REPUBLIC OF LITHUANIA
LAW
ON
THE ESTABLISHMENT OF THE LITHUANIAN DEVELOPMENT BANK AND
ON THE APPROVAL OF ITS STATUTE
The Seimas of the Republic of Lithuania,
on the basis of the Joint Declaration of Ministers from
Denmark, Finland, Iceland, Norway, Sweden, Estonia, Latvia and
Lithuania on the Establishment of a Baltic Investment Program
for Small and Medium-Sized Enterprises in Estonia, Latvia and
Lithuania, done in Helsinki on 4 March 1992, and
the Memorandum of Understanding between the Government of
the Republic of Lithuania, the European Bank for Reconstruction
and Development, and the Nordic Investment Bank, done in Vilnius
on 28 June 1993
hereby passes this Law:
1. To approve the Statute of the Lithuanian Development
Bank.
2. To establish that in case of conflict between the
Statutes of the Lithuanian Development Bank and the laws and
other standard acts of the Republic of Lithuania, the provisions
of the Statutes of the Lithuanian Development Bank shall
prevail; and
3. To propose to the Government of the Republic of Lithuania
to take part in the establishment of the Lithuanian Development
Bank.
I promulgate this Law passed by the Seimas of the Republic
of Lithuania.
ALGIRDAS BRAZAUSKAS
President
of the Republic
Vilnius
14 December 1993
No. I-335
Appendix to the
Law of the Republic of Lithuania
of 14 December 1993 No. I-335
STATUTE OF THE LITHUANIAN DEVELOPMENT BANK
CHAPTER 1
GENERAL PROVISIONS
Article 1
The Lithuanian Development Bank (LDB) is a stock investment
bank to be set up by the Government of Lithuania and the
European Bank for Reconstruction and Development (EBRD), with
possible participation of other Lithuanian and foreign
shareholders.
The LDB is guided by the laws of the Republic of Lithuania,
this Statute and international banking principles.
The LDB is a legal person operating in an independent and
autonomous manner. The name of the Bank is:
in Lithuanian: Lietuvos Vystymo Bankas (abbreviated form -
LVB),
in English: Lithuanian Development Bank (abbreviated form -
LDB).
The seat of the Bank is located in Vilnius.
Article 2
The LDB shall be established to promote the economic
development of the Republic of Lithuania. Its principal
activities shall be the financing of capital investment and
related permanent working capital requirements of financially
profitable and creditworthy private capital enterprises. In
exceptional cases the LDB may also channel resources to state
enterprise projects as a trustee or agent for third parties
without taking financial risk. In its activities the LDB shall
especially promote the establishment and development of small
and medium size enterprises and of a capital market in Lithuania.
It will only pursue such activities and in such manner as to earn
a commercial rate of return.
The LDB financing shall be provided for medium and long
term, short term loans may be granted only in exceptional cases
and with the assent of the Board of Directors.
Article 3
The LDB shall be liable for its obligations with all its
property.
The LDB shall not be liable for the obligations of the
state. The state is not liable for the obligations of the LDB,
with the exception of cases where the state undertakes such
obligations.
The LDB shall not be liable for the obligations of its
shareholders. The shareholders shall be liable for the
obligations of the LDB only to the extent of their commitments
to the Bank's capital, but not with their own property.
Article 4
The LDB shall guarantee the secrecy of its clients'
correspondent accounts and operations. The Board members,
President of the LDB, staff of the Bank, auditors and other
persons authorized to obtain such information shall be obliged
to maintain the secrecy of all information relating to customer
accounts and bank operations. Such information may be disclosed
only in cases stated by law.
Article 5
The LDB may open its affiliates and representative offices
in Lithuania and abroad.
Article 6
Upon its adoption by the Seimas, the Statute of the LDB
shall be registered with the Bank of Lithuania.
The LDB may commence activities:
upon receiving a license from the Bank of Lithuania and upon
the registration of the LDB in the Registration Book of the Bank
of Lithuania; and
upon presenting to the Bank of Lithuania the LDB auditor's
certification that the share capital has been paid-in in
accordance with the founding and subscription agreement.
The affiliates and representative offices of the LDB shall
commence their activities upon their registration in the
Registration Book of the Bank of Lithuania.
