Chapter 1
General Provisions
Article 1. Objectives of the Law
This Law shall regulate the establishment, reorganisation
and liquidation of public and private companies, their management
and activities, as well as the rights and obligations of their
shareholders. When the text of the Law applies both to public and
private companies, they shall be referred to by the term
Companies."
Article 2. Public Companies and Private Companies
1. A Company is an enterprise whose authorised capital is
divided into shares. It may be formed for any business not
prohibited by the laws of the Republic of Lithuania. A Company is
a legal person.
2. A Company is a limited liability formation. It shall be
liable for its obligations only to the extent of its assets. The
shareholders shall be liable only for the amounts which they must
pay for their shares.
3. The amount of the authorised capital of a public Company
may not be less than 100 000 litas. Its shares may be circulated
and traded in publicly.
4. The amount of the authorised capital of a private Company
may not be less than 10 000 litas. A private Company must limit
the number of its shareholders to 50. The shares of a private
Company may not be circulated or traded in publicly, unless the
laws regulating the sale of state-owned property (shares) provide
otherwise.
5. The registered office of a Company must be situated in
the Republic of Lithuania.
6. A Company may be established for a period of limited or
unlimited duration. If the Articles of Association of a Company
do not specify the period for which it is established, it shall
be deemed to have perpetual existence. The duration of a Company
may be extended.
Article 3. Incorporators
1. The incorporators of a Company shall be natural or legal
persons who have executed the Company incorporation agreement
(act) in accordance with the procedure established by this Law.
Natural and legal persons of the Republic of Lithuania and other
states may be incorporators. The number of incorporators shall
not be limited. Each incorporator of a Company must be its
shareholder. If at least one of the incorporators (investors) of
a Company is a foreign person, the laws of the Republic of
Lithuania which regulate foreign investment shall also apply to
the Company.
2. If a Company is formed by one person, an incorporation
act shall be drawn up instead of the Company incorporation
agreement and the requirements of the incorporation agreement
shall apply to it.
3. The incorporators shall conclude an agreement on the
incorporation of the Company. The following must be specified in
the incorporation agreement:
1) the incorporators (full names, names of legal persons)
and their addresses;
2) the name of the Company;
3) the manner in which the Company is formed;
4) the rights and obligations of the incorporators in the
formation of the Company and liability for failure to fulfil
their obligations;
5) the number of shares acquired by each incorporator;
6) the par value, price of issue, and the procedure and
terms of offering of shares;
7) compensation of incorporation costs and remuneration for
the incorporation; and
8) the procedure for settling disputes between the
incorporators.
The agreement shall be signed by all incorporators or
persons authorised by them. If at least one of the incorporators
is a natural person, the agreement must be certified by a notary.
If all the incorporators are legal persons or enterprises, the
signature of their manager or authorised person shall be
certified by a seal. The procedure established for natural
persons shall apply to a foreign legal person who does not
possess a seal.
The agreement on the incorporation of a Company shall be a
public document.
4. A Company incorporation agreement or an act on the
incorporation of a Company concluded in accordance with the
procedure established by this Law shall grant the right to open a
settlement account with a bank registered in the Republic of
Lithuania.
5. Upon executing a Company incorporation agreement, the
incorporators shall draw up the Company's Articles of Association
and offer shares for sale. The incorporators of a public Company
shall be entitled to offer shares for sale only upon registering
the Company's Articles of Association in accordance with the
procedure established by the Law on the Register of Enterprises
of the Republic of Lithuania as well as upon registering the
issue of shares with the Securities Commission.
6. Prior to the statutory general meeting, any incorporator
as well as the persons specified in the incorporation agreement
shall be entitled to conclude contracts in the name of the
Company which is being incorporated. Upon their approval by the
statutory general meeting, said contracts shall create
obligations for the Company. In the event that the meeting
refuses to approve said contracts, the incorporators shall be
jointly liable for the obligations thereunder, whereas other
persons stated in the incorporation agreement shall be severally
liable therefor. Upon the proposal of the incorporator the
general meeting may transfer to the Company the obligations under
the contracts concluded by the incorporator in his own name.
7. The shareholders shall have the right to request that the
incorporators compensate for the losses incurred by the Company
prior to the day of its registration by reason of failure to
fulfil the obligations, dishonest management of the affairs
related to the incorporation, with the exception of cases where
the losses have been incurred through normal industrial or
business risks. Disputes concerning the compensation of losses
shall be settled in court.
8. By drawing up the record of transfer and receipt the
incorporators must within 7 days of the day of the statutory
general meeting transfer the Company's assets and documents to
the Board (if it has not been elected - to the head of the
Administration).
Article 4. Shareholders
1. A shareholder shall be a natural or a legal person who
has at least one share in the Company acquired under law.
2. Each shareholder shall have such rights in the Company
which are incidental to the shares in the Company held by him.
3. If the holder of all shares in a Company is one natural
or legal person, the person's written decisions shall be
equivalent to the resolutions of the general meeting.
Article 5. Special Purpose Companies
1. The status of special purpose Companies may be assigned
to Companies which fulfil functions that are of vital
significance for the state or Companies whose activities require
a special regime. The sphere of activity in which special purpose
Companies may operate shall be approved by the Seimas on the
recommendation of the Government of the Republic of Lithuania.
2. The shares held by an institution of state power and
government in a special purpose Company must account to at least
70% of votes.
3. The institutions of state power and government possessing
controlling interest in a special purpose Company shall be
entitled to establish the following:
1) obligatory works (assignments);
2) quality requirements for goods (services); and
3) prices of goods (services) or price calculation
regulations.
4. Taking into account the specific character of a Company,
the terms and conditions set forth in Par. 3 hereof must be
provided for in the Company's Articles of Association.
Chapter 2
Incorporation, Reorganisation and Liquidation of
a Company
Article 6. Incorporation of a Company
1. A private Company may be founded only in a closed manner,
whereas a public Company may be founded either in a closed or in
an open manner.
2. A Company shall be founded in a closed manner by forming
its authorised capital from contributions received for issued
shares acquired only by the incorporators.
3. A Company shall be founded in an open manner by forming
its authorised capital from contributions received for issued
shares a portion whereof is acquired by the incorporators while
the remaining shares are offered for sale to other persons.
4. The business year of a Company shall be a calendar year.
Other 12-month periods may also be established in the Articles of
Association for the beginning and the end of the Company's
business year. If a Company is registered after the commencement
of the business year, the day of the end of the Company's
business year provided for in the Company's Articles of
Association shall be considered the end of the first business
year of the Company. If a Company is crossed off the Register
prior to the end of the business year, the last business year
shall end by the day the Company is crossed off the Register.
5. The incorporators must prepare a statutory report
specifying:
1) incorporation expenses;
2) money received for the shares;
3) non-pecuniary (property) contributions, the value of said
contributions and valuation methods submitted to the meeting for
approval;
4) the number of shares acquired by each incorporator;
5) repayable incorporation expenses, remuneration for the
incorporation; and
6) contracts obligations whereunder are transferred to the
Company by the incorporators or other persons.
6. The statutory report must be audited and conclusions
thereon must be submitted to the statutory meeting by an
independent auditor who shall have the right to invite property
valuation experts. The independent auditor shall have the rights
established for the auditor by this Law. If the incorporators
deny the auditor the required information and explanations, the
auditor shall inform the statutory meeting thereof in writing.
Each shareholder shall have the right to familiarise himself with
the statutory report and the auditor's findings and to make
copies thereof.
7. If, during incorporation, not all shares in a public
Company are subscribed for during the time prescribed for the
subscription for shares, the amount of the authorised capital may
be reduced on the decision of the statutory meeting, but by not
more than 50%. The reduced amount of the authorised capital may
not be less than the minimum amount under Par. 3 of Article 2 of
this Law. If during the time prescribed for the subscription for
shares not all shares are subscribed for and the amount of the
authorised capital is not reduced, the public Company may not be
registered. In this case the contributions of the subscribers
must be returned to them without any deductions within 15 days.
All the incorporators shall be jointly liable for the return of
the contributions.
8. Within 60 days of the end of the subscription period or
the last day of the subscription for shares (in the event that
all shares are subscribed for prior to the fixed date) the
incorporators must call the statutory general meeting. If the
general meeting is not called within the above period, all the
subscribers shall be relieved of their obligations to the Company
and shall have the right to request full return of their
contributions for the shares within 15 days.
9. The provisions established by this Law for the general
meeting shall apply to the statutory general meeting. The
statutory general meeting must also be attended by all the
incorporators of the Company. If there is no quorum, another
meeting shall be called.
10. The statutory general meeting shall approve the
statutory report of the Company and the contracts concluded by
the incorporators, elect the managing bodies, the auditor, may
amend or supplement the Articles of Association, settle other
issues within the competence of the general meeting.
11. The first Supervisory Board or the Board shall be
elected for no longer than 2 business years.
12. Remuneration for the incorporation of a Company or
compensation of the incorporation expenses may be paid to the
incorporators or to third persons provided that civil contracts
have been concluded with them and the incorporation costs are
substantiated by documents. Disputes between the incorporators,
shareholders and third persons concerning the compensation of
incorporation costs and remuneration for the incorporation shall
be settled in court.
Article 7. The Company's Articles of Association
1. The Articles of Association of a Company constitute a
legal document governing the conduct of the Company's business.
