On 24 June 2003 the Parliament adopted Law No IX-1647 On the Amendment to the Law on Concessions. This law is a new wording of the Law on Concessions. The new law made up for the main drawback of the former version, i.e., gave an extended concept of a concession, hi the new law a concession is defined not only as a special right to possess and/or use the existing state-owned or municipal property, but also as a permission to engage in business activities relating to the operation of objects of infrastructure and provision of public services. Concessions may be granted in various spheres, e.g., energy, water supply, tourism, education, public transport, etc. The law is rather flexible and contains very few peremptory provisions. The grantor of the concession may select the concessionaire qualification criteria and complexity of the competition procedure at its own discretion. The parties to the concession may agree on the most favourable to both of them contractual provisions. One party to a concession contract, i.e. the grantor of the concession, may be the Government or its authorised institution (when the concession is granted on behalf of the state), or a municipal executive institution (when a concession is granted on behalf of a certain municipality). A concessionaire may be any Lithuanian or foreign entity: any type of a company, consortium, association, institution, organisation, or an entity of any other legal form or type except for an individual. There are two ways to grant a concession: through a competition or, in exceptional cases, without a competition. The law provides a finite list of cases when concessions may be granted without a competition. Whichever way of contracting for a concession is chosen, it must be transparent and announcements about the concessions must be placed in an official national gazette. The law will come into force on 1 October 2003.

      Note: Experts commissioned by the European Bank for Reconstruction and Development for the purpose of drafting the Law on Concessions were Law Firm Lideika, Petrauskas, Valiunas ir Partneriai and Law Firm Vinson & Elkins from London. The law was drafted based on the practice of foreign states and international organisations.

      On 24 June 2003 the Parliament adopted Law No IX-1645 On the Amendments and Supplements to Articles 2, 12 and 13 of the Law on Investment. To promote investment in problematic territories, Article 13 of the Law on Investment was supplemented with a new way of investment promotion. Under the law, the Government of the Republic of Lithuania or its authorised institutions, based on the procedure set forth in the Civil Code, may enter into contracts providing for special investment and business conditions with those who invest at least LTL 20 mln. throughout the territory of Lithuania, and with those who invest at least LTL 5 rnln. in the districts where the level of unemployment exceeds the Lithuanian average.

      On 4 July 2003 the Parliament adopted Law No IX-

      1709 On Undertakings for Collective Investment.

      Undertakings for collective investment as recognised under this law are investment funds or variable capital investment companies whose: (i) only aim of incorporation is public trade in investment units or shares in order to accumulate funds and make collective investment thereof into securities and/ or any other liquid assets specified in the law and thus share the risk; and (ii) securities (investment units or shares) confirm the right of their holders to demand the redemption thereof at any time. This law regulates the process of management and state supervision of the operations of collective investment undertakings. The objective of this Law is to ensure the protection of interests of investment fund members and shareholders of investment companies with variable capital. On 4 July 2003 the Parliament adopted Law No IX-

      1710 On Controlling Investment Companies. This law

      regulates the process of management of controlling

      investment companies (i.e. companies holding licences issued

      to them by the Securities Commission for such operations

      after their reorganisation), specific features of their operations

      and liquidation and state supervision over the controlling

      investment companies and the procedure of their liquidation.

      The law also provides for the possibility to refuse from the

      status of the controlling investment company when: (i) 3/4

      of those attending the general meeting of shareholders decide

      so by majority vote, and (ii) not later than within 3 months

      following such decision of the shareholders, an official

      proposal of one or more shareholders to buy up all shares of

      the company has been implemented. The companies whose

      licences to engage in the activities of controlling investment

      companies have been cancelled according to the procedure

      prescribed in this law, will not be subject to business

      restrictions set forth in it and their further activities will be

      regulated by the Company Law.

      On 20 June 2003 the director of the Fire Prevention and Rescue Department, by his Order No 110, approved the fire prevention training programme for managers of companies, institutions and organisations.

      On 24 June 2003 the Parliament adopted Law No IX-1644 On the Amendments and Supplements to Articles 6,12, 16, 17 and 18 of the Law on Energy. By this Law the State Prices and Energy Control Commission was commissioned to regularize depreciation (amortisation) rates of long term assets used by companies engaged in the activities wherein prices are subject to regulation. This is aimed at the establishment of real depreciation rates of long term assets used in business and prevention of ineffective use of funds.

      On 30 June 2003 the Minister of Economy: by Order No 4-258 approved the Rules on the Supply and Use of Heat; by Order No 4-259 - the Procedure for Maintenance of Heat and Hot Water Supply Systems in Buildings; by Order No 4-260 - Standard Provisions of Contracts for Purchase and Sale of Heat and Standard Provisions of Contracts for Maintenance of Heat and Hot Water Supply Systems in Buildings; by Order No 4-262 - the Procedure of Electricity Purchase from Combined Heat and Electricity Producers.

