REPUBLIC OF LITHUANIA                                             
                               LAW                                              
                               ON                                               
                          CREDIT UNIONS                                         
                                                                                
                                                                                
                            Chapter 1                                           
                       General Provisions                                       
                                                                                
          Article 1. Objectives of the Law                                      
     This Law  establishes grounds  for the  activities of credit               
unions, terms and conditions of membership, and the principles of               
self-governance, regulates  the establishment  of credit  unions,               
their activities,  the rights  and duties of their members, their               
reorganisation and  liquidation, management  and  supervision  of               
activities. This  Law restores the co-operative credit system and               
aims at accelerating its development in Lithuania.                              
                                                                                
     Article 2. Credit Unions. Loans to Members                                 
     1. A  credit union  is a credit institution organised on co-               
operative  basis,  which  has  been  voluntarily  established  by               
natural  persons   (hereinafter  referred   to  as  members)  and               
registered in  the manner  prescribed by  this Law,  which  pools               
money from  its members  with the  aim of satisfying the business               
and social  needs of  its members  that are  provided for  in the               
bylaws of  the credit  union by making members loans and assuming               
related risks and liabilities.                                                  
     2. Members  loans are long-term and short-term loans made to               
members of the credit union from the funds accumulated therein at               
the rate  of interest  established by  the resolution of Board of               
the credit union.                                                               
                                                                                
     Article 3. The Status of a Credit Union                                    
     1. A credit union shall be a legal person from the moment of               
its registration  in accordance with the procedure established by               
this Law  and shall  operate in  compliance with  this Law, other               
laws and  legal acts  of the  Republic of  Lithuania, and  its by               
laws.                                                                           
     2. A  credit union  shall have its assets, it may in its own               
name  acquire   property  and   non-property  rights  and  assume               
obligations, may  act as plaintiff or defendant before a court of               
law or before the arbitration court.                                            
     3. A  credit union  may deposit  its funds  with  the  banks               
registered in the Republic of Lithuania and/or in other states.                 
     4. A  credit union  may be  established for a definite or an               
indefinite period.  If the  period for  which the credit union is               
established is  not specified  in its  bylaws, the  credit  union               
shall be  deemed to  have  been  established  for  an  indefinite               
period. The  term  of  functioning  of  a  credit  union  may  be               
extended.                                                                       
     5. A  credit union  shall be liable for its obligations only               
to the extent of its available assets and shall not be liable for               
the obligations  of its  members which  are not  related  to  the               
activities of the credit union. Members of the credit union shall               
be liable for the obligations thereof only to the extent of their               
shares or the amount due for their share.                                       
     6. A credit union shall not be liable for the obligations of               
the  State  whereas  the  State  shall  not  be  liable  for  the               
obligations of  the credit union, except in cases where the State               
itself assumes such liabilities.                                                
                                                                                
     Article 4. Ownership of a Credit Union                                     
     The assets of a credit union, accumulated from the shares of               
its members  and entrance  fees as  well received  from  its  own               
activities  shall   belong  to  the  credit  union  by  right  of               
ownership.                                                                      
                                                                                
     Article 5. The Name of the Credit Union and the Use                        
               thereof                                                          
     1. A  credit union must register its name in accordance with               
the procedure  established by  legal  acts  of  the  Republic  of               
Lithuania.                                                                      
     2. The  name of  a  credit  union  must  contain  the  words               
"kredito  unija"   (credit  union).   The   procedure   for   the               
registration of  the name  and for  the  settlement  of  disputes               
arising therefrom  shall  be  regulated  by  legal  acts  of  the               
Republic of Lithuania.                                                          
     3. A  credit union  may not  choose a  name which  would  be               
identical to the name of another credit union or commercial bank,               
registered in  the Republic of Lithuania , or would be so similar               
as to produce a confusion.                                                      
                                                                                
     Article 6.Application of other Laws and Legal Acts of                      
               the Republic of Lithuania to the Activities                      
               of Credit Unions                                                 
     The provisions  of laws and other legal acts of the Republic               
of  Lithuania   which  regulate  bank  loans,  i.e.  such  credit               
relations in  which one  of the  parties always  is a bank, shall               
apply to  the relations of making members loans to the members of               
credit  unions   only  to  the  extent  said  provisions  are  in               
compliance with the provisions of this Law.                                     
                                                                                
                            Chapter 2                                           
       Activities of Credit Unions, Rights and Obligations                      
                        of Credit Unions                                        
                                                                                
     Article 7. Activities of Credit Unions                                     
     1. Credit unions shall:                                                    
     1) receive  amounts on  term and  demand deposits  from  its               
members, other  credit unions,  associations  of  credit  unions,               
public organisations  of the  Republic  of  Lithuania,  religious               
communities, institutions  authorised by  the Government  of  the               
Republic of Lithuania and/or local governments, and international               
charitable (sponsorship)  foundations and/or  such foundations of               
foreign states;                                                                 
     2) make  short-term and  long-term loans to its members only               
for the purposes provided for in the bylaws;                                    
     3) lend  money to  other credit  unions or  associations  of               
credit unions,  or borrow  money  from  other  credit  unions  or               
associations of credit unions on the terms provided for in Par. 3               
of Article  9 of  this Law,  and shall  invest free  funds of the               
credit union into government securities if activities of the kind               
are provided for in the bylaws of the credit union; and                         
     4) engage  in other  activities  licenced  by  the  Bank  of               
Lithuania.                                                                      
     2. The  operations and  activities specified in this Article               
may be  performed  only  by  the  credit  union  which  has  been               
registered in  accordance with  the procedure established by this               
Law, provided  that the credit union has been issued a licence by               
the Bank of Lithuania for the performance of the above operations               
and activities.                                                                 
                                                                                
     Article 8. Rights and Obligations of Credit Unions 1. A                    
               credit union may:                                                
     1) engage in the activities established in Article 7 of this               
Law;                                                                            
     2) have  settlement and currency accounts only in one of the               
chosen banks in the Republic of Lithuania as well as one currency               
account  in   each  bank  registered  in  any  foreign  state  in               
accordance with the licence issued by the Bank of Lithuania;                    
     3) have  its own  seal and  change it  and use it at its own               
discretion;                                                                     
     4) buy  or in other ways acquire property for its activities               
as well  as sell,  lease or  mortgage said  property  or  dispose               
thereof in any other way;                                                       
     5) pay  honorariums to the members and heads of the managing               
bodies of the credit union;                                                     
     6) fix  the amount  of charges for the rendered services and               
preferential terms  when  said  services  are  rendered  for  the               
members;                                                                        
     7) determine its organisational structure; and                             
     8) reorganise  or liquidate  itself in  accordance with  the               
procedure established by this Law.                                              
     2. A credit union may also have other civil rights which are               
not established  by this  Law, provided  that these rights are in               
compliance with  the provisions of this Law and other laws of the               
Republic of Lithuania.                                                          
     3. A  credit union  must comply  with the provisions of this               
Law and  its bylaws,  other laws  of the  Republic of  Lithuania,               
provide  conditions  for  its  members  to  exercise  the  rights               
belonging to  them, timely  and adequately perform obligations to               
the members of the credit union and third persons.                              
                                                                                
     Article 9. Purpose, Amount and Repayment Guarantee of a                    
               Member's Loan                                                    
     1. A credit union shall issue a long-term or short-term loan               
to its  member  for  purchasing  movable,  or  real  property  or               
everyday-use articles,  for paying every-day service charges, for               
developing  their   economic,  professional   or  small  business               
activities, or for any other specific purpose provided for in the               
bylaws of the credit union.                                                     
     2. The  maximum amount of a loan advanced to a member of the               
credit union  may not  exceed the  amount requested  by  him,  or               
exceed tenfold  the amount of the member's share contribution and               
10% of  the amount  of deposits accumulated with the credit union               
as determined  on the  basis of the last accounting balance sheet               
of the credit union.                                                            
     3. A  loan must be secured by at least one means of ensuring               
the performance  of obligations provided for by the Civil Code of               
the Republic of Lithuania: pledge, mortgage, surety or guarantee.               
                                                                                
     Article 10. Deposit Insurance                                              
     In its  bylaws, a  credit union may provide for the terms of               
voluntary  deposit   insurance  and/or   for  collective  deposit               
insurance.                                                                      
                                                                                
                            Chapter 3                                           
                 Establishment of a Credit Union                                
                                                                                
