of Property and Income               
of  Individuals",   a  certificate   issued  by   the  State  Tax               
Inspectorate must be presented.                                                 
                                                                                
     Article 23. Obligations of the Privatisation Subject                       
               under Privatisation Transaction                                  
     1. Privatisation  transaction  under  which  the  enterprise               
controlled by  the state (municipality) is being privatised, must               
include the  obligation of  the  purchaser  (purchasers)  not  to               
reduce the  number of  jobs in  the enterprise by more than it is               
allowed under the laws of the Republic of Lithuania.                            
     2. Privatisation  transaction which  is  concluded  by  open               
tender must  include the obligation of the purchaser (purchasers)               
to  invest   into  the   enterprise  controlled   by  the   state               
(municipality) being  privatised or  other spheres  of Lithuanian               
economy.                                                                        
     3.  The  Privatisation  Agency  or  any  other  institution,               
authorised by  the municipality,  may request  to include  in the               
privatisation transaction the obligations of the purchaser not to               
liquidate, pledge,  donate, mortgage,  or exchange the privatised               
enterprise,  use  its  assets  as  a  collateral  ,  suspend  its               
operations, or sell the shares of the privatised enterprise until               
the purchaser fulfils all the terms and conditions established by               
the  privatisation  transaction.  Privatisation  transaction  may               
provide for other obligations of the purchaser as well.                         
     4. If the privatisation subject starts to manage and operate               
the privatisation  object  under  the  privatisation  transaction               
prior to  the acquisition  of ownership  rights to  that  object,               
privatisation  transactions   must  provide  for  the  conditions               
ensuring the  possibility for  the founder  of the  enterprise to               
control the activities of the privatised object.                                
     5. Privatisation  transaction must provide for the sanctions               
against  the  purchaser  for  non-fulfilment  of  the  undertaken               
obligations (fines  or deprivation of shares) and (or) guarantees               
(by indicating  the guarantor who would compensate for the losses               
incurred by the Republic of Lithuania).                                         
                                                                                
                                                                                
                            Chapter 5                                           
                        FINAL PROVISIONS                                        
                                                                                
                                                                                
     Article 24. International Agreements                                       
     In the event the international agreements of the Republic of               
Lithuania establish  other rules  regulating the  conclusion  and               
enforcement of  transactions  or  if  privatisation  transactions               
provide for  other conditions  of the  fulfilment of obligations,               
the provisions of international agreements shall apply.                         
                                                                                
     Article 25. Coming into Effect of this Law                                 
     1. This law comes into effect as of 15 September 1995.                     
     2. Upon  coming into  effect of  this Law,  the Law  on  the               
Initial Privatisation  of State  Property (LIPSP) of the Republic               
of  Lithuania  shall  remain  in  force  to  the  extent  of  its               
applicability to  the privatisation of state property included in               
the privatisation programmes that were prepared under the LIPSP.                
     3. By  1 September  1995, the  Government of the Republic of               
Lithuania shall  establish  the  Lithuanian  State  Privatisation               
Agency within  the Government  of the  Republic of  Lithuania and               
approve its statutes.                                                           
                                                                                
     I promulgate  this Law  passed by the Seimas of the Republic               
of Lithuania.                                                                   
                                                                                
Algirdas Brazauskas                                                             
President of the Republic                                                       
                                                                                
Vilnius                                                                         
4 July 1995                                                                     
No. I-1001