2. The Articles of Association must state:
1) the name of the Company;
2) the Company's registered office;
3) business activities (types of manufactured products,
performed work, rendered services);
4) the procedure for transferring registered shares to the
ownership of other persons in the cases specified in Par. 7 of
Article 34 of this Law;
5) the amount of the authorised capital and its composition
according to the classes of shares;
6) the number of shares according to class, their par value
and the rights they give to the holder;
7) procedure of payment for shares;
8) procedure for exchanging shares of one class for shares
of another class;
9) procedure for electing the Supervisory Board, the Board
and the auditor, and their respective powers;
10) the powers of the general meeting, the procedure for
calling the meetings and their voting rules;
11) the rules for the distribution of profit;
12) the procedure for communicating the announcements of the
Company; and
13) the procedure for reorganising and liquidating the
Company.
The Articles of Associations of a Company may also include
other provisions, provided that they are in compliance with the
laws of the Republic of Lithuania.
3. If the conduct of business activities provided for in the
Company's Articles of Association is regulated by other laws of
the Republic of Lithuania, said laws must be complied with when
drafting the Company's Articles of Association.
4. The Articles of Association of a Company must be signed
by all incorporators and the signatures must be certified: in the
case of natural persons - by a notary, in the case of legal
persons, when the signature belongs to the head of the enterprise
or to the authorised person - by a seal. The procedure
established for natural persons shall apply to a legal person who
does not posses a seal.
Article 8. Registration of the Articles of Association
and the Company
1. Prior to offering their shares to the public for
subscription or purchase, companies must register their Articles
of Association according to the procedure established in the Law
on the Register of Enterprises.
2. In the event that the general meeting amends or
supplements the Company's Articles of Association, said
amendments must be registered. Amendments to the Articles of
Association shall be valid only upon their registration.
3. A Company must be registered in the Register of
Enterprises of the Republic of Lithuania within 6 months of the
day of conclusion of the incorporation agreement. If the Company
is not registered within the prescribed time period, it shall be
deemed not to have been incorporated and the contributions of
persons to the Company's authorised capital must be returned
without any deductions within 15 days of the day of expiry of the
period prescribed for the registration.
In the event of failure to register the Company through
reasons not related to the activities of the Company's
incorporators or shareholders, the incorporators may appeal the
actions of the Registrar in court.
4. The Company shall be registered according to the
procedure established by the Law on the Register of Enterprises
after the shares have been subscribed for, initial installments
have been collected and the statutory general meeting has been
held. The sum of the collected initial installments must be no
less than the amount of the minimum authorised capital as
established in Article 2 of this Law, of which sum pecuniary
contributions must constitute no less than 1/4.
5. The Company shall acquire the rights of legal person as
of the day of its registration.
Article 9. Affiliate of a Company
1. A Company shall have the right to establish affiliates.
Affiliates shall be established on the decision of the Company's
Board. The number of affiliates of a Company shall not be
limited.
2. An affiliate shall be a division of a Company possessing
a separate registered office. An affiliate shall not be a legal
person and shall use the name of the Company as a legal person.
It shall operate in compliance with the Articles of Association
of the Company and within the powers which are granted by the
Board and which must be specified in the Articles of Association
of the affiliate.
3. The assets of the Company's affiliate shall be accounted
in the Company's balance sheet and in a separate balance sheet of
the affiliate.
4. Affiliates of a Company shall be registered in accordance
with the procedure established in the Law on the Register of
Enterprises.
Article 10. Reorganisation of a Company
1. Reorganisation is transformation of a Company as a legal
person without the liquidation procedure. The successors to all
the rights and liabilities of reorganised Companies shall be the
Companies newly incorporated in the process of reorganisation and
Companies continuing to operate after reorganisation as going
concerns.
2. Companies may be reorganised in the following ways:
1) by merger or consolidation of companies;
2) by division of companies;
3) by changing the type or status of a Company.
3. Reorganisation by merger or consolidation of companies
shall be carried out by:
1) joining the companies (one or several) which cease their
existence as separate legal entities to the Company which
continues its business; or
2) combining companies which terminate their existence as
legal entities to form a newly created Company.
4. Reorganisation of companies by way of Company division
shall be carried out by:
1) parcelling out the Company which terminates its
activities to other companies which continue their business;
2) organising new companies from the Company which
terminates its activities; or
3) separating a part from the Company which is a going
concern and merging the part with another Company or organising a
new Company from the separated part.
5. When the type of a Company is being changed, it may be
reorganised:
1) from a private Company into a public Company by
registering its shares with the Securities Commission; or
2) from a public Company into a private Company by
cancelling the registration of its share issue with the
Securities Commission.
6. Reorganisation by changing the status of the Company
means cancelling the special purpose status of a Company by
amending its Articles of Association.
7. The Companies under reorganisation must prepare a plan of
reorganisation, which must state:
1) the name, type and registered office of each Company
under reorganisation;
2) valuation of assets of each Company under reorganisation;
3) assumption of liabilities and the period of assumption
thereof;
4) the criteria and rules for dividing the shareholders and
shares of the Companies which are connected with the
reorganisation among the Companies which will continue as going
concerns after the reorganisation;
5) the rate at which the shares held by shareholders shall
be exchanged for new shares taking into account the difference in
price; the number of new shares according to class and their par
value;
6) the difference between the price of shares held by the
shareholders and shares received by them after the reorganisation
which shall be paid out to them in cash. The payment in cash may
not exceed 10% of the par value of shares;
7) the procedure and terms for issuing shares;
8) property and non-property rights of holders of shares and
other securities after Company reorganisation and the terms of
acquisition thereof;
9) the projected business indices of the Companies which
will be going concerns after the reorganisation; and
10) the rights accorded to the managing bodies, auditors and
experts of Companies during their reorganisation period.
The Articles of Association of each Company which will be a
going concern after the reorganisation must be drafted together
with the plan of reorganisation.
8. The Board of each Company under reorganisation shall make
a comprehensive written evaluation of the plan of reorganisation
and shall also assign one or more experts to conduct an
examination of the plan. The experts shall be entitled to obtain
any related information from the Companies under reorganisation.
Prior to the announcement of the general meeting, the experts
shall submit to the Board the Examination Act which must contain
findings concerning the valuation of property, the terms and
conditions of loan extension and changes in the price of shares.
9. Every Company must make a public announcement of its
projected reorganisation no later than 30 days prior to the
general meeting which has the consideration of issue of the
Company reorganisation on its agenda. During the stated period
every shareholder shall have the right to familiarise himself
with the Company's plan of reorganisation, its evaluation,
business indices of the Companies under reorganisation and the
Examination Acts as well as to make copies thereof.
10. The resolution to reorganise a Company may be passed and
the plan of reorganisation and the draft Articles of Association
may be at the same time approved by shareholders with no less
than 2/3 of votes of every class of shares. Shareholders with no
less than 1/2 of votes of all classes of shares shall have the
right to appeal in court the resolution of the general meeting
concerning the refusal to reorganise a Company.
11. A Company against which bankruptcy proceedings have been
instituted or with respect to which out-of-court bankruptcy
procedure is applied may be reorganised in accordance with the
procedure established by the Law on Enterprise Bankruptcy of the
Republic of Lithuania.
12. Public announcement shall be made of the Company's
reorganisation no less than three times with an at least a 2-
month interval between the announcements, or each shareholder and
creditor shall be given a written notice thereof.
13. The Articles of Association of Companies which are going
concerns after the reorganisation shall be registered after the
first general meeting. The registration of the reorganised
Companies shall be regulated by the Law on the Register of
Enterprises of the Republic of Lithuania.
Article 11. Liquidation of a Company
1. A Company may be liquidated on the following grounds:
1) the time of the Company's duration as specified in the
Articles of Association has expired;
2) the court or the creditors' meeting has passed a decision
to liquidate a bankrupt Company. In this case the Company shall
be liquidated in accordance with the procedure established by the
Law on Enterprise Bankruptcy;
3) the court has passed a decision to liquidate the Company
on the grounds of violations of law established by the laws of
the Republic of Lithuania; and
4) the general meeting has passed a corresponding resolution
(provided that no bankruptcy proceedings have been instituted
against the Company).
2. The institution which decides to liquidate the Company
must appoint its liquidator (administrator of a Company in
liquidation). The managing bodies of the Company shall be
divested, as of the day of the liquidator's appointment, of the
powers to manage the Company and their functions shall be
performed by the liquidator.
3. The liquidator shall, in accordance with the procedure
established by the Law on the Register of Enterprises, inform the
Registrar who registered the Company of the alteration of the
Company's status and shall furnish the Registrar with the
information concerning the liquidator. After the Company acquires
the status of a Company in liquidation, the words Öin
liquidation" shall precede its name.
4. A Company in liquidation may conclude only contracts
which are related to its liquidation as well as those contracts
which are provided for in the liquidation resolution.
5. The liquidation of a Company shall be announced publicly
no less than three times at no shorter than 2-month intervals or
each shareholder or creditor shall be personally notified
thereof.
6. The distribution of the Company's assets to the
shareholders may be carried out only upon the expiration of two
months after the day of the third public announcement of the
liquidation of the Company or of the personal notification of
each shareholder and creditor.