     Article 11. Establishment and Founders of a Credit                         
               Union                                                            
     1. A  credit union shall be established by forming funds for               
covering the  expenses related  to the establishment thereof from               
the paid  amounts of  one-time entrance  fees and by accumulating               
share capital  from the  share contributions  of the credit union               
founders.                                                                       
     2. Founders  of a  credit union shall be natural persons who               
are establishing  a credit union in accordance with the procedure               
established by  this Law. A credit union may be established by no               
less than  5 natural  persons of  the Republic of Lithuania. Each               
founder of  the credit  union must  at the  same time  also be  a               
member of the credit union, which is being established.                         
     3. The  founders shall  conclude  a  credit  union  founding               
agreement in which the following must be stated:                                
     1) the founders (full names) and their addresses;                          
     2) the name of the credit union;                                           
     3) the  registered office of the credit union, which must be               
located in the Republic of Lithuania;                                           
     4) the rights and duties of the founders, while establishing               
the credit  union and responsibility for failure to perform their               
obligations;                                                                    
     5) the  amount of  share contribution  in cash due from each               
founder and  the  dates  of  payment  thereof  as  well  as,  the               
procedure for  the temporary use thereof during the establishment               
of the credit union;                                                            
     6) the  amount of  admission  fee,  the  procedure  for  the               
payment and use thereof; and                                                    
     7) the procedure for settling disputes between the founders.               
     4. The  founding  agreement  shall  be  signed  by  all  the               
founders. The agreement must be certified by a notary.                          
     5. The  founding agreement, concluded in accordance with the               
procedure established by this Law, shall be a public document and               
shall grant  the right  to open  a settlement  account in  a bank               
registered in the Republic of Lithuania.                                        
     6. The  founders of a credit union shall draft the bylaws of               
the credit  union and  present them  to the statutory meeting for               
approval. Prior to the statutory meeting the founders must record               
in the  register of  members persons who have acquired a share in               
the credit union which is being established.                                    
     7. Minimum  share capital  must be accumulated and shares of               
at least  50 persons  must be  paid up  prior  to  the  statutory               
meeting.                                                                        
     8. Prior  to the  statutory meeting,  any founder shall have               
the right  to conclude  transactions regarding  the credit  union               
which  is  being  established.  Said  transactions  shall  create               
obligations for  the credit  union after  the approval thereof by               
the statutory  meeting. In  the event that the meeting refuses to               
approve the  transactions, the  founders who  have concluded them               
shall  be   liable  for   the  obligations   arising  from   said               
transactions. On  the recommendation  of a  founder the statutory               
meeting of  the credit  union may  transfer to  the credit  union               
obligations created  by a  founder in  his own name and reimburse               
the founders  for their  expenses related to the establishment of               
the credit union.                                                               
                                                                                
     Article 12. Statutory Meeting of the Credit Union                          
     1. The  founders of  a credit  union must call the statutory               
meeting no  later than  within 60  days of the day of approval of               
the founding agreement by the notary.                                           
     2. The statutory meeting shall:                                            
     1) consider and approve the bylaws of the credit union;                    
     2) elect for the first term of office the managing bodies of               
the credit union and the auditor, but for no longer than the term               
of two financial-business years;                                                
     3) approve the statutory report;                                           
     4) approve the transactions concluded by the founders of the               
credit union; and                                                               
     5) resolve other issues within the competence of the general               
meeting.                                                                        
     3. The statutory meeting must be attended by at least 2/3 of               
the  persons   registered  in   the  register   of  members.  The               
participation of the founders is mandatory.                                     
     4. The  statutory meeting  shall be  presided over by one of               
the founders or the chairperson elected by the statutory meeting.               
     5. Minutes must be kept of the statutory meeting wherein the               
following must be specified: the number of persons taking part in               
the  meeting,   all  the   considered  issues   and  the  adopted               
resolutions. The  minutes shall be signed by the chairperson, the               
secretary and  one of  the members,  authorised by the meeting. A               
list  of   all  members  of  the  credit  union  which  is  being               
established must be attached to the minutes of the meeting.                     
     6. The  founders must,  no later than within 7 days from the               
day of  the statutory meeting, hand over to the elected Board the               
                                                                                
founding documents  of the  credit union  and  transfer  all  the               
acquired assets thereto.                                                        
     7. If  the founders  of the credit union fail to convene the               
statutory meeting, within 60 days of the approval of the founding               
agreement by  the notary,  all the members shall be released from               
their obligations to the credit union and shall have the right to               
request that  all their contributions be returned to them without               
deductions.                                                                     
                                                                                
     Article 13. Statutory Report                                               
     The founders  of the  credit union  must prepare a statutory               
report and  present it to the statutory meeting for approval. The               
following must be stated in the statutory report:                               
     1) establishment costs;                                                    
     2) the  number of  shares purchased  and the amount of money               
received;                                                                       
     3) the number of shares purchased by each founder;                         
     4) transactions, the obligations under which are transferred               
to the credit union by the founders; and                                        
     5)  the  amount  of  remuneration  paid  out  to  cover  the               
establishment costs.                                                            
                                                                                
     Article 14. Bylaws of a Credit Union                                       
     1. Bylaws  are a  legal document governing the activities of               
the credit union.                                                               
     2. The bylaws must state:                                                  
     1) the name of the credit union;                                           
     2) the registered address of the credit union;                             
     3) the criteria of uniting into a credit union;                            
     4) the  period of operation of the credit union if provision               
is made for a temporary credit union (of limited duration);                     
     5)  type   of  activities  (operations  performed,  services               
rendered);                                                                      
     6) rights, duties and responsibilities of members;                         
     7) the grounds and procedure for entrance of, withdrawal and               
expulsion from the credit union;                                                
     8) the  minimum amount  of share  contribution which must be               
paid in  by a  member and the maximum number of shares allowed to               
be acquired by one member, as well as the share payment procedure               
and the  procedure for  the transfer of shares into the ownership               
of other persons;                                                               
     9) the  application of  funds of share capital of the credit               
union pursuant  to the provisions of Par. 3 of Article 41 of this               
Law and/or  the procedure  and time  limits  of  investment  into               
government securities  of the  funds  of  the  credit  union  not               
immediately required for its objects;                                           
     10) the  competence of  the general meetings of members, the               
procedure for calling the meetings and their voting rules;                      
     11) the  procedure for  electing the  Supervisory Board, the               
Board, the  Loans committee, and the auditor and their respective               
powers;                                                                         
     12) the  capital structure,  ownership  and  formation  (the               
amount of share capital is not specified);                                      
     13) the procedure of profit and loss approval, the rules for               
the distribution of profit and compensation for losses;                         
     14) the  procedure for  making up,  inspecting and approving               
the accounts;                                                                   
     15) the  procedure of  the credit  union reorganisation  and               
liquidation;                                                                    
     16) the procedure for communicating the announcements of the               
credit union; and                                                               
     17) information  which is  classified secret  by the  credit               
union.                                                                          
     3. The  bylaws may  also include other provisions regulating               
the activities  of the  credit union and determining property and               
other relations  of the  members as well as the relations between               
the credit  union and  third persons,  provided  that  the  above               
provisions are  in compliance  with the  laws of  the Republic of               
Lithuania.                                                                      
     4. The  bylaws of  a credit  union must  be approved  by the               
general meeting of members.                                                     
                                                                                
     Article 15. Registration of Credit Union                                   
     1. Upon  being issued the licence provided for in Article 16               
of this Law, a credit union must be registered within 4 months of               
the  day   of  the  statutory  meeting  in  accordance  with  the               
commercial bank  registration procedure  established by  the laws               
and other legal acts of the Republic of Lithuania.                              
     2. In the event that a credit union is not registered within               
the period  specified in Par. 1 hereof, the credit union shall be               
deemed not  established and  the members'  contributions into the               
share capital  thereof must  be  repaid  without  any  deductions               
within 15 days of the expiry of the period set for registration.                
     3. If  the credit  union was  not registered for reasons not               
related to  the activities of the founders thereof or persons who               
have paid  their share  contributions into the share capital, the               
founders of  the credit  union may  appeal in  court against  the               
refusal to register the credit union.                                           
     4. From  the day  of its  registration, a credit union shall               
acquire the  rights of  legal person  and may  engage  in  saving               
activities and in making loans to its members.                                  
                                                                                