The licence shall be issued free of charge within 30 days
from submitting an application and all the requisite documents
to the Bank of Lithuania. The application shall be submitted
with the following:
1) the founding and subscription agreement between the
Government of the Republic of Lithuania and other possible
founders, covering:
- the Statute of the Bank,
- the names of the founders of the Bank and the address of
their offices,
- the amount of shares subscribed for by each founder, and
- the term during which all the shares must be paid for;
2) the minutes of the constitutive meeting of the
shareholders covering the elected members to the Board of
Directors and the appointed auditors of the Bank;
3) certification from the auditors that the subscribed share
capital has been paid-in;
4) name and address of the members to the Board of Directors
as well as their alternates;
5) name and address of the President of the Bank;
6) name and address of all persons authorized to sign on
behalf of the Bank; and
7) name and address of the affiliates and representative
offices of the LDB in Lithuania and abroad.
The LDB must present to the Bank of Lithuania for
registration all decisions of the shareholders to increase or
decrease the share capital of the LDB, to liquidate the LDB or
to appoint the liquidators, as well as all decisions to change
or supplement the documents and information set forth herein.
Article 7
The LDB shall pay the taxes in accordance with the Law on
Foreign Investments in the Republic of Lithuania and other laws
of the Republic of Lithuania.
CHAPTER 2
CAPITAL AND SHARES OF THE LDB
Article 8
The initial subscribed share capital of the LDB amounts to
ECU five (5) million. The share capital is divided into 50
ordinary registered shares with a par value of ECU 100,000 each.
Contributions to the share capital shall be made in
accordance with the procedure established in the founding and
subscription agreement in cash or in kind.
The value of in kind contributions must be duly verified by
independent experts and auditors of the Bank. The shares shall
be considered to be paid-in by in kind contributions after their
evaluation has been confirmed by the General Meeting of
Shareholders pursuing from the recommendations of the Board of
Directors.
Article 9
The share capital of the LDB may be increased as per
resolution of the General Meeting:
1) by issue and placement of new payable shares;
2) by transferring part of the restricted or unrestricted
reserves to the share capital and thereby increasing the par
value of a share or by issuing new free shares; and
3) by using the 1st and the 2nd methods simultaneously.
Article 10
The General Meeting of Shareholders shall determine the
conditions of subsequent issue of shares, the class and number
of shares issued when increasing the capital, subscription terms
and procedures. Subscribed shares must be paid-in within the
time schedule decided by the General Meeting of Shareholders but
within one year from the day of the subscription therefor.
Article 11
The reserve capital (restricted reserves) shall be formed by
deducting at least 10% of profits annually, until it has reached
the level determined by the General Meeting but no less than 1/4
of subscribed share capital. The reserve capital may be used only
to cover the losses or to increase the share capital.
Article 12
Unrestricted reserves may be formed from the profits left
after the deductions in accordance with Article 11 of this Law.
Article 13
The shareholder of the LDB shall have the following property
and non-property rights:
1) to receive the dividend if it is assigned;
2) to receive part of the property of the Bank under
liquidation;
3) to have a priority to subscribe for such part of any
increase in the share capital which is proportional to the value
of his subscribed for and paid-in shares;
4) to sell or transfer in any other way all or part of his
stock to other persons; and
5) to participate in the governing of the Bank in line with
Chapter 4 of this Statute.
Article 14
The share capital of LDB can be decreased by decision of the
General Meeting, taking into consideration the rights of
creditors as well as stating the reasons of decrease and setting
the procedure of decrease.
CHAPTER 3
FUNCTIONS OF THE LDB
Article 15
THE LDB shall perform the following operations:
1) shall grant loans in national and foreign currency;
2) shall issue guarantees;
3) shall participate in co-financing activities;
4) shall borrow funds for its own account in foreign and
national currency, in Lithuania and abroad, using all relevant
financial instrument;
5) shall accept managed funds from Lithuania and abroad
directly related to the activities undertaken by the LDB;
6) shall invest its liquid assets in Lithuania and abroad;
7) shall engage in correspondent activities with foreign
banks and shall maintain hard currency accounts with these
banks; and
8) shall provide advisory services on the issues of project
financing.