7. In the event of disputes concerning the payment of the
Company's debts, the assets of the Company may be distributed to
the shareholders only after the dispute has been settled in court
and settlements with the creditors have been effected. Disputes
concerning the mortgaged assets of the Company shall be
considered in accordance with the procedure established in the
Law on Mortgage of the Republic of Lithuania.
8. After the payment of the required taxes into the budget
and after the discharge of liabilities to the creditors and the
employees, the remaining assets shall be distributed to the
shareholders in proportion to the par value of the shares held by
them by ownership right. Any contingent assets shall later be
distributed in an analogous manner. If the shares of the Company
carry different rights, said rights shall be taken into account
during the distribution of assets.
Article 12. Powers of the Liquidator
1. The liquidator shall have the rights and obligations of
the Company's Board. The liquidator shall represent the Company
in liquidation in court, in its relations with the State power
and government bodies, and with other natural and legal persons.
2. The liquidator of the Company shall:
1) make a stock-taking of material and financial valuables
and draw up the act of receiving same, make up the accounts as of
the beginning of the liquidation period (the liquidation balance
sheet);
2) complete the discharge of the obligations under contracts
concluded previously and draw up new contracts within their
powers;
3) terminate contracts with the creditors and debtors of the
Company;
4) distribute the remaining assets of the Company to and
among the shareholders;
5) draw up the Company liquidation act; and
6) have the liquidated Company struck off the Register in
accordance with the procedure established by the Law on the
Register of Enterprises.
3. If the liquidation of the Company lasts for several
years, within 3 months of the end of each business year the
liquidator shall make up the annual accounts and the liquidation
report. These documents shall be open for review to all the
shareholders and the third persons with vested interests.
4. The liquidator shall be liable to the Company and the
third persons for the losses incurred through his fault.
5. Shareholders who hold shares the total par value whereof
amounts to at least 1/10 of the authorised capital shall have the
right to appeal to court to change the liquidator.
Chapter 3
Rights and Obligations
of Companies and Shareholders
Article 13. Company's Rights and Obligations
1. Every Company must have a name which must include the
words ÖPublic Company" (in Lithuanian - akcine bendrove or the
acronym - AB) or ÖPrivate Company" (in Lithuanian - uzdara akcine
bendrove or the acronym - UAB). The name of an investment Company
must include the words ÖInvestment Company" (in Lithuanian -
investicine akcine bendrove or the acronym - IAB). The name of a
Company must be in compliance with the regulations of names of
enterprises, institutions and organisations approved by the
Government. Disputes over the name of a Company shall be settled
in court.
2. A Company may:
1) have accounts in banking institutions registered in the
Republic of Lithuania and other states, its own seal which may be
altered and used at the Company's discretion;
2) buy or acquire in other ways assets, or sell, lease, or
mortgage its assets or dispose thereof in any other way;
3) buy or acquire in any other way and hold by ownership
right, as well as issue, transfer, exchange, or use in any way
investment and credit securities. If the acquisition of shares
and the exercise of the rights incidental to them reduces
competition among Companies (enterprises) or competition in the
appropriate field of business activities, the number of shares of
the other Company which is acquired and held may be restricted in
accordance with the procedure established by the Law on
Competition of the Republic of Lithuania;
4) engage in business activities in the Republic of
Lithuania and beyond its boundaries;
5) allocate funds for the purposes of charity, health care,
culture, science, education, physical education and sport, as
well as for relief in cases of natural calamities or other
emergencies;
6) conclude contracts, assume obligations, lend sums of
ownership capital and borrow money at the interest rate fixed by
an agreement;
7) charge prices, rates and tariffs for its products,
services or other resources, with the exception of cases provided
for in the laws of the Republic of Lithuania;
8) prepare and implement the systems of payment of pension
supplements and benefits, as well as systems of incentives and
privileges;
9) reorganise itself, be an incorporator and shareholder of
another Company; and
10) form associations, concerns or consortiums provided that
this is in compliance with the Law on Competition.
Companies may also have other civil rights and obligations
which are not established in this Law, provided that said rights
and obligations are in compliance with the laws of the Republic
of Lithuania.
3. If the Company acquires controlling interest in another
Company, the latter shall become a controlled Company.
Controlling interest shall consist of shares which give their
holder more than 50% of votes at the general meeting. The
controlled Company shall be a subsidiary, and the controlling
Company shall be the holding Company. A subsidiary may not
acquire shares in the holding Company.
Article 14. Rights and Obligations of Shareholders
1. The property and non-property rights as well as the
obligations of the shareholders shall be established by this Law
and other laws of the Republic of Lithuania and by the Company's
Articles of Association.
2. The shareholders shall have no other liabilities to the
Company but the obligation to pay, in the established manner, the
issue price of all the shares subscribed for. The resolution of
the general meeting obliging all or some of the shareholders to
make additional contributions shall be invalid if at least one of
them does not agree with the resolution.
3. If a Company is being liquidated and lacks funds to
discharge its liabilities, shareholders whose shares have not
been fully paid up may be requested to pay up for their shares in
the manner established by the Articles of Association or by the
subscription agreement.
4. A share shall not be divisible into smaller parts. If a
share is held by several persons, all its holders shall be
considered to be a single shareholder. The rights carried by the
share shall be exercised by one of the holders by a general
agreement certified by a notary. All the holders of a share shall
be jointly liable for the shareholders' obligations.
Article 15. Property Rights of Shareholders
1. A shareholder shall have the following property rights:
1) to receive a certain portion of the Company's profit
(dividend);
2) to receive a portion of assets of the Company in
liquidation;
3) to receive shares without payment if the authorised
capital is increased with the funds of the Company;
4) to have a priority in acquiring newly issued shares
unless the Company's Articles of Association provide otherwise;
5) to bequeath all or part of shares to one or several
persons;
6) to sell or transfer in any other way all or part of
shares to the ownership of other persons; and
7) to have other property rights provided for in the
Company's Articles of Association.
2. Shareholders shall have the right to request of the
Company the repayment of their contributions in the cases
provided for in Pars. 7 and 8 of Article 6, Par. 3 of Article 8,
Par. 3 of Article 40 and Par. 4 of Article 42 of this Law.
Article 16. Non-property Rights of the Shareholders
1. Shareholders shall have the following non-property
rights:
1) to attend the meetings of shareholders as voting members,
unless this Law or the Articles of Association provide otherwise;
2) to receive information on the business activities of the
Company;
3) to appeal in court the resolutions of a general meeting
or the Board; and
4) other non-property rights provided for in the Articles of
Association.
2. If all the voting shares of the Company are of the same
par value, each share shall carry one vote at the meetings of
shareholders.
3. The Articles of Association of the Company may provide
for a rule according to which some types of shares do not carry
the right to vote.
4. A shareholder shall have no right to take part in the
voting at the general meeting on issues specified in Par. 7 of
Article 3 or in item 9 of Par. 3 of Article 19, in the settlement
whereof the shareholder is directly interested.
5. If the voting shares are of different par value, one
share of the smallest par value shall give its holder one vote.
The number of votes given by other shares shall be equal to their
par value divided by the smallest par value. The Articles of
Association of the Company may prescribe for other rules on the
establishment of the number of votes, but the number of votes
given by a share must be proportionate to its par value, with the
exception of cases specified in Par. 3 hereof.
6. Only shares with 1/4 of the issue price paid up shall
give their holders voting rights at the general meeting held
prior to the expiry of the term set for the payment of the first
issue of shares as specified in the subscription agreement;
thereafter voting rights shall be carried only by fully paid up
shares.
7. At the request of a shareholder the Company must present
to him for inspection or copying the annual and intermediate
accounts, the reports of the Board on the activities of the
Company, the minutes of the meetings, and the share register.
Other documents of the Company must be presented for the
shareholder's inspection if they do not contain official secrets,
the divulgence whereof would cause the Company material losses.
Denial of information for any other reason shall be prohibited.
At the shareholder's request, the refusal to present the
requested papers for inspection must be presented in writing.
Disputes over the shareholder's right to information shall be
settled in court.
8. Shareholders the total par value of whose holdings
amounts no less than 1/10 of the authorised capital shall have
the right to appoint an expert (a group of experts) to inspect
the Company's activities and accounting papers. The inspection
expenses shall be covered by the shareholders who appointed the
experts. If the expert (the group of experts) proves that the
facts stated in the shareholders' application are true, the
Company must refund the inspection expenses.
Article 17. Proxies
1. A shareholder shall have the right to authorise another
person to vote for him as his proxy at the general meeting or
perform other legal acts. The authorisation of the shareholder-
natural person must be certified by a notary, whereas the
authorisation of the shareholder-legal person or of an enterprise
must be certified by the manager's signature and a seal. The
auditor of the Company the shares whereof are held by the person
who is appointing a proxy may not act as proxy.
2. The proxy to represent a shareholder at the meeting must
be presented to the person who is responsible for the
registration of the participants in the meeting; the person shall
record in the list of registration the name of the person who
certified the proxy and the date when it was certified as well as
its number and term of validity.
Chapter 4
Management of the Company
Article 18. Managing Bodies
1. The managing bodies of a Company shall include the
general meeting, the Supervisory Board, the Board, and the
Administration.
2. On the resolution of the general meeting a public Company
may form either the Supervisory Board or the Board. In the event
that only the Board is formed, it shall be formed pursuant to the
procedure established for the formation of the Supervisory Board
in Article 24 of this Law.