     Article 16. Licence                                                        
     1. A  licence to  perform operations  of saving  and  making               
loans to  members, as  well as  to  engage  in  other  activities               
subject to the licencing of the Bank of Lithuania shall be issued               
by the  Bank  of  Lithuania  in  accordance  with  the  procedure               
established by it.                                                              
     2. In  order to  be issued  a licence,  a credit  union must               
present to the Bank of Lithuania the following documents:                       
     1) application;                                                            
     2) a notarised copy of founding documents;                                 
     3) documents  confirming the  payment by  the members of the               
credit union of their initial share contributions;                              
     4) information  concerning the  founders and  members of the               
Supervisory Board  and the Board of the credit union as requested               
by the Bank of Lithuania;                                                       
     5) the bylaws; and                                                         
     6) other documents requested by the Bank of Lithuania.                     
     3. The  Bank of  Lithuania must  substantiate its refusal to               
issue a  licence. The refusal may be appealed against in court in               
accordance with  the procedure  established by  the laws  of  the               
Republic of Lithuania.                                                          
                                                                                
                                                                                
                            Chapter 4                                           
  Membership in the Credit Union, Rights and Duties of Members                  
                                                                                
     Article 17. Members                                                        
     1. Only  natural persons  -  citizens  of  the  Republic  of               
Lithuania, stateless persons permanently residing in the Republic               
of Lithuania  and foreign  nationals may  be members  of a credit               
union. Persons who are 18 years of age and over may be members of               
credit unions.  The bylaws may provide for a possibility to admit               
as members  persons who  have attained  16 years of age, provided               
that they have an independent source of subsistence.                            
     2. A  credit union  must  have  at  least  50  members,  the               
founders including.  In the  event that the minimum number of the               
credit union members is reduced by at least one, the credit union               
must receive  a permission  from the  institution supervising the               
activities of credit union for its activities continued until the               
required  number   of  members   is  restored.   The  supervisory               
institution taking  into account  the liquidity  of  such  credit               
union may  either grant  it permission  to operate  for no longer               
than 3 months, or prohibit such credit union from functioning.                  
     3. New members may be admitted only upon the registration of               
the credit  union in accordance with the procedure established by               
this Law.                                                                       
     4. Membership  in the  credit union  shall be based upon the               
following criteria which must be specified in the bylaws:                       
     1) employment in the same enterprise, institution;                         
     2) belonging to the same professional group;                               
     3) belonging  to  a  certain  formal  formation  of  people:               
organisation, including  public and  professional  but  excluding               
political  parties;  educational,  ethnic,  cultural,  social  or               
religious society or community, etc.; and                                       
     4) residing in the same location - township or village.                    
     5. Family  members of  a credit  union member or persons who               
either live  together or  keep house with him, may be admitted as               
members of the credit union without taking into consideration the               
criteria specified  herein, unless the bylaws of the credit union               
provide otherwise.                                                              
     6. Persons who wish to become members of a credit union must               
file with the Board of the credit union a written application. It               
must be  stated in  the application that he/she pledges to comply               
with the bylaws of the credit union, pay the entrance fee, pay in               
his/her share  and perform  the obligations  of the  credit union               
assumed by  the  credit  union  prior  to  his/her  admission  to               
membership.                                                                     
     7. A  person shall  become a member of the credit union only               
after the Board adopts a resolution to approve his application.                 
     8. If  a credit  union member  does not  satisfy  the  basic               
conditions for  holding membership  in the  credit union,  on the               
decision of  the general  meeting he  may be  left in  the credit               
union with the rights of an associate member. An associate member               
shall not  be released  from obligations  to the credit union. He               
may enjoy  all rights of a full member, with the exception of the               
right to vote, be elected to the management and control bodies of               
the credit union, and receive new loans from the credit union.                  
                                                                                
     Article 18. Registration of Members                                        
     1. Member  of the  credit union  must be  registered in  the               
register of  members kept by the Board. The following information               
must be  recorded  in  the  register:  the  member's  full  name,               
personal code  number, place  of residence  and address,  date of               
admission, payment of entrance fee and share contribution.                      
     2. At  the request  of the  supervisory institution  of  the               
credit union  activities, the  Board must present the list of the               
credit union  members. If the number of members of a credit union               
becomes less  than the  minimum number  prescribed in  Par. 2  of               
Article 17  of this  Law, the  Board must  notify the supervisory               
institution thereof no later, than within 10 days.                              
     3. At  the request of a member of the credit union he may be               
issued a  certificate confirming  his membership  in  the  credit               
union and the amount for his share.                                             
                                                                                
     Article 19. Rights and Duties of a Credit Union Member                     
     1. A credit union member shall have the right to:                          
     1) attend  meetings of the credit union and to have one vote               
during voting;                                                                  
     2) elect  and be  elected to  the bodies  of management  and               
control of the credit union;                                                    
     3) obtain  information about  the activities  of the  credit               
union, its  financial-economic condition and assets or to request               
that he  be presented  for familiarisation  or  for  copying  the               
annual  and  intermediate  accounts,  the  report  of  the  Board               
concerning the  activities of  the credit  union, minutes  of the               
meetings,  the  register  of  members.  Other  documents  may  be               
presented to the member provided that they contain no secrets the               
divulging whereof  would inflict  material damage  to the  credit               
union. It shall be prohibited to refuse access to the information               
for other  reasons. The refusal to present the required documents               
must be  executed in writing if requested by the member. Disputes               
concerning the  member's right  of access to information shall be               
settled in court;                                                               
     4) appeal  in court  against the  resolutions of the general               
meeting and the Board;                                                          
     5) withdraw from the credit union;                                         
     6) have a share or shares in the credit union of the minimum               
amount or of the maximum amount established in the bylaws;                      
     7) receive the share of profit distributed among the members               
-dividend in proportion to the amount of his share;                             
     8) receive  a portion  of assets  of  the  credit  union  in               
liquidation in proportion to the amount of his share;                           
     9) bequeath his share to one or several persons;                           
     10) with  the consent of the Board transfer his share to the               
ownership of  other persons  in accordance with the procedure set               
forth in item 10 of Par. 2 of Article 35 of this Law;                           
     11)  request   that  the   credit  union  return  his  share               
contributions; and                                                              
     12) make  use of  services provided  by the  credit union on               
easy terms established in the bylaws.                                           
     2. The  credit union's  bylaws may  also provide  for  other               
rights of  members which  are in  compliance with the laws of the               
Republic of Lithuania.                                                          
     3. A  member of the credit union shall have no right to vote               
when the  issue of  his membership  in the  credit union is being               
decided at the general meeting and in other cases provided for in               
the bylaws when he has a direct interest.                                       
     4. A member of the credit union must:                                      
     1) make  timely notification,  should the  grounds  for  his               
membership in the credit union cease to exist;                                  
     2) pay  the entrance  fee,  share  contributions  and  other               
purpose-oriented contributions  within the time limits set out in               
the bylaws;                                                                     
     3) act in compliance with the bylaws, fulfil the obligations               
of  the  credit  union  and  implement  the  resolutions  of  the               
management and  control bodies,  participate in the activities of               
the credit union; and                                                           
     4) duly  and timely  carry out  loan agreements,  agreements               
concerning the  keeping of  deposits with  the credit  union  and               
other agreements concluded with him.                                            
     5. A  member of the credit union may not at the same time be               
a member  of another  credit union,  if this is prohibited in the               
bylaws.                                                                         
     6. Upon  withdrawal or  expulsion from  the credit  union, a               
member of  the management of control body of the credit union may               
not continue  to perform  his functions  in the above bodies. The               
withdrawing members  who are  employed in  the credit union under               
the  employment   contract  may   refrain  from  terminating  the               
employment contract, unless the bylaws provide otherwise.                       
                                                                                
     Article 20. Rescission of Membership and Termination of                    
               Membership                                                       
     1. Membership  of the credit union shall be rescinded in the               
following cases:                                                                
     1) if the Board grants the member's request to withdraw from               
the credit union;                                                               
     2) upon the demise of the member;                                          
     3)  upon   recognising  the   member  legally  incapable  in               
accordance with  the procedure  established by  the laws  of  the               
Republic of Lithuania;                                                          
     4) upon the member's expulsion; and                                        
                                                                                
     5) when  he becomes a member of another credit union, if the               
bylaws of  the credit  union prohibit membership of more than one               
credit union.                                                                   
     2. Membership  of the  credit union shall terminate upon the               
liquidation thereof  in the  cases provided  for  in  Par.  1  of               
Article 50 of this Law.                                                         
                                                                                
     Article 21. Withdrawal from the Credit Union                               
     1. Every  member of the credit union shall have the right to               
withdraw from  the credit  union at their own will upon notifying               
the Board  thereof in  writing no later than 3 months in advance.               
Resolution concerning  the withdrawal  and settlement of accounts               
with the withdrawing member shall be adopted by the Board.                      
     2. A  member may  withdraw only  at the  end of the business               
year. The Board may permit a member to withdraw before the end of               
business year,  provided that  accounts may  be settled  with the               
withdrawing member without causing damage to the interests of the               
credit union.                                                                   
     3. If  the bylaws  prescribe the residence of the members in               
one locality  - a  township or  a village  - as  a  condition  of               
membership of  the credit  union, a member who is moving from the               
locality must notify the Board of his withdrawal in writing.                    
                                                                                