Upon separate authorization from the shareholders, the Bank
may make equity investments. Such authorization shall be passed
through at the shareholders meeting by at least 2/3 majority
vote in accordance with the procedure for conducting the General
Meeting of Shareholders.
The LDB may engage in other activities relating to its
operation.
The LDB shall not take deposits or conduct current account
business.
The Bank shall take into account the potential
environmental impact associated with its investment decisions.
Article 16
The LDB shall conduct its operations according to the
following principles and standards meeting international banking
practices:
1) the LDB shall choose clients by itself independently
according to project profitability;
2) generally, loans and guarantees shall be granted for
medium and long terms; loans may be granted for a short term
only in exceptional cases;
3) the LDB may make loans directly to borrowers or
indirectly through other banks serving as intermediaries;
4) the LDB shall not incur the foreign exchange risk in its
lending and funding operations;
5) in making or guaranteeing a loan, the LDB must obtain
adequate security or payment depending on the financial
capability of the ultimate borrower to meet contractual
obligations;
6) the interest rates charged and other financial conditions
fixed by the LDB for its lending and related activities shall be
set at levels to cover the operating and financing costs of the
LDB as well as to earn a commercial return and to reflect
appropriate market terms for the type of investment envisaged;
and
7) the LDB shall charge a fee for all its services.
Article 17
When performing its operations, the LDB shall in the normal
course conform to the following economic standards:
1) the Bank's borrowings may not exceed more than four times
the total amount of the Bank's paid-up share capital and reserve
capital;
2) equity investments in the share capital of a single
enterprise or group of enterprises connected by ownership right
may not exceed 25% of the issued capital of the enterprise or
group of enterprises and 10% of the Bank's paid-up share capital
and reserve capital;
3) the aggregate total of equity investments shall not
exceed 75% of the Bank's paid-up share capital and reserve
capital;
4) the total commitment to any single enterprise or group of
enterprises connected by ownership right (loans guarantees,
equity and any other type of assistance) may not exceed 20% of
the Bank's paid-up share capital and reserve capital;
5) the total commitment to a single project may not exceed
20% of the Bank's paid-up share capital and reserve capital.
If the above standards are not conformed to, the Board of
Directors must immediately adopt a decision concerning the term
and means of resolution of the non-conformity.
The economic standards and reserve requirements established
by the Bank of Lithuania shall not be obligatory to the LDB.
CHAPTER 4
THE GOVERNING BODIES OF THE LDB
Article 18
The governing bodies of the LDB are:
1) the General Meeting of Shareholders;
2) the Board of Directors; and
3) the President.
Article 19
The General Meeting of Shareholders is the supreme governing
body of the LDB. The annual General Meeting shall be convoked
by the Board of Directors no later than within four months from
the end of each financial year.
Extraordinary General Meetings shall be convoked by the
auditors or upon the decision of the Board of Directors adopted
on its initiative or whenever requested in writing by the owners
of at least 1/10 of all shares.
The shareholders must be notified of the General Meeting by
registered letters no later that two weeks before the Meeting.
Invitations with the enclosed agenda, time and place of the
Meeting must be sent to the addresses recorded in the register
of shareholders.
The following matters shall be within the exclusive
competence of the General Meeting:
1) approval of amendments to the Statute of the Bank to be
presented to the Seimas;
2) increase and reduction of the share capital and other
matters stated in Article 10 of this Statute;
3) approval of the Annual Report of the LDB, the Annual
Statement of Accounts, and allocation and distribution of profit
and compensation for the losses;
4) election of the auditors and liquidators and
establishment of their salaries;
5) election of the members of the Board of Directors and
establishment of their salaries; and
6) dissolution or merger of the LDB.
The General Meeting may adopt resolutions if the attending
shareholders or their proxy have more than 1/2 of the total
number of votes. If there is no quorum, the Board of Directors,
in compliance with the procedure for convoking Meetings
established in Article 19 of this Statute, must immediately
convoke a repeat Meeting. Repeat Meeting shall have the right to
pass resolutions regardless of the number of the attending
shareholders.
The General Meeting may resolve only the issues included on
the agenda, with the exception of cases when all the shareholders
are present in person or by proxy and give their unanimous
consent that the issues which are not on the agenda be
considered.