3. On the resolution of the general meeting, a private
Company may refrain from forming either the Supervisory Board or
the Board. In the event that neither of these managing bodies is
formed, the functions of the Board shall be delegated to the head
of the Administration and the general meeting. If the Supervisory
Board and the Board are not formed, the head of the
Administration of a private Company shall be elected by the
general meeting.
4. If any of the Company's managing bodies is not formed,
the division of functions among the other managing bodies must be
specified in the Company's Articles of Association.
Article 19. General meeting
1. The supreme managing body of a Company shall be the
general meeting. All the shareholders of the Company irrespective
of the number and class of shares they hold shall have the right
to attend the Company's general meeting. Members of the Board and
the Supervisory Board as well as the head of the Administration,
even if they are not shareholders, may also attend the general
meeting without the right to vote.
2. The shareholders of a public Company whose securities
accounts are operated by stockbroking firms may attend the
general meetings presenting abstracts of their securities
accounts concerning shares held by them.
3. Only the general meeting shall have the right to:
1) amend and supplement the Articles of Association of the
Company;
2) elect the auditor, members of the Supervisory Board, in
the event that the Supervisory Board is not formed - members of
the Board, and if neither the Supervisory Board nor the Board is
formed - elect the head of the Administration;
3) remove from office members of the Supervisory Board and
the Board, the auditor, and the head of the Administration who
have been elected by the general meeting;
4) fix the salary of the auditor, the annual payments from
the profit to the members of the Board and the Supervisory Board;
5) approve the annual accounts, adopt a resolution on the
distribution of profit;
6) increase or reduce the authorised capital, exchange
shares of one class for shares of another;
7) liquidate or reorganise the Company;
8) appoint an expert (a group of experts) for the inspection
of the incorporation of the Company and management of its
affairs;
9) approve the valuation of non-pecuniary (property)
contributions; and
10) at the request of the Board, consider issues assigned to
the Board, which pertain to the activity of the Company.
4. The shareholders (or their proxies) attending the general
meeting shall be registered by signing in the registration list.
The registration list must indicate the number of votes possessed
by each shareholder. The list shall be signed by the chairman and
secretary of the meeting.
5. The minutes of the general meeting shall be signed by the
chairman, secretary and at least one shareholder authorised to do
so by the meeting. The list of the participants in the general
meeting and ballot-papers of shareholders who voted in advance in
writing shall be appended to the minutes.
Article 20. Quorum of the General Meeting and Adoption
of Resolutions
1. The general meeting may adopt resolutions if the
attending shareholders have more than 1/2 of the total number of
votes. If the meeting does not have a quorum, a repeat meeting
must be called within 15 days which shall have the right to adopt
resolutions on all the items of the agenda irrespective of the
number of shareholders present. If the consent of shareholders
holding shares of a certain class is necessary for the adoption
of a resolution, the decision on the consent may be adopted by
the meeting of the shareholders of the respective class, provided
that the meeting is attended by shareholders who hold more than a
half of the shares of said class. The procedure for calling a
general meeting shall be valid for convening the repeat meeting.
2. Upon familiarising themselves with the agenda and the
draft resolution, shareholders who are entitled to vote at the
general meeting may inform the meeting in writing of their vote
Öfor" or Öagainst" individual resolutions only. Such
communications shall be included in the quorum of the meeting and
added to the voting results only provided that the issue has been
put to the written vote.
3. Voting at the general meeting shall be open. Secret
voting shall be mandatory on the issues on which at least one
shareholder requests a secret vote to be taken, provided that he
is supported by at least 2 shareholders.
4. The resolutions of the meeting shall be adopted by a
simple majority vote of those present, with the exception of
cases provided for in this Law which require a qualified
majority: resolutions on issues specified in Par. 10 of Article
10, items 1, 6, 7 of Par. 3 of Article 19, and item 6 of Par. 1
of Article 48 of this Law require an at least 2/3 majority vote.
Article 21. Calling a General Meeting
1. A general meeting shall be organised by the Board. The
right of initiative to call a meeting shall be vested in the
Supervisory Board, the Board, and the shareholders the par value
of whose shares is no less than 1/10 of the authorised capital,
unless the Articles of Association provide for a smaller portion
of the authorised capital.
2. The Board must call a regular annual general meeting
within 3 months of the end of the business year.
3. An extraordinary meeting must be called if:
1) the net assets of the Company diminish up to 1/2 of the
authorised capital;
2) provisions are made for the reorganisation of the
Company;
3) the Company is announced or announces itself to be not in
the position to satisfy its financial liabilities; or
4) it is requested by the shareholders with the right of
initiative or the Supervisory Board.
The Articles of Association may also provide for other
reasons for convening the extraordinary meeting.
4. The persons who are demanding that a general meeting be
called shall submit an application to the Board indicating the
reasons and objectives for calling a meeting, a draft agenda, and
proposals as to the time and place of the meeting. If the Board
fails to come to an agreement with the persons initiating the
meeting on settling otherwise the issues proposed on the agenda,
it must announce about the calling of the general meeting within
10 days of the submission of the application
5. A general meeting may be called on a court decision if:
1) a meeting has not been called within 3 months of the end
of the business year and a shareholder has brought the matter to
court;
2) the persons who initiated the meeting refer the matter to
court after failing to get a favourable decision from the Board
in accordance with the procedure established by Par. 4 hereof;
and
3) the creditors of the Company have appealed to court on
the grounds of failure to call an extraordinary general meeting
in the cases specified in items 1 and 3 of Par. 3 hereof.
6. The Board must notify about the general meeting according
to the procedure established by the Articles of Association no
later than 30 days prior to the day of the meeting. If a repeat
meeting is called, the shareholders must be informed thereof no
later than 10 days before the meeting. A general meeting may be
called without observing the above requirements provided that all
the shareholders entitled to vote or their proxies give their
consent thereto.
7. The notice about the general meeting must state:
1) the name of the Company and the address of its registered
office;
2) the place and the date of the meeting; and
3) the draft agenda.
8. The shareholders must have a possibility for reviewing
the documents related to the agenda of the meeting no later than
7 days before the meeting .
Article 22. Agenda of the General Meeting
1. The draft agenda of the general meeting may be revised.
In the event that the agenda of the meeting referred to in the
notice on the calling of the meeting is revised, the shareholders
must be informed of the changes in the agenda in the same manner
in which notice of the general meeting is given and no later than
10 days prior to the meeting.
2. The meeting shall have no right to adopt resolutions on
issues which are not on the agenda if not all shareholders who
have the voting right attend the meeting.
3. Shareholders the par value of whose shares is no less
than 1/20 of the authorised capital, shall be entitled to request
the inclusion of additional items of business in the agenda. This
group of shareholders shall also have the right to nominate
candidates for the Supervisory Board or the Board, and a
candidate for the auditor's post. The Articles of Association may
provide for a smaller par value of the shares which gives the
shareholders this right.
4. Only the agenda of a meeting which failed to take place
shall be valid at the repeat meeting.
Article 23. Invalidity of the Resolutions of a General
Meeting
1. On the declaration of the shareholders, the members of
the Board, the Supervisory Board, and the head of the
Administration, the resolutions of a general meeting may be
declared invalid by court if:
1) the issue on which the resolution is adopted has not been
included in the agenda of the meeting in accordance with the
procedure established by law;
2) the resolution adopted by the meeting has not been
registered in the Register of Enterprises of the Republic of
Lithuania in the cases and within the period prescribed by laws;
3) the procedure of calling a meeting or adopting the
agenda, prescribed by Articles 21 and 22 of this Law, has been
violated; and
4) the resolution is not in compliance with the Articles of
Association of the Company, this Law, or other laws of the
Republic of Lithuania.
2. A resolution of the general meeting may be appealed in
court no later than within 30 days of the day when the person
learned or should have learned about its adoption.
Article 24. Formation of the Supervisory Board
1. The number of members of the Supervisory Board shall be
prescribed by the Articles of Association of a Company; the
number must be no less than 3 and no more than 15.
2. The Supervisory Board shall be elected by the general
meeting. During the election of the Supervisory Board each
shareholder shall have the number of votes which is equal to the
number of votes carried by the shares held by him as established
pursuant to Article 16 of this Law multiplied by the number of
members of the Supervisory Board. The shareholder shall
distribute the votes at his discretion, giving them for one or
several candidates. Candidates who receive the greatest number of
votes shall be elected.
3. The Supervisory Board shall be elected for the term not
exceeding 4 years. A member of the Supervisory Board may be
released from his duties or re-elected for another term of
office. The term of office of the Supervisory Board shall
commence with the closing of the meeting at which it was elected.
4. Only legally capable natural persons may serve as members
of the Supervisory Board. Each candidate for the Supervisory
Board must inform the shareholders where he is employed and what
post he holds. A person who is a member of the Board, the head of
the Administration of the Company, or a person who, pursuant to
the laws of the Republic of Lithuania, has no right to perform
these duties may not be a member of the Supervisory Board.
5. The general meeting shall have the right to remove from
office the entire Supervisory Board in corpore or its individual
members. If, during the removal from office, at least one
shareholder votes against the removal of individual members, the
entire Supervisory Board must be re-elected.
6. The Supervisory Board shall have the right to appoint its
own member to serve on the Board for a term not exceeding 6
months. If the same member of the Supervisory Board is appointed
to temporarily serve on the Board, the overall duration of his
service on the Board may not exceed 12 months in 4 successive
years. While serving on the Board, a member of the Supervisory
Board may not perform the duties of a member of the Supervisory
Board.