     Article 22. Expulsion from the Credit Union                                
     1. If  a member  of the  credit union  fails to  fulfil  his               
obligations, violates this Law and the bylaws, he may be expelled               
from the  credit union  only  on  the  decision  of  the  general               
meeting. The  Board may  suspend the  member's rights  until  the               
general meeting  at which  the issue  of his  expulsion from  the               
credit union is to be considered.                                               
     2. A  member may be expelled provided that he has been given               
an opportunity  to be  heard at the general meeting and if 2/3 of               
the credit  union members  participating in  the meeting  vote in               
favour of his expulsion.                                                        
     3. If the expelled member disagrees with the decision of the               
general meeting concerning his expulsion, he shall have the right               
to appeal  to court  for the revocation of such decision within 3               
months of the day of passing of the decision.                                   
                                                                                
     Article 23. Settlements with the Former Members of the                     
               Credit Union                                                     
     1. The  time period  within which  settlements must  be made               
with the  member who  has withdrawn  from the credit union or has               
been expelled from it shall be determined assessing the financial               
position and  the state of assets (liquidity) of the credit union               
and  upon   deducting  sums   belonging  to   the  credit  union.               
Settlements must  be made no later than within 12 months from the               
day of actual withdrawal or expulsion of the member of the credit               
union.                                                                          
     2. A  person who has been expelled or has withdrawn from the               
credit union  shall lose  the right  to make use on easy terms of               
the services  provided by the credit union from the moment of his               
expulsion or withdrawal from the credit union.                                  
     3. The  Board of  the credit union, protecting the interests               
of the credit union and its members, must within 10 days from the               
day of the member's withdrawal or expulsion, review all contracts               
for the provision of services by the credit union which have been               
concluded with  him and, as necessary, rescind said contracts or,               
if the  other  party  does  not  object,  change  the  terms  and               
conditions of the contracts.                                                    
     4. Disputes  concerning settlements between members shall be               
resolved in court.                                                              
     5. Amounts due to a deceased member shall be paid out to his               
heirs in  the same  manner as  in the  cases of his withdrawal or               
expulsion, if  the heirs  are not members of the credit union and               
                                                                                
are not  admitted as  members  thereof  in  accordance  with  the               
procedure established by this Law and the bylaws.                               
     6. Amounts  due to  a person who has been recognised legally               
incapable shall  be paid  out to  his lawful representative after               
the latter presents the required documents.                                     
                                                                                
     Article 24. Proxies                                                        
     A member shall have the right to authorise another person to               
vote for  him at the meeting of members or perform other actions.               
At the  meeting of  members of  the credit  union the  proxy  may               
represent only one member of the credit union. The member's proxy               
must be  certified by a notary. A member of management or control               
bodies of the credit union may not be a proxy of the credit union               
member.                                                                         
                                                                                
     Article 25. Liability of a Member of the Credit Union                      
               for the Damage Inflicted on the Credit Union                     
     1. A  member of  the credit  union shall  be liable  for the               
damage inflicted  on the  credit union  in  accordance  with  the               
procedure established  by the  Civil  Code  of  the  Republic  of               
Lithuania. Rescission of membership of the credit union shall not               
exempt from  liability for  the damage  inflicted on  the  credit               
union.                                                                          
     2. A  member of  the credit  union shall  be liable  to  the               
extent of  his share  contribution (his  share  of  assets).  The               
bylaws of  the credit  union may establish the member's liability               
which would  be as  much as  the fivefold  amount  of  his  share               
contribution (his share of assets).                                             
                                                                                
                            Chapter 5                                           
           Management of the Credit Union and Control                           
                        of its Activities                                       
                                                                                
     Article 26. Management Bodies                                              
     1. Bodies  of management  of the  credit union  shall be the               
general meeting,  the Supervisory  Board, the Board and the Loans               
Committee. Only  those members of the credit union who are of age               
may be members of the bodies of management.                                     
     2. The  credit union  may not form the Supervisory Board, if               
it has  less than 100 members. In such an instance, the bylaws of               
the  credit   union  must  specify  that  the  functions  of  the               
Supervisory Board shall be performed by the Board.                              
     3. The  Loans Committee  is a  mandatory managing  body of a               
credit union,  which must be formed irrespective of the number of               
members of the credit union.                                                    
     4. Upon  the decision  of the  general meeting of the credit               
union, the  administration of  the credit  union may be formed in               
the credit  union of  hired personnel.  In  the  event  that  the               
administration is  not formed  the  functions  thereof  shall  be               
fulfilled by the Board of the credit union.                                     
                                                                                
     Article 27. General Meeting                                                
     1. General meeting shall be the supreme managing body of the               
credit union.                                                                   
     2. It  shall be  within  the  exclusive  competence  of  the               
general meeting to:                                                             
     1) approve,  mend and  supplement the  bylaws of  the credit               
union;                                                                          
     2) approve the statutory report of the credit union;                       
     3) elect or remove from office members of Supervisory Board,               
the Board,  and the  Loans Committee  as well as the auditor, and               
from among  them accordingly,  chairpersons  of  the  Supervisory               
Board, the Board and the Loans Committee;                                       
     4) adopt a decision to expel a member from the credit union;               
                                                                                
                                                                                
     5) consider  complaints and  proposals of  the credit  union               
members concerning  the work  of the  supervisory Board  and  the               
Board;                                                                          
     6)  establish  the  minimum  and  maximum  amount  of  share               
contribution to  be paid by a member and the procedure of payment               
of share  contributions; approve  and change  the amount  of  the               
entrance fee;                                                                   
     7) establish  the special  purpose  of  loans  made  to  the               
members;                                                                        
     8)  fix   the   auditor's   salary   and   annual   payments               
(honorariums) from profit to the members of the managing bodies;                
     9) establish  the limit  of funds  that may  be allotted  as               
remuneration for  the work  of an  accounts expert or independent               
auditor;                                                                        
     10) fix the amount and procedure of payment of wages for the               
personnel employed in the credit union on a contractual basis;                  
     11)  approve   the  annual   accounts,  adopt  a  resolution               
concerning the  procedure  of  the  distribution  of  profit  and               
compensation for losses;                                                        
     12) determine  the amount  of  the  share  capital,  reserve               
capital, deposit  insurance capital  and other  required capital,               
decide to  compensate with funds from the reserve capital for the               
losses which  are not  related to  the fixed assets of the credit               
union;                                                                          
     13) provide  for the  insurance of  deposits received in the               
credit union, decide to compensate for the losses incurred by the               
depositors with  the deposit  insurance capital  funds  or  other               
capital funds;                                                                  
     14) adopt a resolution to reorganise or liquidate the credit               
union;                                                                          
     15) resolve  the issue  concerning adhesion  of  the  credit               
union to  the association of the credit union and withdrawal from               
it;                                                                             
     16) evaluate  the reports  of the  bodies of  management and               
control of the credit union;                                                    
     17) during  the meeting,  if requested  by  the  Supervisory               
Board, resolve  issues within  the competence  of the Supervisory               
Board; and                                                                      
     18) resolve  other issues reserved for the competence of the               
general meeting by the bylaws.                                                  
                                                                                
     Article 28. Grounds for Calling the General Meeting                        
     1. General  meetings shall  be called  by the  Board of  the               
credit union.                                                                   
     2. The right of initiative to call a special general meeting               
shall belong  to the  Supervisory Board,  the  Board,  the  Loans               
Committee and  a group  of no less than 1/4 of the members of the               
credit union. A special general meeting must be called if :                     
     1) it  is planned  to reorganise  or  liquidate  the  credit               
union;                                                                          
     2) the  credit union  is not  in the position to satisfy its               
financial liabilities or is declared insolvent;                                 
     3) it  is requested  by the  members of the credit union who               
have the  right of  initiative, or  the Supervisory Board, or the               
Board, or the Loans Committee;                                                  
     4) on  the occurrence of the event provided for in Par. 2 of               
Article 34 of this Law; and                                                     
     5) a  decision of the court to call a meeting of the members               
comes into effect.                                                              
     3. The  general meeting  of the  credit union members may be               
called on the decision of the court if:                                         
     1) a  regular general  meeting has  not been called within 3               
months of  the end of the business year and a member (members) of               
the credit union appealed to court for this reason;                             
                                                                                