The General Meeting of Shareholders shall pass its
resolutions by more than 2/3 majority of the votes cast in the
matters defined in items 1), 2) and 6) of Article 19, whereas
all other decisions shall be taken by a majority of the votes
cast.
General Meetings of Shareholders may be attended by
shareholders who own shares registered in the Share Register of
the LDB.
Each General Meeting shall be recorded by minutes, which
must be signed by the secretary and the chairman of the General
Meeting.
Lithuanian and English shall be used in General Meetings.
All resolutions passed by a General Meeting as well as related
official documents must be announced in Lithuanian and in
English and shall have equal force.
Article 20
The Board of Directors shall consist of at least five (5),
but not more than nine (9), voting members. Each member shall
have an appointed alternate member. The detailed procedure for
election to the Board of Directors as well as the number of its
members shall be determined by the General Meeting.
The right of representation in the Board of Directors shall
be determined in proportion to the respective shareholder's
subscribed and paid-in shares. The members of the Board of
Directors as well as their alternates, except the President,
shall be appointed for a three year period.
All the members of the Board of Directors must be persons
experienced in economic and financial matters and/or in banking.
Article 21
Every year, no more than 30 days after annual General
Meeting, the Board of Directors shall by simple majority vote
elect one of its members as Chairman of the Board of Directors
and one member as his deputy. The same person may be elected as
Chairman of the Board of Directors for not more than six (6)
years in succession.
The President shall not be eligible as Chairman or deputy
Chairman of the Board of Directors. The members of the Board of
Directors shall account for their work to the General Meeting of
Shareholders.
All the powers of the LDB, except for the powers expressly
vested in the General Meeting, shall be vested in the Board of
Directors.
In this respect the Board of Directors shall especially:
1) direct and supervise the activities and operations of the
LDB;
2) appoint and dismiss the President of the LDB;
3) establish the LDB's operational guidelines, approve the
Code of the Board of Directors and the annual budget of the LDB;
4) determine the remuneration of the President;
5) submit to the General Meeting of Shareholders the Annual
Report of the Bank, the Annual Statement of Accounts, the
Auditor's Report and the proposal for allocation and distribution
of profit;
6) submit to the General Meeting any proposals to increase
or reduce the capital; and
7) approve all investments and loans unless such powers are
delegated to the President.
Article 22
The meeting of the Board of Directors shall be convoked by
the Chairman or, in case of his absence, by his deputy, at least
four (4) times a year.
A meeting must also be convoked whenever requested by at
least two (2) members of the Board of Directors or by the
President or by the auditor(s) with the subject of discussion
stated.
The Board of Directors may pass resolutions if a majority of
its members are present in person or by proxy. Decisions of the
Board of Directors shall be passed by majority vote of the
Members present and voting with the exception of decisions on
issues covered in items 2), 3) and 7) of Article 21 which to be
taken upon a more than 2/3 majority vote of the Board members
present and voting. Each member shall have one vote. In the
event of a tie the vote of the Chairman of the meeting shall be
decisive.
In case of urgency, the Board of Directors may pass its
resolutions by letter or telegraphic balloting. Such decisions
are deemed to have been passed, as soon as the matter to be
decided has been transmitted to all members of the Board of
Directors and affirmative written or telegraphic statements from
at least a half or, on issues covered in items 2), 3) and 7) of
Article 21, of more than 2/3 of all Board members have been
received.
Written invitations to vote shall be sent by registered
mail. Telegraphic invitations to vote shall be confirmed by
telegraphic answer without undue delay. The results of voting by
mail or by telegraph shall be announced at the next meeting of
the Board of Directors.
Each meeting of the Board of Directors shall be recorded by
the minutes which are to be signed by the Chairman of the
meeting and the secretary.
All communication and documents related to the activities of
the Board of Directors shall be in Lithuanian and in English.
Article 23
The day-to-day management of the LDB shall be carried out by
the President. The President shall be appointed for the term of
five (5) years. He may be repeatedly appointed for another term.
The President of the LDB must be a resident of the Republic
of Lithuania.
The President shall conduct the current business of the LDB
under the direction of the Board of Directors.
The President shall decide the organizational structure of
the Bank, shall be responsible for appointment and dismissal of
the staff.
The President of the LDB shall be a non-voting member of the
Board of Directors.