7. The Supervisory Board shall have no right to delegate or
transfer its functions to other persons or the managing bodies of
the Company.
8. A member of the Supervisory Board may resign from his
office prior to the expiry of his term upon giving a written
notice thereof to the Supervisory Board at least 14 calendar days
in advance.
9. The general meeting may remunerate (make quarterly
payments to) members of the Supervisory Board for their work only
out of the profit of the Company.
Article 25. Powers of the Supervisory Board
1. The Supervisory Board shall:
1) appoint or remove form office members of the Board;
2) at the request of the Board decide on the issue
concerning the termination of the employment contract with a
member of the Supervisory Board employed in the Company;
3) analyse the work of the Board, the utilisation of
financial resources, the organisation of production and
management, the profitability of capital, remuneration for work,
the correctness of depreciation deductions, the prospects of
financial position;
4)check the accounting and other papers of the Company;
5) make proposals and comments to the general meeting on the
annual accounts of the Company, the draft of the profit
distribution, and the report of the Board to the general meeting;
6) represent the Company in court proceedings when disputes
between the Company and its Board, or a member of the Board, or
the head of the Administration or the Company agent are examined;
7) submit proposals to the Board to revoke the resolutions
adopted by it if they are not in compliance with the laws of the
Republic of Lithuania or the Articles of Association of the
Company; and
8) consider other issues provided for in the Articles of
Association of the Company or in the resolutions adopted by the
general meeting.
2. The Supervisory Board shall have the right to appoint an
expert (or group of experts) or ask a government financial
institution to check and assess the Company's accounting. The
general meeting of the Company may specify a sum of money which
may be paid to experts in remuneration for their work.
3. At the request of the Supervisory Board the
Administration of the Company and the Board must present
documents concerning the activities of the Company and create
conditions for inspecting the Company's assets. Members of the
Supervisory Board must preserve the confidentiality of the
Company's secrets divulged to them in the course of their duties.
4. 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 chairman's vote shall be decisive.
5. If a member of the Supervisory Board is unable to attend
a meeting, he may take a written vote Öfor" or Öagainst" the
resolution which is being voted on provided that he has
familiarised himself with the draft resolution.
6. If the meeting of the Supervisory Board is attended by
more than half of its members, the meeting may adopt resolutions
by a simple majority vote of those present, with the exception of
resolutions on removing from office members of the Board. In this
case resolutions shall be adopted by a 2/3 vote of those present.
7. The Supervisory Board must meet at least once quarterly.
Its regular meetings shall be called following the schedule by
the chairman of the Supervisory Board or, in his absence, by the
vice chairman. They shall call extraordinary meetings at the
request of no less than 1/3 of the members of the Supervisory
Board. The procedure for calling meetings shall be established in
the work regulations of the Supervisory Board.
8. Members of the Supervisory Board shall be liable in the
manner established by law for concealing violations of the
Company's business activities, inadequate control of business
activities, if that provided conditions for the Board or the
Administration to evade laws of the Republic of Lithuania or the
Articles of Association of the Company.
Article 26. Formation of the Board
1. The number of the Board members, which may not be less
than 3, shall be established by the Articles of Association of
the Company. The Board shall be a collegiate body whose
activities are directed by its chairman.
2. Only legally capable natural persons may be appointed or
elected as members of the Board. Each candidate for the Board
members must notify the Supervisory Board of his place of
employment and duties. The following persons may not be appointed
or elected as members of the Board:
1) members of the Supervisory Board of the same Company or
its holding Company registered in the Republic of Lithuania, with
the exception of the case provided for in Par. 5 of Article 24 of
this Law; and
2) a person who, under the laws of the Republic of
lithuania, may not serve in the office.
The Articles of Association of a Company may prescribe
additional requirements to a member of the Board.
3. The Board and its chairman shall be appointed by the
Supervisory Board for a term not exceeding 4 years; in its
absence, said officers shall be elected by the general meeting.
There is no limitation on the number of terms of office a member
of the Board may serve.
4. By notifying the Board in writing at least 14 calendar
days in advance, a member of the Board may resign from his post
before the expiry of his term of office.
5. The general meeting may remunerate (pay quarterly
payments to) members of the Board for their work on the Board
only out of the profit of the Company. The members of the Board
shall receive a salary if they have entered into an employment
contract with the Company.
Article 27. Powers and Liabilities of the Board
1. The procedure of work of the Board shall be established
in the work regulations adopted by the Board. The Board may
represent the Company in court, arbitration bodies and other
institutions. The powers of the Board and its members shall be
established by the Articles of Association of the Company.
2. The Board shall consider and approve:
1) the structure of the Company and the titles and duties of
the Company's officers;
2) posts in which persons are employed only by holding
competitions as well as candidates for said posts;
3) the candidates for the post of the head of
Administration, his deputies (directors) and their respective
salaries; and
4) the office regulations for the head of the
Administration, deputy heads (directors), regulations for the
subdivisions of the enterprise, work regulations for the
Administration.
3. The Board shall analyse and approve the material
submitted by the Administration and the auditor on:
1) the strategy of production, technical, research, design
and experimental work as well as other business activities;
2) the organisation of management and production;
3) the sources of accumulation of financial resources and
ways of their use;
4) contracts to which the Company is a party; and
5) quarterly and annual results of business activities, the
Company's draft accounts, income and expenditure estimates, draft
of the distribution of profit, stock-taking data and other
records of valuables; and
6) results of audits.
4. The Board must timely hold general meetings, draw up
their agenda, present to the shareholders the Company's annual
accounts, the draft of the distribution of profit, report on the
activities of the Company and other required information for
considering the items on the agenda.
5. The Board must invite the head of the Company's
Administration to every meeting and to provide him with
possibilities to familiarise himself with the information
concerning the items on the agenda.
6. The Board shall be prohibited from restricting the
auditor's powers or from interfering with his work in any other
way.
7. A resolution of the general meeting shall be required for
the decisions of the Board concerning the sale, transfer, or
lease of a portion of the Company's long-term assets amounting to
more than 1/10 of value of the Company's authorised capital.
8. The chairman and members of the Board must jointly
compensate for the losses incurred by the Company by reason of
the resolutions of the Board adopted in violation of the
Company's Articles of Association, this Law and other laws of the
Republic of Lithuania. Exempted from the obligation to compensate
for the losses shall be persons who voted against the resolution
or did not attend the meeting at which the resolution was
adopted, provided that they present a written protest to the
presiding officer within 7 days after they learnt or ought to
have learnt about the resolution. The resignation of a member of
the Board or his removal from office shall not exempt him from
the obligation to compensate for the losses incurred through his
fault. A member of the Board may be exempted from the obligation
to compensate for the losses inflicted by him through the
performance of his duties provided that he acted on the basis of
the Company documents and other information the accuracy whereof
gave no grounds for doubt, or if he acted within the extent of
normal production or business risks. Disputes concerning the
compensation of losses shall be settled in court.
9. If the rights of the shareholders provided for in this
Law and in the Company's Articles of Association were enforced by
instituting legal proceedings, the members of the Board shall
jointly refund the legal expenses and compensate for the damages
incurred by the shareholders because of the disregard of their
rights.
10. The right of initiative to call a meeting of the Board
shall be vested in the chairman of the Board as well as in other
members provided that more than half of the Board members approve
thereof. A meeting of the Board shall be valid if attended by
more than half of the members and the adopted decisions shall be
valid if voted in favour of by at least half of the Board
members. The members of the Board shall have equal voting rights.
In the event of a tie vote, the vote of the chairman of the Board
shall be decisive.
11. The members of the Board must keep the Company's secrets
confidential.
12. The Board shall perform its functions until the expiry
of the term established by the Articles of Association or until a
new Board is appointed or elected and commences its work.
Article 28. The Company Auditor
1. A Company must have at least one auditor who shall be
elected by the general meeting for a term specified in the
Articles of Association but not exceeding 4 years. The auditor's
post may be held by a legally capable natural person, possessing
a diploma certifying his proper professional qualifications, or a
legal person entitled to provide auditing services. An employee
of the Company, or a member of the Supervisory Board or the
Board, or a shareholder who holds more than 10% of shares in the
Company may not be elected auditor.
2. The auditor shall control the Company's financial
activities. The auditor's procedure of work shall be established
by the auditor's work regulations approved by the general
meeting.
3. The auditor must:
1) audit the annual accounts of the Company and other books
and records of the Company;
2) perform any inspections of the Company on the instruction
of the general meeting or the Supervisory Board or the Board; and
3) report to the next general meeting or the meeting of the
Supervisory Board all the violations disclosed in the course of
inspection.
4. The auditor of the holding company shall have the right
to inspect of the subsidiary Company.
5. The Administration and the Board of the Company must
present the auditor with the books and records requested by him.
6. For his work the Company shall pay the auditor a salary
in the amount fixed by the general meeting.
7. The auditor must keep the Company's secrets learnt by him
in the course of inspection confidential.
8. The auditor of the Company shall be liable under law for
unsatisfactory control of the Company's activities and
concealment of deficiencies in its activities.
Article 29. Administration
1. Business activities of the Company shall be organised and
executed by the administration. The regulations of the
Administration's work shall be approved by the Board.