                                                                                
     2) the  initiators of  a special  general meeting  appeal to               
court upon the failure of the Board to call such a meeting within               
the time period set out in Par. 1 of Article 30 of this Law; and                
     3) creditors  appeal to  court if  a special  meeting is not               
called in the cases provided for in item 2 of Par. 2 hereof.                    
                                                                                
     Article 29. Quorum of the General Meeting and Adoption                     
               of Resolutions                                                   
     1. The  general meeting  may  adopt  resolutions  if  it  is               
attended by more than 1/2 of all the members of the credit union.               
If the  meeting does  not have a quorum, a repeat meeting must be               
called, which  shall have  the right  to adopt resolutions on all               
the issues  on the  agenda even without the quorum , but if it is               
attended by  at least 1/3 of all the members of the credit union.               
If the  repeat meeting  is attended  by less  than 1/3 of all the               
members of  the credit  union, the meeting must be called for the               
third time  and the  resolutions  in  it  shall  may  be  adopted               
according to the agenda and even without a quorum.                              
     2. The  members of  the  credit  union  (or  their  proxies)               
attending the  general meeting  shall be registered by signing in               
the register  list which shall be signed by the presiding officer               
and the  secretary of the meeting. Head of the administration who               
is not  a member  of the  credit union  may  attend  the  meeting               
without the  right to  vote. A  member of the credit union who is               
not attending  the  general  meeting  but  who  has  familiarised               
himself with  the agenda  and the draft resolution may inform the               
general meeting  in writing  whether he is "for" or "against" it.               
Such communications  shall be  included  in  the  quorum  of  the               
meeting and  added to the voting results , but only of that issue               
on which the member voted in writing.                                           
     3. Voting  at the  general meeting  shall  be  open.  Secret               
voting shall  be held  provided 1/4  of the members of the credit               
union attending the meeting so request.                                         
     4. Resolutions  of the  general meeting of the credit unions               
shall be adopted by a simple majority vote. In the event of a tie               
vote ,  the presiding officer shall have a casting vote. In cases               
specified in  items 1, 4, 6, 7, 14 and 15 of Par. 2 of Article 27               
of this  Law ,  the adoption  of resolutions shall require 2/3 of               
votes of those attending the meeting.                                           
     5. The minutes of the general meeting shall be signed by the               
presiding officer,  the secretary  and at least one member of the               
credit union  authorised by  the general  meeting.  The  list  of               
members attending the meeting must be attached to the minutes and               
if the  voting was in writing, the ballot papers must be attached               
as well, and kept till the end of the next general meeting.                     
                                                                                
     Article 30. Procedure for Convening of General Meetings                    
     1. A  regular general meeting shall be convened by the Board               
of the credit union every year, but no later than within 3 months               
after the  close of  a business year. The Board must notify about               
the general meeting according to the procedure established by the               
bylaws of  the credit  union and  at least, 20 days in advance of               
the date on which the meeting is to be held.                                    
     2. The persons who request that a special meeting be called,               
shall submit  an application to the Board, indicating the reasons               
and objectives  for calling  such a  meeting and  a draft  agenda               
thereof .  Upon receipt of an application, the Board must, within               
10 days  from the  submission  of  the  application,  notify  the               
members of  the credit  union about  the  calling  of  a  special               
general  meeting  and  no  later  than  within  20  days  of  the               
announcement thereof, convene said meeting.                                     
     3. A  repeat general  meeting of  the members  of the credit               
union must  be called  within 10  days of  the day of the meeting               
which failed  to be  convened and the members of the credit union               
must be notified thereof at least 5 days in advance of the repeat               
meeting.                                                                        
     4. A  general meeting  may be  called without  observing the               
above requirements,  provided that  all the members of the credit               
union give their consent thereto.                                               
     5. The notice about the general meeting must specify :                     
     1) the name and address of the credit union;                               
     2) the place, date and time of the meeting; and                            
     3) the agenda of the meeting and draft resolutions.                        
     6. The  members of  the  credit  union  must  be  given  the               
opportunity  to   familiarise  themselves   with  the   documents               
concerning the agenda of the meeting at least 5 days prior to the               
meeting.                                                                        
     7. The  chairperson of  the general meeting shall be elected               
each time,  from the  members of  the credit union, and until his               
election, the  meeting shall  be presided over by the chairperson               
of the  Supervisory Board  unless the  bylaws of the credit union               
provide otherwise.                                                              
     8.  The   general  meeting  shall  have  no  right  to  pass               
resolutions on issues which are not on the agenda, if the meeting               
is not  attended by all the members of the credit union. Only the               
agenda of  a meeting which failed to take place shall be valid at               
the repeat meeting.                                                             
                                                                                
     Article 31. Invalidness of Resolutions of General                          
               Meeting Members                                                  
     1. Per  declaration of  credit  union  members  or  head  of               
management, the resolutions of the general meeting may, according               
to the procedure prescribed by court, be declared invalid, should               
they contradict  this Law,  the credit  union statutes  and other               
Republic of Lithuania laws.                                                     
     2. A resolution of the general meeting may be submitted as a               
complaint before the court, no later than 30 days within the date               
of the  adoption of  the resolution,  or from  the day,  when the               
person learned or was to learn of the adoption of the resolution.               
                                                                                
     Article 32. The Supervisory Board                                          
     1.  The  Supervisory  Board  is  the  body  supervising  the               
legality and expediency of the activities of the credit union.                  
     2. The number of the members of the Supervisory Board, which               
may not be less than 3 and no more than 9, shall be prescribed by               
the bylaws  of the  credit union.  The Supervisory  Board and its               
Chairperson shall  be elected  by the  general meeting for a term               
not to exceed 3 years.                                                          
     3. A  member of  the Board  of the credit union, a member of               
the Loans  Committee or  an auditor  may not  be members  of  the               
Supervisory Board.  A member  of the  Supervisory Board  may  not               
assign or delegate his functions to other persons.                              
     4. Members  of the Supervisory Board may be paid honorariums               
for their work.                                                                 
                                                                                
     Article 33. The Powers of the Supervisory Board                            
     1. The Supervisory Board shall:                                            
     1) monitor how the Board and/or the Administration implement               
the resolutions of the general meeting;                                         
     2) analyse the activities of the credit union and its Board,               
the  accumulation   and  utilisation   of  financial   resources,               
remuneration for work, and financial condition;                                 
     3) present  to the general meeting the report containing its               
findings and proposals;                                                         
     4) warn  the Board  of the credit union, Loans Committee, or               
members  of  the  credit  union,  that  they  should  immediately               
eliminate violations of activities in the credit union, or notify               
the general meeting thereof;                                                    
     5)  present  to  the  general  meeting  their  findings  and               
proposals concerning  the draft  annual accounting balance sheet,               
the draft distribution of profit and compensation for losses;                   
                                                                                
     6) represent  the credit  union in  court  proceedings  when               
disputes between  the credit  union and its Board, members of the               
credit union and its Board are settled;                                         
     7)  submit   proposals  to  the  Board  to  revoke  unlawful               
resolutions adopted  by it  or request  that the  general meeting               
should revoke unlawful resolutions adopted by the Board;                        
     8) may  refer issues that are within their competence to the               
general meeting for resolution; and                                             
     9) resolve other issues provided for in the bylaws.                        
     2. The  Supervisory Board  shall have the right to invite an               
expert or  an independent  auditor  to  inspect  and  assess  the               
accounting balance sheet of the credit union and other accounts.                
     3. On the request of the Supervisory Board, the Board of the               
credit union  and /or  the Administration  must present documents               
concerning the activities of the credit union.                                  
     4. The  meeting of the Supervisory Board shall be lawful, if               
it is  attended by more than half of its members. The resolutions               
shall be  adopted by a simple majority vote of those present. The               
members of  the Supervisory Board shall have equal rights. During               
voting, each  member shall  have one  vote. In the event of a tie               
vote, the chairperson shall have the casting vote.                              
     5.  The  Supervisory  Board  shall  work  according  to  the               
procedure established by its work regulations.                                  
                                                                                
     Article 34. The Board of the Credit Union                                  
     1. The  Board is a collegiate executive-managing body of the               
credit  union  the  activities  of  which  are  directed  by  its               
chairperson. The  number of  the Board members, which must be odd               
and at  least 3, shall be established by the bylaws of the credit               
union. The  members of the credit union and its chairperson shall               
be elected  by the  general meeting  of the  credit union for the               
term not  exceeding 3  years. Members of the Supervisory Board of               
the credit  union, members  of the Loans Committee or the auditor               
may not be a member of the Board or its chairperson.                            
     2. In  addition to  the main  members of  the Board, no more               
than 3  candidates may  be elected  for the same term, which upon               
the decrease  of the  number of  the Board members, shall replace               
the Board  members  who  may  not  serve  in  the  office.  These               
candidates shall  have the  right to  attend the  Board  meetings               
without the right to vote.                                                      
     3. If  the number  of the  members of the Board becomes less               
than the  minimum number of members established by the bylaws and               
there is  no possibility  to replace  the lacking  members of the               
Board with  the elected  candidates, the remaining members of the               
Board must convene a special meeting.                                           
     4. Members  of the  Board may  be paid honorariums for their               
work on the Board.                                                              
                                                                                