Article 24
Two persons shall be authorized to jointly sign on behalf of
the LDB. They may be members of the Board of Directors, the
President or persons authorized by the Board of Directors.
Article 25
The members of the Board shall be liable to the LDB for the
losses inflicted on the Bank by reason of their negligence or
deliberately inadequate performance of their duties.
CHAPTER 5
ANNUAL REPORT AND DISTRIBUTION OF PROFITS
Article 26
The Annual Statement of Accounts must be in accordance with
the generally accepted principles of accounting as well as with
the standards of accounting in effect in the Republic of
Lithuania. The audit report and the principles of auditing must
correspond to the generally accepted principles of accounting.
The financial accounting of the LDB shall be carried out in
the currency of the share capital. Transactions concluded in the
national currency of the Republic of Lithuania or in any other
currency must be accounted in the Bank accounts according to the
exchange rate as fixed by the Bank of Lithuania for the day of
the transaction. All transactions concluded in the currency
other than the currency of the share capital must be accounted
as converted in the currency used for the LDB accounting in
accordance with the generally accepted standards.
The LDB shall organize its book-keeping, accountancy and
statistics as well as prepare and submit reports in accordance
with the procedure established by the laws of the Republic of
Lithuania.
Article 27
The net annual profit after all necessary deductions,
including those for loan losses, shall be allocated on the
decision of the General Meeting of Shareholders in accordance
with the procedure established in Articles 11-13 of this Statute.
Article 28
The General Meeting of Shareholders shall determine the
amount of dividends according to the recommendations of the
Board of Directors. Dividends shall be payable only for the
fully paid-in shares.
The LDB shall pay dividends, if any, to the shareholders not
later than within four weeks after the allocation of profits.
CHAPTER 6
SUPERVISING AND AUDITING OF THE LDB'S ACTIVITIES
Article 29
The auditing of the LDB shall be carried out by independent
external auditors appointed by the General Meeting of
Shareholders for the period of one year. The members of the
Board of Directors and the staff of the LDB are excluded from
being auditors.
The auditor must be either a universally recognized
international auditing firm or the auditor must represent an
auditing firm associated with an internationally recognized
auditing firm.
Article 30
The auditors shall have access to and shall audit the
accounts, book-keeping and operations of the LDB.
Article 31
At the request of shareholders representing at least one
tenth (1/10) of all shares a special auditor may be appointed to
carry out a special auditing of the LDB. Such audit shall be
carried out at the expense of the requestor.
Article 32
The Board of Directors shall submit to the auditors the
Annual Statement of Accounts and the Annual Report no later than
within four (4) weeks following the end of the financial year.
The auditors shall submit to the Board of Directors the
Auditor's Report no later than three weeks before the date of
the annual General Meeting.
The Board of Directors shall submit to the shareholders the
Annual Statement of Accounts, the Annual Report and the Auditor's
Report no later than two (2) weeks before the date of the
General Meeting.
The Annual Statement of Accounts, the Annual Report and the
Auditor's Report shall be delivered to the Bank of Lithuania
within 30 days from approval thereof by the General Meeting of
Shareholders.
Article 33
The Bank of Lithuania shall carry out the supervision and
auditing of the LDB's activities in pursuance of the Law on the
Bank of Lithuania.
CHAPTER 7
TERMINATION OF THE LDB'S ACTIVITIES
Article 34
The LDB shall terminate its activities by dissolution:
1) by the decision of the General Meeting;
2) in case of insolvency or bankruptcy; or
3) by decision of the court.
The issues concerning the termination of the LDB's
activities and procedures for the final settlement of debts with
creditors shall be determined by the General Meeting of
Shareholders.
Article 35
The dissolution shall be carried out by liquidators
appointed by the General Meeting of Shareholders or, in the case
of bankruptcy, by court.
At the end of the term of dissolution of the LDB, the
liquidators submit to the General Meeting of Shareholders the
final report and balance sheet.
Article 36
The activities of the liquidators, the current and final
reports as well as the balance sheet shall be inspected by the
auditors of the LDB who shall submit to the General Meeting of
Shareholders the Auditor's Report simultaneously with the current
and final reports of the liquidators.
Article 37
The assets of the LDB remaining after adjustment of all
liabilities, shall be distributed to the shareholders in
proportion to their shares in the share capital.