2. Administration shall work in compliance with the laws of
the Republic of Lithuania, Articles of Association, work
regulations, regulations of the divisions and the staff,
resolutions of the Board and decisions of the head of the
Administration.
3. The Company must have head of Administration and chief
financier (accountant). Head of the Administration may not
concurrently occupy the post of the chief financier (accountant).
4. The activities of the Administration shall be managed by
head of the Administration (President, General Director,
Director).
5. Head of the Administration shall be appointed by the
Board of the Company. The Board may organise a competition for
the selection of head of the Administration.
6. Remuneration of head of the Administration shall be
established by the Board in the employment contract. Remuneration
of head of the Administration, who is a member of the Board shall
be established by the Supervisory Board. Remuneration shall
consist of two parts _ fixed salary and bonus paid for operation
results of the Company.
7. A person who becomes prohibited by the laws of the
Republic of Lithuania from being head of Administration may not
be appointed to such post. Head of the Administration may not be
the manager or auditor of another enterprise. In the event he
holds such a post, he must resign from it within one month after
the appointment.
8. The Board of the Company may terminate the employment
contract with the head of Administration according to the
procedure established by the Law on Employment Contract of the
Republic of Lithuania and prior to the termination of the
contract, it may limit his/her powers.
9. Chief financier (accountant) shall be appointed, his/ her
remuneration shall be fixed and employment contract shall be
concluded by the Board of the Company. Other officers of the
Administration shall be employed and employment contract shall be
concluded by head of the Administration.
10. Head of the Administration shall have the right to enter
into transactions of the Company in accordance with the Articles
of Association, resolutions of the Board and work regulations.
Articles of Association and work regulations may establish
spheres of activities wherein deputy head of the Administration
or other authorised persons shall have the right to act
independently and to enter into Company's transactions. Head of
the Administration shall participate in the meetings of the
Company without the right to vote.
11. Transactions concluded by head of the Administration or
his/her deputies may be declared null and void according to the
procedure established by the Civil Code of the Republic of
Lithuania.
12. Head of the Administration and the officers thereof must
indemnify losses caused to the Company through their fault
according to the procedure established by the Labour Code of the
Republic of Lithuania.
Chapter 5
CAPITAL OF THE COMPANY
Article 30. Capital Structure
1. A Company's capital shall consist of its ownership
capital and borrowed capital. The ownership capital shall be
formed out of the contributions of the shareholders, proceeds
from the debentures sold at a premium and the profit of the
Company. Borrowed capital shall be formed by offering issued
debentures, taking loans and by borrowing funds in any other way.
2. The Company's ownership capital shall consist of:
1) authorised capital;
2) capital reserve fund;
3) compulsory reserve fund;
4) profit reserve fund; and
5) profit.
3. The Company's net assets may not be less than the
authorised capital. The authorised capital registered according
to the procedure established by laws shall be considered as the
amount of the authorised capital. If the Company's net assets
become less than the authorised capital, the Board must rectify
the situation by taking measures within its powers or call an
extraordinary general meeting to consider the decrease of the
authorised capital.
Article 31. Reserve Funds
1.The capital reserve fund shall be formed out of funds that
are not attributed to profit, derived from the share and
debenture premium (the proceeds from the issuing shares and
debentures at a price higher than their par value).
2.The compulsory reserve fund shall be formed out of annual
profit deductions made according to the procedure provided for in
Par.5 of Article 48 and used for the coverage of losses.
3.The share of profit which has not been paid out in
dividends or used in any other way, shall be accumulated in the
profit reserve fund.
4. If the capital reserve and the compulsory reserve funds
account for less than 1/10 of the authorised capital, they can be
used exclusively for covering the losses of the Company and only
in the event these losses may not be covered out of the profit or
the profit reserve fund.
Article 32. Shares
1.Shares are the financial securities of investments
evidencing the participation of their holders in the Company's
capital and entitling them to property and non-proprietary
rights. Shares may be represented by certificates (documents
printed in compliance with the requirements established for
securities) or uncertificated ( represented by records in
securities accounts). A private company may use certificates.
2. The par value of a share must be quoted in litas (without
indicating centas). The issue price of a share may not be less
than its par value.
3. Shares are classified according to the type of holding
into registered and bearer, and according to the rights of
shareholders into ordinary and preference.
4. The shares of a private company may be only registered
and they may be transferred according to the procedure
established by the Articles of Association. These shares shall
not be registered with the Securities Commission. The issue of
shares of public companies must be registered with the Securities
Commission.
5. Uncertificated shares shall be represented by records in
securities accounts which are either operated by the issuer or
stock broking firm in the name of shareholders. Each shareholder
of a public company shall have the right to choose where to keep
securities account _ in the public company the shares of which
he/she holds or in the stock broking firm. The provisions of Par.
2, 5 and 6 of Article 39 shall not apply to uncertificated
shares.
6. Records in securities accounts shall evidence the
ownership of uncertificated shares. Transfer of uncertificated
shares shall be debited to the securities account of the
transferor and credited to the securities account of the
transferee. Upon entering into contract concerning the transfer
of shares, parties to the contract must present said contract to
their agents who operate their securities accounts, which must
state information specified in items 2-5 of Par. 8 hereof.
7. The Company or a stock broking firm in which securities
account of a shareholder is opened, must issue upon the request
of a shareholder statement of account indicating the number of
shares and other information relative to the shares recorded in
the account.
8. A share represented by a certificate must specify:
1) the word ÖShare Ö or ÖA share of a private company (
certificate)";
2) the code and name of the Company;
3) par value of a share;
4) number (code);
5) the rate of dividend on preference shares and voting
right;
6) issue date;
7) the name of the holder of a registered share; and
8) signature of the chairman of the Board and the chairman
of the Supervisory Board or the facsimiles of their signatures.
Information that must be provided in securities accounts
relative to uncertificated shares shall be established by
standard acts regulating the securities and their circulation
accounting.
9. Shares are classified according to the rights that they
carry. The rights carried by different classes of shares must be
specified in the Articles of Association of a Company.
10. Shares may be issued after the registration of the
Company or after the increase of its authorised capital, and
after they have been fully paid for at an issue price.
11. A Company shall be prohibited from issuing shares which
may be exchanged for debentures. Convertible debentures (which
may be exchanged for shares) may be issued only in the case
specified in Par. 4 of Article 43 hereof. It shall be prohibited
to issue shares of the type other than prescribed by this Law.
12.The circulation of the shares of a Company in liquidation
shall be allowed up to the expiration of the term fixed for the
settling of accounts with the shareholders.
Article 33. Partly Paid Shares
1. A person who has subscribed for shares shall have no
right to transfer his shares to other persons prior to the
registration of the Company or prior to the increase of its
authorised capital and until the shares have been fully paid for.
2. Upon the registration of a Company or the increase of its
authorised capital, persons who have subscribed for shares and
have paid the initial installments shall be issued provisional
certificates of a shareholder. Provisional certificate of a
shareholder is a term investment security with all the requisites
of registered shares and may not be offered to the public. This
certificate shall specify the sum of money paid for the
subscribed shares and the date of the expiration of its validity.
The Board shall have the right to extend the term of validity of
provisional shareholders' certificates. Upon payment of the full
issue price, the provisional shareholders certificates must be
replaced by certificated shares or adequate records must be made
in securities accounts.
3. Records in the securities accounts of shareholders,
representing partly paid uncertificated shares shall state the
amount paid thereon, the amount to be paid therefor and the
expiration of the due date of payment. These statements shall
also be indicated in the statement of securities account of a
shareholder issued to him.
4. Circulation of partly paid shares shall be prohibited.
Article 34. Registered and Bearer Shares
1.The owner (shareholder) of a certificate representing
registered share shall be a natural or legal person whose name
shall be indicated on the share and in the share register of the
Company. The share register must state the following information
about the shareholder: full name of a person or company, address
(registered office), the number of shares held.
2. Registered certificated shares shall be transferred to
other persons by making a relevant record - endorsement on the
share (certificate). As to the form of endorsement and the
identification of the owner of registered shares, provisions set
forth in Articles 12, 13 and 16 of the Law on the Bills of
Exchange of the Republic of Lithuania shall apply.
3. The owner of an uncertificated registered share is a
natural or legal person in whose name the securities account has
been opened. Registered shares of a shareholder shall be recorded
in this account.
4. Public companies shall have the right, according to the
procedure established by standard acts regulating the securities
and their circulation, to get information from stock broking
firms about registered shares of that company, recorded in the
securities accounts operated by them, share register and other
information relative thereto.
5. The owner of a bearer share is a natural or legal person
in whose name securities account has been opened. In this
account, bearer shares of a shareholder are recorded. Public
companies shall have no right to demand from stock broking firms
to disclose the owners of bearer shares and other information
relative thereto.
6. Registered shares of a public company may be exchanged
for bearer shares or vice versa, if the general meeting so
decides by at least 2/3 of votes and if it has amended the
Articles of Association accordingly.
7. The Articles of Association of a private company may
provide that the holder of its shares may sell or otherwise
transfer his/her shares to the ownership of another person only
with the consent of the Board. Transfer may be rejected only if
the transfer of a portion of shares would increase the number of
shareholders by more than it is established by Par. 4 of Article
2 hereof. The shareholder must be notified about the consent or
rejection within 15 days from the receipt of his application.