     Article 35. Powers of the Board                                            
     1. The  powers  of  the  Board  and  its  members  shall  be               
established by  the bylaws of the credit union, and the procedure               
of its work by the work regulations adopted by it.                              
     2. The Board shall :                                                       
     1) admit  new members  into the  credit union, suspend their               
membership in  the credit  union in  cases specified  in Par.1 of               
Article 22 hereof;                                                              
     2) represent  the credit  union in court, arbitration bodies               
and other institutions;                                                         
     3) organise and convene general meetings;                                  
     4) set interest rate on deposits and on loans;                             
     5) enter  into employment  contracts with hired employees in               
the name of the credit union;                                                   
     6) enter  into civil  transactions with  the members  of the               
credit union and third parties in the name of the credit union;                 
     7) maintain the register of members of the credit union;                   
                                                                                
     8) consider  the material  submitted  by  the  auditor,  the               
activities of  the administration ( if there is such) and present               
its findings to the Supervisory Board or the general meeting ;                  
     9) prepare  drafts of accounting balance sheet, distribution               
of profit,  procedure for  the compensation  for losses and other               
drafts of accounts;                                                             
     10) consider  the applications  of the members of the credit               
union, concerning  the transfer  of their shares and shall notify               
said member  about the  consent or  prohibition to  transfer  his               
share to  another person  no later  than within  1 month from the               
receipt of the application;                                                     
     11) invest  the funds  of the  credit union,  which are  not               
immediately  required,   into  the   securities  issued   by  the               
government, if it is permitted under the bylaws;                                
     12) lend  the funds  of the  credit union  , which  are  not               
immediately required,  to other  credit unions or Associations of               
Credit Unions  as well  as borrow  money  from  them,  if  it  is               
permitted under the bylaws;                                                     
     13) settle  accounts with  the former  members of the credit               
union on  terms and  conditions specified  in Article  23 of this               
Law;                                                                            
     14) inform,  in due  time, the supervision institution about               
the reduction  of the  minimum number of the members or the share               
capital and  submit  other  data  required  by  this  institution               
according to  the rules  of the  supervision of the activities of               
credit unions, approved by the Bank of Lithuania; and                           
     15) consider  other issues  concerning  the  activities  and               
management of  the credit union that are not within the exclusive               
competence of  the general meeting, the Supervisory Board or Loan               
Committee.                                                                      
     3. The  Board shall  adopt resolutions on issues assigned to               
its competence  by this  Law or bylaws. Members of the Board must               
keep the secrets of the credit union confidential. Members of the               
Board shall have equal voting rights. In the event of a tie vote,               
the chairperson of the Board shall have a casting vote.                         
                                                                                
     Article 36. Loans Committee                                                
     1. Loans  Committee shall  be elected by the general meeting               
from at  least three  members of the credit union for the term of               
three years.  A member  of the  Supervisory Board  of the  credit               
union , the Board or the auditor may not be a member of the Loans               
Committee.                                                                      
     2. Loans  Committee shall  consider the  applications of the               
members of  the credit  union, concerning members loans. It shall               
decide whether  the loan requested by the member is in compliance               
with the  purposes set  out in  the bylaws, shall provide for the               
terms and  conditions of its disbursement and repayment and shall               
submit proposals  concerning these  issues to  the Board  of  the               
credit union.  The Board  may not  conclude members loan contract               
with a  member of the credit union, if it was not approved by the               
Loans Committee.                                                                
     3. For  its activities  the Loans Committee shall account to               
the general  meeting in  the manner prescribed by the bylaws, but               
at least once a year.                                                           
     4. Members of Loans Committee may be paid honorariums.                     
                                                                                
     Article 37. Liability of the Members of the Supervisory                    
               Board, the Board and the Loans Committee                         
     1. For the damage caused to the members of the credit union,               
the members  of the  Supervisory Board,  the Board  and the Loans               
Committee shall be liable under the Civil Code of the Republic of               
Lithuania.                                                                      
     2. Only  those members  of the  Supervisory Board, the Board               
and Loans  Committee shall  be released  from the  obligation  to               
compensate for the losses, who voted against the resolutions that               
are not  in compliance  with this  Law, the  bylaws of the credit               
union or  other laws  of the  Republic of  Lithuania, or  did not               
attend the meeting at which such resolutions were passed. In this               
event, they  must present  a written  protest  to  the  presiding               
officer within  7 days  after they learnt or ought to have learnt               
about such resolutions.                                                         
                                                                                
     Article 38. Auditor of the Credit Union                                    
     1. The credit union must have at least one auditor who shall               
be elected  by the  general meeting  for a  term set  out in  the               
bylaws of  the credit  union but  not exceeding  three years. The               
auditor's office  may be  held by  a member  of the  credit union               
possessing a  diploma certifying  his  proper  qualifications.  A               
member of the Supervisory Board, the Board and Loans Committee or               
a chief  financier (accountant)  employed in the credit union may               
not be the auditor.                                                             
     2. If  it is  not possible  to elect  the auditor  from  the               
members of  the credit  union, the  general meeting shall approve               
the independent  auditor, which  the Supervisory Board recommends               
to hire under contract.                                                         
     3. The  auditor  (independent  auditor)  shall  control  the               
financial- business  activities of  the  credit  union,  and  the               
implementation of the resolutions passed by the general meeting .               
For the  performance of  his duties,  the auditor  shall have the               
right to  demand to  present  to  him  all  necessary  books  and               
accounts.                                                                       
     4. The  auditor of  the credit  union (independent  auditor)               
shall present  to the  general meeting annual report on the audit               
of financial-business  activities. He  must immediately report to               
the Board  and the Supervisory Board the violations determined in               
the financial-  business activities of the credit union, and keep               
the secrets of the credit union confidential.                                   
     5. The elected auditor may be paid remuneration.                           
     6. The  auditor of  the credit  union (independent  auditor)               
shall be  liable under  and in  accordance with  the laws  of the               
Republic of  Lithuania for  the  unsatisfactory  control  of  the               
credit  union   and  the   concealment  of  deficiencies  in  its               
activities.                                                                     
                                                                                
     Article 39. The Administration                                             
     If the  general meeting  of the credit union decides to form               
the Administration  of the credit union, the relationship between               
the employees of the credit union and the Administration shall be               
regulated by  the Law  on Employment  Contract of the Republic of               
Lithuania and the Labour Code.                                                  
                                                                                
                                                                                
                                                                                
                            Chapter 6                                           
          CAPITAL OF THE CREDIT UNION, MEMBER'S SHARE,                          
          INCOME AND EXPENDITURE, FINANCIAL ACCOUNTING                          
                           AND CONTROL                                          
                                                                                
                                                                                
     Article 40. Capital Structure of the Credit Union                          
     1. The credit union's ownership capital shall consist of the               
share capital,  reserves, insurance  of deposits  and  additional               
types of capital.                                                               
     2. The  procedure  for  the  formation  and  application  of               
deposit  insurance   capital  and  additional  capital  shall  be               
established by the bylaws of the credit union.                                  
                                                                                
     Article 41. Share Capital of the Credit Union                              
     1. The  credit union's minimum share capital may not be less               
than Lt  15000. If  the share  capital is less , the credit union               
supervision institution  may cancel  the licence  issued  to  the               
credit union.                                                                   
     2. The share capital of the credit union shall be formed out               
of the  cash contributions  of the  founders and  members of  the               
credit union, paid for their shares.                                            
     3. Share  capital shall  be formed  taking into  account the               
required funds, which the credit union decides to invest into the               
credit union's  assets -  premises, equipment and stock necessary               
for the  commencement  and  development  of  the  credit  union's               
activities.                                                                     
     4. It  shall be  prohibited to form the share capital of the               
credit union  from the  funds borrowed by the credit union or the               
property mortgaged to it.                                                       
                                                                                
