REPUBLIC OF LITHUANIA                                     
                               Law                                              
                                                                                
                               On                                               
                                                                                
            the Basic Regulations of the Association                            
                 of Municipalities of Lithuania                                 
                                                                                
                                                                                
     Article 1. Objective of the Law                                            
     This Law establishes the basic regulations of the foundation               
and activities  of the Association of Municipalities of Lithuania               
(hereinafter referred to as the Association).                                   
                                                                                
     Article 2. Representation                                                  
     The Association  shall represent the common interests of its               
members -the  municipalities - in all institutions of state power               
and government.                                                                 
                                                                                
     Article 3. The Objectives of the Association and Legal                     
               Framework of its Activities                                      
     The objectives  of the  Association  activities,  its  basic               
functions and  tasks must  be related to the activities and needs               
of its members and must be stated in its bylaws.                                
     The activities  of the  Association shall  be based  on  the               
principles  of   voluntariness  of  its  members,  democracy  and               
decentralisation of  power. The  Association  shall  function  in               
compliance with this Law and its bylaws.                                        
                                                                                
     Article 4. Members of the Association                                      
     Upon taking  its decision,  every municipal council may be a               
member of the Association.                                                      
                                                                                
     Article 5. Establishing the Association                                    
     The Association  shall be  established  by  the  constituent               
congress of  representatives of  municipalities which  want to be               
members of  the Association.  The quota  of representation in the               
Association for  a municipality  shall be 1 person for 10 council               
members, and  1 -  for the remaining number of members (more than               
5). Additionally to the prescribed quota, municipalities in which               
the number  of residents exceeds 100 000 shall elect 1 person for               
every other  100 000 residents (also for an incomplete 100 000 of               
residents).                                                                     
     Municipalities shall  elect  their  representatives  to  the               
Association congress  in accordance with quotas and in proportion               
to the  seats in  the councils  received by the parties which won               
the elections.                                                                  
     The constituent  congress of  the Association shall have all               
the rights  of the congress of representatives of the Association               
members.                                                                        
     The  constituent  congress  shall  be  considered  valid  if               
attended  by  not  less  than  a  half  of  the  members  of  all               
municipalities.                                                                 
                                                                                
     Article 6. The Term of Office of the Association of                        
               Municipalities, Replacement of the                               
               Representatives                                                  
     Municipalities  -  Association  members  shall  elect  their               
representatives to  the Association for the term of office of the               
council. The  Association  shall  establish  in  its  bylaws  the               
procedure of  the expiry of the term office in the Association of               
said representatives,  their removal  from office  prior  to  the               
expiry of the term and their replacement.                                       
     After  every   election  to   the  municipal   council   the               
representatives  shall  be  re-elected  in  accordance  with  the               
                                                                                
principle established  by Article  5  of  this  Law,  unless  the               
municipality decides to withdraw from the Association.                          
                                                                                
     Article 7. The Number of Municipal Councils in the                         
               Association                                                      
     The Association  shall be  registered provided  that no less               
than a  half of  all municipal councils are its members and shall               
be liquidated  if less  than a  half of municipal councils retain               
their membership  in the  Association and  the membership  is not               
increased to the required number within a year's period.                        
                                                                                
     Article 8. The Competence of the Congress of                               
               Representatives of the Association Members                       
     The congress  of representatives  of the Association members               
shall approve  and change  the sum  of the  membership fee  which               
shall be fixed to amount to not less than 0.02% and not more than               
0.04%  of  municipal  budget  expenditure,  shall  determine  the               
structure of  the  Association  and  its  executive  and  control               
institutions, the  estimate of  income and  expenditure  and  the               
bylaws.                                                                         
                                                                                
     Article 9. The Status of the Association, Formation of                     
               its Institutions and Organisation of its                         
               Services                                                         
     The Association  is a  non-profit organisation.  It shall be               
prohibited  from   engaging   in   commercial   activities.   The               
institution authorised by the Association bylaws may conclude the               
contract of employment with the head of the executive institution               
for  the  term  of  office  of  the  authorised  institution  and               
employment contracts  of unlimited duration with other employees,               
and pay  their salaries  from the collected amounts of membership               
fees and  other income from the organisation of services provided               
for in the bylaws.                                                              
     The Association shall have the rights of legal person.                     
     The Association  shall form  its elective  institutions from               
candidates nominated  in proportion to all seats in the municipal               
councils received  by the  parties winning  the elections  to the               
municipal councils  and which  join or  have already  joined  the               
Association, unless the congress decides otherwise.                             
                                                                                
     I promulgate  this Law  passed by the Seimas of the Republic               
of Lithuania.                                                                   
                                                                                
                                                                                
Algirdas Brazauskas                                                             
President of the Republic                                                       
                                                                                
Vilnius                                                                         
28 March 1995                                                                   
No. I-833