Public companies shall be prohibited from restricting the right
of shareholders to sell or otherwise transfer their shares into
the ownership of another person provided it is done according to
the procedure established by this Law.
Article 35. Ordinary and Preference Shares
1.Ordinary shares constitute the main portion of a Company's
shares. The par value of the preference shares may not exceed 1/3
of the authorised capital.
2.The holders of ordinary shares shall be entitled to
dividend and a portion of assets of a Company in the event of a
Company's liquidation only after the claims of the holders of
preference shares have been satisfied. The holders of ordinary
shares shall have the right to acquire new shares which are
issued when the authorised capital is increased out of the profit
reserve fund. If the authorised capital is increased out of the
capital reserve fund, the holders of both preference and ordinary
shares shall have equal rights to acquire new shares.
3.It shall be prohibited to fix in the Articles of
Association of the Company or in the subscription agreement the
rate of dividend to which the holders of ordinary shares are
entitled.
4.The property and non-propriatory rights incident to
preference shares, as well as the procedure for changing the
rights must be established prior to their sale and must be set
forth in the Articles of Association of a Company.
5. If the profit is not sufficient for the payment of
dividends specified on the preference shares, all the preference
shares with different dividend rates shall receive dividends of a
proportionately smaller amount.
6.Dividends on preference shares may be cumulative or non-
cumulative. This must be established in the Articles of
Association prior to the sale of shares.
7.The holder of cumulative preference shares shall be
guaranteed the right to the rate of dividend specified on the
shares. If the profit is not sufficient for the payment of all
dividend, the unpaid sum must be transferred to the following
business year.
8. The unpaid dividend or part of unpaid dividend on non-
cumulative preference shares may not be transferred to the
following business year.
9.Before exchanging (converting) cumulative preference
shares for ordinary shares, the Company must settle accounts with
the holders of preference shares or oblige itself to pay the debt
in the following business year.
10. The Articles of Association may establish that the
preference shareholders have no voting rights. If in two
consecutive business years the Company fails to pay the full
amount of dividend to the holders of cumulative preference shares
without voting rights, such shareholders shall acquire the right
to vote. The shareholders shall retain this right until the end
of the business year in which the full amount of their dividend
has been paid to them.
Article 36. Employee Shares
1. The employee shares shall be registered shares sold on
preferential terms or otherwise transferred to the employees of
the Company. Such shares may be issued only after all shares
subscribed for at the moment of incorporation have been fully
paid for.
2. The sphere of circulation of employee shares may be
restricted by the Articles of Association of the Company, but the
restriction may not cover a period longer than three years after
the day of the issue of shares. It must also be established that
the holder of an employee share has no right to transfer in any
way the shares to another person who has no right to acquire such
shares. Upon the expiration of the term of this restriction, the
share shall lose the status of an employee share.
3. The issue price of an employee share may be below its par
value, if the difference is covered out of the deductions made
from the employee's wages, which at his request are accumulated
in a special fund. It shall be prohibited to compel an employee
to buy the Company's shares and to make deductions from his wages
for the payment for shares for which he has not subscribed.
4. The heirs of a deceased employee shall have the right to
retain his employee share or demand that the Company redeem this
share at a fair price (rate) or exchange it for non-employee
share.
Article 37. Shares of Agricultural Producers
1. Shares of agricultural producers shall be the shares
acquired by agricultural producers who are the suppliers of raw
materials or the consumers of services, as well as shares
acquired by the cooperatives established by them, in enterprises
providing services to agriculture and in plants processing
agricultural produce. These shares shall be certificated ordinary
registered shares.
2. The sphere of circulation of agricultural producers'
shares shall be restricted indefinitely. The status of
agricultural producers' shares may not be changed.
Article 38. Debentures
1. A debenture of a public company is a term credit security
giving its holder the right to receive annual interest as well as
other rights specified on the debenture or in the resolution to
issue debentures. On maturity, debenture shall give its holder
the right to receive the sum of money from a public company equal
to the par value of a debenture. Annual interest shall not be
paid to the holder of a debenture provided that this is stated on
the debenture (in the resolution to issue debentures) and its
issue price is below the par value. Debentures may be
uncertificated, in which case they shall be represented by
records in the securities accounts of their holders. Accounting
of debentures and their circulation shall be carried out
according to the provisions set forth in Par.5-8 of Article 32
and Par.2 and 4 of Article 34 hereof.
2. Public companies the authorised capital of which is not
fully paid up shall be prohibited from issuing debentures, except
in the case when they are offered exclusively to the employees
and shareholders of these companies. The par value of debentures
issued by a public company may not exceed fully paid up
authorised capital and when there are guarantees of the third
party _ may not exceed the sum of the fully paid up authorised
capital and the amount of the guarantees.
3.The resolution to issue debentures may be adopted by a
general meeting by a simple majority vote, or by the Board if
this is provided by the Articles of Association.
4. A public company must redeem its debentures by the date
specified in the Articles of Association. Debenture holders shall
have equal rights with the other creditors of a public company.
5. Private companies shall be prohibited from issuing
debentures.
Article 39. Invalidity of Securities Issued by a
Company
1. Shares and provisional shareholders' certificates shall
be invalid if:
1) they do not bear requisites specified in Par.8 of Article
32;
2) they were issued prior to the registration of the Company
or the increase of its authorised capital;
3) they were issued by public companies without the
registration of issue of shares with the Securities Commission or
their registration has been revoked; and
4) shares were issued prior to the payment of their issue
price.
2. If a Company has changed its name, exchanged one type of
shares for the other type of shares, reduced the par value of its
shares or the rights of preference shareholders, it must, within
4 months, exchange the shares held by the shareholders and the
provisional shareholders' certificates or make adequate notes on
them. If within 3 months after public announcement or written
notice the shareholders fail to present their shares or
provisional shareholders' certificates to the Board of the
Company, provisional shareholders' certificates shall become
invalid and the shares shall be deposited.
3. Invalidity of shares must be publicly announced by the
Company.
4. The invalidity of shares shall not cause the reduction of
the authorised capital of the Company, unless a general meeting
decides otherwise.
5.If the security issued by a Company is damaged and not
suitable for circulation but is identifiable, at the holder's
request the Company must replace it. Expenses incurred thereby
must be covered by the holders of such securities.
6. Lost or destroyed securities shall be replaced by the
Company according to the procedure established by the laws of the
Republic of Lithuania.
Article 40. Subscription for Shares
1.Subscription for shares is an agreement between the
Company and a natural or legal person by which one party binds
itself to allot a certain number of new shares and the other
party binds itself to pay the full issue price of the shares
subscribed for.
2. The subscription agreement of a Company must state:
1) the name of the Company;
2) the amount of authorised capital of the newly-
incorporated Company or the increase of the authorised capital;
3) the date of the general meeting during which the
resolution to increase the authorised capital has been passed;
4) the date and registration number of the share issue and
of the Company's Articles of Association;
5) the par value and the issue price of the shares, the
number of shares of each class issued and the rights they carry;
6) the subscription dates;
7) procedure for the payment for shares;
8) the procedure for the allotment of shares in the event of
over-subscription;
9) the full name of a subscriber (the name of a legal
person) and his/her address (registered office) ; and
10) the number of shares subscribed for according to their
classes.
The incorporator and upon the registration of a Company, the
Board shall be responsible for the drawing up of the draft
subscription agreement, announcement and the correctness of the
information. If the subscriber has indicated fraudulent or
incomplete information specified in Par. 9 and 10 hereof, the
public company may unilaterally terminate the subscription
agreement and return the contributions.
3. Upon the request of the subscriber, the Company (when the
Company is being incorporated _ its incorporators) must, within
15 days from the written request, return his contributions
without any deductions if:
1) the Company was being incorporated not in compliance with
the laws of the Republic of Lithuania;
2) the authorised capital has been increased in violation of
this Law; and
3) fraudulent or incomplete information specified in items 1
- 8 of Par. 2 of this Article has been presented in the
subscription agreement.
4. The subscriber may not relinquish his liabilities to the
Company and the Company may not declare a person's subscription
invalid after the Company has been registered or its authorised
capital has been increased.
5. The shareholder's priority right to acquire the Company's
newly-issued shares shall give him a possibility to subscribe for
shares the par value of which is proportionate to the total par
value of the shares held by him. The period of time for
exercising this right may not be less than 30 days.
Article 41. Payment for Shares
1. Payment for shares means the payment of their issue price
in money or in non-pecuniary (property) contributions by the
shareholders. Only the assets which are objects of proprietary
rights and which may be rated economically may be used as non-
pecuniary (property) contributions. Works and services may not be
used as contributions.
2. The shares issued by a Company must be fully paid up
within the period specified in the subscription agreement, but
not later than within 1 year after the signing of the agreement.
The subscription agreement must indicate the dates for the
payment for shares, including the date for the payment of the
first installment.
3.The initial installments paid in money may not be less
than 1/4 of the issue price of shares. They shall be paid to the
Company's account, the funds of which may be used only after the
registration of the Company, at the date established in the
subscription agreement. If the balance of the issue price is paid
in non-pecuniary (property) contributions and these contributions
are paid by installments, the issue price shall be considered as
fully paid up only after the last installment is valued and
approved according to the established procedure.
If the initial installments are not paid in money, the total
issue price must be covered by property installments during the
time established for the payment of initial installments.