     Article 42. Reserves of the Credit Union                                   
     1. The  credit union shall form reserves which shall be used               
for covering the losses of the credit union.                                    
     2. The  reserves shall  be formed  out of  the profit of the               
credit union,  which remains  after the  payment of taxes, having               
deducted from  this profit  at least  20 per cent annually, until               
the reserves shall account for 10 per cent of the amount of long-               
term investments  and extended  loans, determined on the basis of               
the annual accounting balance-sheet .                                           
     3. When  a part  of the  reserves has been used for covering               
losses of  the credit  union, it shall be again deducted from the               
profit so that the reserves would be in the established amount.                 
     4. Only  losses which  are attributed  to losses incurred by               
reason  of   such  non-liquid   assets  as  loans  and  long-term               
investments, may  be covered out of the reserves. Reserves may be               
applied for  covering other  losses only by the resolution of the               
general meeting.                                                                
                                                                                
     Article 43. The Share (Shares) of a Member of the                          
               Credit Union                                                     
     1. A share (shares) of the credit union may only be the cash               
contribution.                                                                   
     2. The  amount of  the share,  its payment and liability for               
the non-payment  shall be  set out  in the  bylaws of  the credit               
union.                                                                          
     3. The  initial contribution  for shares must be at least Lt               
300.                                                                            
     4. Members  of the  credit union shall dispose of shares and               
their share  in the profit in accordance with this and other laws               
of the Republic of Lithuania.                                                   
     5. It shall be prohibited to take recourse upon the member's               
contributions, with  the exception  of  cases  where  the  debtor               
ceases to be a member of the credit union.                                      
                                                                                
     Article 44. Distribution of Profit                                         
     1. The profit of the credit union shall consist of the funds               
which remain  after deduction  of  credit  union's  expenses  and               
losses of  the year from the annual income of the credit union of               
the same year.                                                                  
     2. The  profit must  be distributed  no later  than within 3               
months after  the close  of the  financial  year  and  after  the               
approval of  the annual balance sheet in accordance with this and               
other laws of the Republic of Lithuania.                                        
     3. The resolution on the distribution of profit must state:                
     1) the amount of profit;                                                   
     2) taxes;                                                                  
     3) allocations to the reserves;                                            
     4) allocations  to other  types of  capital  of  the  credit               
union;                                                                          
     5)  the   share  of   profit  allocated   to   the   members               
(shareholding members)  in the form of dividend or any other form               
prescribed by the bylaws of the credit union;                                   
     6) honorariums  to the  members of  the managing  bodies and               
managers; and                                                                   
     7) retained profit.                                                        
     4. Dividends  to the  members of  the credit  union shall be               
paid from the profit which remains after the payment of taxes and               
after the  deduction of  funds to the reserves and other types of               
capital provided for in the bylaws.                                             
     5. The  profit which  remains after  the allocations  to the               
types of  capital of  the credit union may not be paid out in the               
form of  dividends and  honorariums or transferred to the members               
of the  credit union,  founders or members of the managing bodies               
in any  other manner,  if the  share capital  of the credit union               
becomes less  than the  fixed minimum  capital prescribed by this               
Law.                                                                            
                                                                                
     Article 45. Accounting, Reporting and Control of the                       
               Credit Union                                                     
     1. The  financial year  of the  credit union  shall coincide               
with the  calendar year.  If the credit union has been registered               
after the commencement of the business year, then the last day of               
the calendar  year shall  be considered  as the  end of the first               
business year.  If the  credit union  has been  removed from  the               
register before  the close  of the  business year,  then the last               
business year  shall end  on the day the credit union was removed               
from the register.                                                              
     2. Accounting,  reporting and  financial  control  shall  be               
carried out  in accordance  with the  laws  of  the  Republic  of               
Lithuania and  legal acts approved by the resolutions of the Bank               
of Lithuania.                                                                   
     3. Within  three months  after the  close of  the  financial               
year, the  credit union  shall prepare annual financial statement               
of the credit union and submit it to the Bank of Lithuania.                     
                                                                                
     Article 46. Standards Restricting the Risk of Credit                       
               Union's Activities                                               
     The Bank  of Lithuania may establish the following standards               
for credit unions:                                                              
     1) liquidity ratios;                                                       
     2) maximum open position in foreign exchange; and                          
     3) capital adequacy ratio.                                                 
                                                                                
                            Chapter 7                                           
         SUPERVISION OF THE ACTIVITIES OF CREDIT UNIONS                         
                                                                                
     Article 47. Sanctions Applied by the Supervision                           
               Institution                                                      
     1. Supervision  institution  of  the  activities  of  credit               
unions shall  have the  right to  apply the  following  sanctions               
against the  credit union  and its  managers for the violation of               
this and  other laws and legal acts, regulating the activities of               
credit unions:                                                                  
     1) to  warn  the  credit  union  for  the  shortcomings  and               
violations and to set the term for their elimination;                           
     2) to impose administrative penalties on the managers of the               
credit union  for  the  violation  of  this  Law  in  the  manner               
prescribed by law;                                                              
     3) to  suspend or  revoke the  licence  to  perform  one  or               
several operations; and                                                         
     4) to  suspend or  revoke the  licence issued  to the credit               
union to  engage in the activities specified in Article 7 of this               
Law.                                                                            
     2. The type of sanction and the terms shall be determined by               
the supervision institution, taking into consideration the nature               
of the violation.                                                               
     3. The  resolution of the supervision institution concerning               
the application  of a  sanction against  the credit  union or its               
managers may  be appealed  against in  a court  of law within one               
month from  the date  of  the  adoption  of  said  resolution  in               
accordance with  the procedure  established by  the laws  of  the               
Republic of Lithuania.                                                          
                                                                                
                                                                                
                            Chapter 8                                           
       REORGANISATION AND LIQUIDATION OF THE CREDIT UNION                       
                                                                                
     Article 48. Reorganisation of the Credit Union                             
     1. Reorganisation  means the  restructuring  of  the  credit               
union as  a legal  entity, without  liquidation  procedures.  The               
credit union  (or unions),  newly established  in the  process of               
reorganisation  and   continuing  their   activities  after   the               
reorganisation, shall  be the  successors to  all the  rights and               
obligations of the reorganised credit union.                                    
     2. Credit unions may be reorganised in the following ways:                 
     1) by merger or consolidation of credit unions;                            
     2) by division of credit unions.                                           
     3.The reorganisation  of the  credit  unions  by  merger  or               
consolidation shall be carried out by :                                         
     1)  joining   to  the  credit  union,  which  continues  its               
activities,  of   other  credit   unions  which  terminate  their               
activities as legal entities;                                                   
     2) merging  several  credit  unions  which  terminate  their               
activities as  legal entities  to form  a  newly  created  credit               
union.                                                                          
     4. The credit unions shall merge in the manner prescribed by               
the Law on Competition of the Republic of Lithuania.                            
     5.The reorganisation  of credit  unions by  way of  division               
shall be carried out by:                                                        
     1) conveying  the rights and obligations of the credit union               
which terminates  its activities,  to  the  credit  unions  which               
continue their activities;                                                      
     2) by  establishing new credit unions from the credit unions               
which terminate their activities;                                               
     3)  by  separating  a  part  from  the  credit  union  which               
continues its  activities and  merging this  part with  the other               
credit  union,  or  from  which  a  new  credit  union  is  being               
established.                                                                    
     6. The credit unions that are being reorganised must prepare               
reorganisation plans which must state:                                          
     1) name  and address  of each  credit union  which is  being               
reorganised;                                                                    
     2) the number of its members;                                              
     3) its share capital;                                                      
     4) valuation of its deposits, extended loans and assets;                   
     5) terms and conditions of the assumption of liabilities;                  
     6) the  criteria and  rules for  the management of shares of               
members in  the  credit  unions  which  will  operate  after  the               
reorganisation;                                                                 
     7) criteria  according to  which the deposits of members and               
loans extended  to members  before and  after the  reorganisation               
shall be managed;                                                               
     8) other property and non-property rights and obligations of               
the members  after the  reorganisation of  the credit  union, the               
terms for the acquisition of these rights and obligations; and                  
     9) the  rights accorded  to the managing bodies and auditors               
(experts) of  the  credit  unions  during  the  period  of  their               
reorganisation.                                                                 
     7. The  bylaws of  each credit  union that will be operating               
after the reorganisation must be also prepared alongside with the               
reorganisation plan.                                                            
     8. The Board of each credit union which is being reorganised               
shall prepare  reorganisation plan for the evaluation of which an               
independent auditor  (expert) may  be invited. He must present in               
writing ,  the valuation  and  his  conclusions  to  the  general               
meeting.                                                                        
     9. Each  credit union must make a public announcement of the               
planned reorganisation  no later  than 20 days before the date on               
which  the   general  meeting   is  to  be  held,  at  which  the               
reorganisation shall  be considered.  During  this  period,  each               
member of  the credit  union shall  be  entitled  to  familiarise               
himself with the reorganisation plan and the evaluation thereof.                
     10. The  resolution to  reorganise the  credit union  may be               
passed and  concurrently the  reorganisation plan  and the bylaws               
may be  approved by  at least 2/3 of all the votes of the members               
of the credit union which is being reorganised. The resolution of               
the general  meeting concerning  the refusal  to  reorganise  the               
credit union may be appealed against in court by no less than 1/5               
of its members.                                                                 
     11. The  reorganisation of  the credit union in the event of               
bankruptcy thereof  means the  restructuring of the credit union,               
in which  case the  appointed administrator  splits up the credit               
union, or  sells a  part of  the assets  thereof to  other credit               
unions, in  order to  ensure the solvency of the credit union and               
its ability  to satisfy  the creditor's  claims. In  the event of               
bankruptcy, the  credit union  must be  reorganised in the manner               
prescribed by the Law on Enterprise Bankruptcy of the Republic of               
Lithuania  and   other  laws   and  legal  acts  regulating  bank               
bankruptcy procedure.                                                           
     12.Each member  of the credit union and its creditor must be               
given a  written notice  about the  reorganisation of  the credit               
union.                                                                          
     13. The  bylaws of  the credit union that will operate after               
the reorganisation  shall be  registered after  the first general               
meeting. Credit  unions which are planned to be reorganised shall               
be registered  in the manner prescribed by Articles 14,15, and 16               
of this Law.                                                                    
     14. Upon  the reorganisation of the credit union, its assets               
shall be conveyed to:                                                           
     1) in  the event of merger or division - newly formed credit               
union;                                                                          
     2) in  the event  of joining one credit union to the other -               
to the latter.                                                                  
     15. The  conveyance of  assets shall  become effective as of               
the  date   of  signing   the  conveyance   instruments,   unless               
reorganisation documents provide otherwise.                                     
                                                                                