      

      On 18 July 2003 the Government adopted Resolution No 937 On Increasing of Minimum Living Wage. By this resolution the Government as of 1 September 2003 approved: (i) minimum hourly wage rate - LTL 2.67 and minimum monthly salary - LTL 450 for employees working in enterprises, institutions and organisations; (ii) minimum hourly wage rate - LTL 2.55 and minimum monthly salary -LTL 430 for employees working in agricultural entities, for state politics, judges, state officials, soldiers and public servants.

      On 26 June 2003 the Parliament adopted Law No IX-1656 on the Supplement and Amendment to Article 162 of the Labour Code. Pursuant to this law, June the 24lh is declared a holiday and free-from-work day.

      On 1 July 2003 the Parliament adopted Law No IX-1672 On Safety and Health of Workers. This law aimed at harmonisation of the provisions contained in the Labour Code, conventions of the International Labour Organisation ratified by the Republic of Lithuania and corresponding EU directives.

      On 20 June 2003 the Senior State Labour Inspector passed Resolution No 1-172 On Measures for the Improvement of Safety and Health of Workers.

      

      On 3 July 2003 the Parliament adopted Law No IX-1680 On the Amendments and Supplements to Articles 1, 2, 3, 4, 8, 11,14,15,21,27,70,75,85 and 86 of the Maritime Shipping Law and Repeal of Articles 16,17,18,19, 28, 30, 69, 71, 72, 73, 74 and 77 of the Same Law, Re-titling of the Sixth and Ninth Parts of the Maritime Shipping Law and Supplementing it with Articles 401 and 571 and an Annex. Under this law, the crew (including the captain and his senior mate) of the ship is required to consist of at least 2/3 of citizens of EU Member States or permanent residents of the Republic of Lithuania. A captain and his senior mate may be only citizens of the Republic of Lithuania. The mentioned provisions will come into effect as of the accession of the Republic of Lithuania to the EU (expected on 1 May 2004).

      On 4 July 2003 the Parliament adopted Law No IX-1691 On the Accumulation of Funds for Pensions. With the view of the provisions contained in the Law on the Reform of the Pension System, this law regulates the conditions and procedure of accumulation of a certain part of social insurance contributions and payment of pension benefits in the Republic of Lithuania.

      On 4 July 2003 the Parliament adopted Law No IX-1691 On the Amendment to the Law on Pension Funds. This law is a new wording of the Law on Pension Funds. The new law regulates the establishment and activity of companies, engaged in the management of pension funds wherein certain part of social insurance contributions is collected, as well as sets the necessary standards of supervision and rules of management of pension funds. The new law also aims at the protection of interests of pension scheme participants and creation of better conditions for the establishment and operations of the companies that will manage pension funds engaged in accumulation of additional part of voluntary old age pension contributions.

      

      On 19 June 2003 the Parliament adopted Law No IX-1636 On the Supplement to Article 2 and Amendments to Articles 261 and 37 of the Law on Tax Administration. The

      new law established the tax administrator's right to recover the underpaid tax amount through uncontested proceedings from the person's bank account. Any commercial bank must fully implement the tax administrator's instruction to charge the taxpayer's bank account for the unpaid amount of the tax. In the case when there are instructions or decisions of several institutions or entities for forced recovery of tax amounts from the taxpayer's account and the amount on the account held with a bank is insufficient to satisfy all such claims, the commercial bank must satisfy the tax administrator's demand based on the recovery sequence established in Article 6.923 of the Civil Code. In order to protect the taxpayer's interests, there is another provision introduced which requires that the tax administrator should notify the commercial bank forthwith when the tax arrears have been partly covered in any other way.

      On 24 June 2003 the Parliament adopted Law No IX-1648 On the Amendment to Article 68 of the Law on Value Added Tax. It is established in this law that when a VAT payer transfers assets possessed and used by him based on trust, with input/import VAT or any part thereof on those assets recorded as VAT-deductible, to another taxable entity who is a VAT payer, or when the assets with input/import VAT or any part thereof recorded as VAT-deductible are transferred to another VAT payer due to the split of the transferor under the Company Law of the Republic of Lithuania, then the transferee must assume the obligation of adjustment of VAT deduction relating to such assets.

      On 1 July 2003 the Parliament adopted Law No IX-1659 On the Amendments and Supplements to Articles 2,4, 5,12, 13, 18,19, 20, 27, 31, 33, 35, 38, 41, 55, 57, 58 and 59 of the Law on Profit Tax. In this law the concepts of interest and deposit were established, taxable entities not to be subject to the reduced profit tax rate of 13% were defined more precisely and the procedure of taxation of dividends was improved. The law also introduced the provision that dividends received by a Lithuanian legal entity from other Lithuanian legal entities wherein the receiver of dividends for 12 months uninterruptedly, including the moment of distribution of the dividends, had held over 10% of voting shares, should be free from profit tax and, moreover, should not be included in the income of the legal entity receiving the dividends.