     Article 49. Liquidation of the Credit Union                                
     The credit union may be liquidated on the following grounds:               
     1) the time of the credit union duration has expired;                      
     2) the minimum number of its members, specified in Par. 2 of               
Article 17  of this  Law, has  decreased to  the extent  that the               
supervision institution  prohibits it  to continue operation with               
such membership;                                                                
     3) the  share capital  has decreased below the minimum level               
set out  in Par.1  of Article  41 of this Law and it has not been               
re-established  by  the  time  limit  fixed  by  the  supervision               
institution;                                                                    
     4) the  Registrar of the Register of Enterprises has adopted               
the decision to cancel the registration of the credit union.                    
     5) the  court's decision  to liquidate  the bankrupt  credit               
union has come into effect;                                                     
     6) the court has passed the decision to liquidate the credit               
union for violation of the laws of the Republic of Lithuania; and               
     7)  the   general  meeting  has  passed  the  resolution  to               
liquidate the  credit union,  provided no  bankruptcy proceedings               
have been instituted against the credit union.                                  
     2.  Having  decided  to  liquidate  the  credit  union,  the               
liquidator shall  be  appointed  on  the  recommendation  of  the               
supervision institution.  The managing bodies of the credit union               
shall loose  their powers  as of the date of the appointment of a               
liquidator, who shall discharge their functions.                                
     3. The  liquidator shall  notify the  institution which  has               
registered the credit union and shall notify the Registrar of the               
Register of  Enterprises about  the change  in the  status of the               
credit union and about the liquidator.                                          
     After the credit union acquires the status of a credit union               
in liquidation,  the words  "in liquidation"  shall  precede  its               
name.                                                                           
     4. The  credit union in liquidation may enter only into such               
contracts that  are associated  with its  liquidation, as well as               
contracts which are provided for in the liquidation resolution.                 
     5. The  liquidation of  the credit  union shall be announced               
publicly, at  least 3 times at no shorter than 2-month intervals,               
or each member and creditor shall be personally notified thereof.               
     6. The  liquidation procedure  of the  credit union shall be               
carried out  in accordance  with the  laws  of  the  Republic  of               
Lithuania and other legal acts, regulating bank liquidation.                    
                                                                                
     Article 50. Bankruptcy Procedure of the Credit Union                       
     Institution of  bankruptcy proceedings, its investigation in               
court and  liquidation by  reason of  bankruptcy shall be carried               
out in  accordance with  the procedure  established by the Law on               
Commercial Banks of the Republic of Lithuania.                                  
                                                                                
                                                                                
                            Chapter 9                                           
                  ASSOCIATIONS OF CREDIT UNIONS                                 
                                                                                
          Article 51. Establishment and Activities of the                       
                    Associations of Credit Unions                               
     1. The Associations of Credit Unions is a voluntary union of               
credit unions that co-ordinates and fulfils the tasks assigned by               
the members  of the  association of  credit unions and represents               
their interests  through  its  activities.  The  Associations  of               
Credit Unions  may be  formed according  to the  territorial  and               
other criteria provided for in Par.4 of Article 17 of this Law.                 
     2. Credit unions may join into Associations of Credit Unions               
in accordance  with the  laws of  the Republic  of Lithuania  and               
other legal acts.                                                               
     3. The  Associations of  Credit Unions  shall  become  legal               
entities as  of the date of its registration. The property of the               
association  shall   consist  of   the  material   and  financial               
contributions made  by the  members of  the  Association  of  the               
Credit  Union,   proceeds  from  the  services  rendered  by  the               
Association, charity and other voluntary donations.                             
     4. The  Association of  Credit Unions shall be registered in               
accordance with  the procedure  established by  the  Law  on  the               
Register of  Enterprises and  shall operate  under  their  bylaws               
approved by  the assembly  of its delegates (proxies), conference               
or meetings.                                                                    
     5.The bylaws of the Association of Credit Unions must state:               
                                                                                
     1) the name and address;                                                   
     2) objectives of its activities;                                           
     3) rights, duties, and liabilities of its members;                         
     4) managing bodies and their powers;                                       
     5) auditing commission;                                                    
     6) assets and funds;                                                       
     7) accounting and reporting; and                                           
     8) procedure  for the  termination  of  the  activities  and               
liquidation.                                                                    
     The bylaws  may contain  other provisions  if  they  are  in               
compliance with the laws of the Republic of Lithuania.                          
     6. The  Association of the Credit Union may apply its income               
only for  the purposes  of the  implementation of  the goals  set               
forth in  the  bylaws.  This  income  is  not  distributed  among               
association members as profit.                                                  
     7. The Association of Credit Unions shall gather information               
about credit  unions, analyse  and assess information provided by               
its members,  analyse and  co-ordinate their  activities, see  to               
their financial stability and perspectives for the application of               
the funds which are not immediately required, study the influence               
of the  market on  the activities of the credit unions, represent               
the interests  of their  members in  state power  and  government               
institutions; provide  assistance on  the methods  of management,               
audit, taxes,  etc., take part in the activities of international               
credit unions  and cooperate  with similar credit unions in other               
countries, and represent the interests of the credit unions on an               
international level.                                                            
     8. The  Association of Credit Unions shall not be liable for               
the obligations  of their  members and their members shall not be               
liable for  the obligations  of the  Association  of  the  Credit               
Union.                                                                          
                                                                                
                                                                                
                           Chapter 10                                           
                        FINAL PROVISIONS                                        
                                                                                
                                                                                
     Article 52. Tax Allowances and the Supervision of the                      
               Activities of Credit Unions                                      
     1. Till 31 December 1997, credit unions shall be exempt from               
the Profit  Tax of  Legal Persons  during the  first two years of               
their  operation,   calculating  from   the   moment   of   their               
registration according  to the procedure established by this Law.               
Since 1  January 1998  or if  by that  time two  years will  have               
elapsed from  the date  of the  registration of the credit union,               
profit of  the credit union shall be subject to the profit tax of               
legal persons , the rate of which shall be reduced by 70 percent.               
     2. Other  tax allowances shall apply to the credit unions in               
accordance with  the laws  of the Republic of Lithuania and other               
legal acts regulating taxation.                                                 
     3.  The   activities  of   all  credit   unions  and   their               
associations, registered  in the  Republic of Lithuania, shall be               
supervised by  the Bank of Lithuania until a separate supervision               
institution is created.                                                         
                                                                                
     I promulgate  this Law  passed by the Seimas of the Republic               
of Lithuania                                                                    
                                                                                
                                                                                
Algirdas Brazauskas                                                             
President of the Republic                                                       
Vilnius                                                                         
21 February 1995                                                                
No. I-796