4. The non-pecuniary (property) contributions shall be
valued by the auditor of the Company or by an independent
external auditor or commission thereof, appointed by the Board
(the incorporators). The shares shall be deemed as fully paid up
only after the general meeting approves the valuation of the non-
pecuniary (property) contributions.
5. If a shareholder fails to pay the installments for the
subscribed shares when due, the Company shall have the right :
1) within 30 days after the expiration of the deadline for
the payment for shares, to sell the shares subscribed for by the
debtor by auction or to sell them at a fair price (rate). If the
shares are sold for a lower price than the subscriber's debt to
the Company, the Company shall have the right to demand that he
pay the balance. If the shares are sold at a higher price, the
difference must be returned to the subscriber;
2) to demand from the defaulting shareholder to pay interest
on the amount due at the rate established in the subscription
agreement, and recover the sums due through court. The interest
may not be less than 25% per year while calculating it on the
amount due.
Article 42. Increase of the Authorised Capital
1. The authorised capital of a Company shall be increased
provided that a general meeting by at least 2/3 vote resolves to
issue new shares or to increase the par value of the issued
shares and to amend the Articles of Association accordingly. The
Company may issue new shares or increase their par value only
after its authorised capital is fully paid (at the last issue
price).
2. Amendments to the Articles of Association relative to the
increase of the authorised capital shall be registered according
to the procedure established by the Law on the Register of
Enterprises after all the shares have been subscribed for and the
first installments have been collected.
3. The authorised capital shall be considered as increased
only upon registration of the amendments of the Articles of
Association in the Register of Enterprises of the Republic of
Lithuania.
4. If within 6 months from the date of the general meeting
which has passed the resolution to increase the authorised
capital, amendments to the Articles of Association relative to
the increase of the authorised capital have not been registered
in the Register of Enterprises of the Republic of Lithuania, the
increase of authorised capital shall not be recognised. In this
case all the contributions must be returned.
5. The resolution to issue preference shares of a new class
may be passed, if it is supported by a 2/3 vote of the attending
preference shareholders, including non-voting preference
shareholders.
Article 43. Increase of the Authorized Capital by
Additional Contributions
1. A Company may increase its authorised capital by
additional contributions of its shareholders and of other persons
only by issuing new shares.
2. An insolvent public company shall be prohibited from
increasing its authorised capital by additional contributions by
public offering. It may offer these shares only to its
shareholders and employees.
3. If a public company has issued convertible debentures,
its authorised capital may be increased by issuing new shares (
of a par value specified in the resolution concerning the issue
of convertible debentures), for which convertible debenture
holders could exchange their debentures. When convertible
debentures are being issued, the shareholders must be granted
priority rights to acquire these debentures in proportion to the
number of shares held by them in the public company, if its
Article of Association does not provide otherwise.
Article 44. Increase of the Authorized Capital out of
the Funds of the Company
1. The authorised capital of the Company may be increased by
the resolution of a general meeting out of the profit reserve or
capital reserve funds by issuing new shares which shall be
transferred to the shareholders without payment, or by increasing
the par value of the previously issued shares.
2. The general meeting shall pass the resolution to increase
the authorised capital on the basis of accounts drawn up not
earlier than 30 days prior the meeting.
3. It shall be prohibited to increase the authorised capital
of the Company out of the capital reserve and profit reserve
funds until losses accounted in the balance sheet are covered.
4. Upon increasing the authorised capital out of the
Company's funds, the amendments to the Articles of Association
shall be registered according to the procedure established by the
Law on the Register of Enterprises. Alongside with other
documents, the balance sheet of the Company shall be filed with
the registrar.
5. When the Company is increasing its authorised capital out
of the capital reserve and profit reserve funds, shareholders
shall have the right to receive new shares without payment, the
number of which must be proportionate to the total par value of
shares held by them, with the exception of cases specified in
Par.2 of Article 35 of this Law.
6. Upon the registration of the increased authorised
capital, the Board shall, according to the procedure established
by the Articles of Association, notify the shareholders of the
procedure for the acquisition of the new shares. If the
shareholders do not communicate their wish to acquire new shares
within 6 months from the receipt of such notice, the Company may
dispose of them according to the procedure established by the
general meeting. If the shares are uncertificated, the new shares
shall be credited to the securities accounts.
7. The new shares shall give their holders equal rights with
the holders of other shares of the same class to receive
dividends for the business year in which the new shares were
issued.
Article 45. Reduction of the Authorized Capital
1. The authorised capital may be reduced by a resolution of
the general meeting adopted by a 2/3 vote. When the Company has
issued shares of different classes, the general meeting may
reduce the authorised capital if this resolution is supported by
holders of different classes of shares by 2/3 vote of
shareholders that class attending the meeting.
2. The authorised capital may be reduced in order to:
1) pay available funds of the Company to the shareholders;
and
2) eliminate the difference between the Company's net assets
and the amount of the authorised capital, caused by losses.
3. The authorised capital may be reduced only in the
following ways:
1) by decreasing the par value of shares; or
2) by canceling shares.
While reducing its authorised capital, the Company must
first cancel its own shares.
4. The resolution to reduce the authorised capital must be
announced publicly 3 times at intervals not shorter than 30 days,
or by notifying each shareholder and creditor.
5. While reducing its authorised capital, the Company must
give additional guarantees for its liabilities to each creditor
who demands them.
6. Amendments to the Articles of Association of the Company
relative to the reduction of its authorised capital shall be
registered according to the procedure established by the Law on
the Register of Enterprises: not earlier than 6 months after the
first and 30 days after the third public announcement or not
earlier than 3 months after the notification of shareholders and
creditors and after additional guarantees have been given to
those creditors who so requested. This rule shall not apply if
the authorised capital is reduced by cancelling the Company's
shares acquired by purchasing said shares out of the net profit
or the profit reserve fund, or by acquiring them without payment.
The authorised capital shall be considered to be reduced only
upon registration of the amendments to the Article of Association
in the Register of Enterprises of the Republic of Lithuania.
7. If the shareholders fail to timely deliver their shares
to the Board for withdrawal from circulation and cancellation,
the Board shall publicly declare said shares invalid.
8. Upon the reduction of its authorised capital, the Company
may return to the shareholders their contributions fully or in
part, or relieve the shareholders from paying the unpaid
contributions (a portion of the unpaid contributions) for the
subscribed shares (to increase the value of their paidin
contributions). Upon the reduction of the authorised capital, the
shareholders may be paid only in money, unless the Articles of
Association of the Company or the subscription agreement provide
otherwise.
Article 46. The Right of a Company to Buy up its own
Shares
1. A public company shall be prohibited from buying up its
own shares except when:
1) it seeks to avoid excessive losses due to the fall of the
price (rate) of shares;
2) the Company's authorised capital has been reduced in
accordance with the procedure established by this Law.
2. The Company shall buy up its own shares by the resolution
of the general meeting. The par value of the shares of a public
company purchased for the purpose specified in item 1 of Par.1
hereof, and the par value of its other shares held by the Company
may not exceed 1/10 of the authorised capital.
3. A public company may acquire its own shares out of the
authorised capital and the compulsory reserve fund only in the
event of the reduction of its authorised capital.
4. If the shares of a public company have been acquired not
in compliance with the provisions of this Article, they shall be
cancelled and authorised capital shall be reduced by the
resolution of the government institution that has registered
them.
5. A public company which has bought up its own shares shall
not be entitled to the non-propriatory rights incident to these
shares.
6. Private company shall be prohibited from buying up its
own shares.
Chapter 6
FINANCES AND DISTRIBUTION OF PROFIT
Article 47. Financial Resources of a Company
1. The financial resources of a Company shall be formed from
the internal and external sources. Internal sources may include
depreciation charges and profit, external sources may include
contributions for shares, proceeds from debentures, borrowed
funds and other comparable resources.
2. The Company's Board shall determine the method for
calculating the depreciation charges and their rates for the
recovery of depreciation of its fixed assets as well as for
covering maintenance expenses. These rates shall be established
taking into account the changes in the efficiency of the
Company's assets and may not exceed maximum economic rates
established by the Government of the Republic of Lithuania. The
part of the fixed assets which has been written off prematurely
(before it has been fully depreciated) shall be attributable to
the losses of the Company.
3. By the resolution of the general meeting or the Board,
passed at the instruction of the general meeting, the total
amount or a portion of the revenue received due to share and
debenture premium may be attributed to profit. If the general
meeting or the Board have not passed such resolution, said
revenue shall be attributed to the capital reserve fund and will
be exempt from taxation.
4. A Company shall have no right to use its profit for other
purposes until it pays all the taxes established by laws.
Article 48. Distribution of Profit
1. The profit of a Company must be distributed not later
than within 3 months after the end of the business year and upon
the approval of the annual balance sheet. The resolution
concerning the distribution of profit must state:
1) the profit;
2) compulsory payments out of profit;
3) dividend;
4) deductions to the compulsory reserve and profit reserve
funds;
5) annual share of profit paid to the members of the Board
and the Supervisory Board;
6) the use of profit for the payment of bonuses to the
employees and other purposes; and
7) net surplus.
2. In distributing the profit, the general meeting shall
have the right to include therein a portion of the profit reserve
or capital reserve funds.
3. The sum allocated for the payment of annual share of
profit to the members of the Board and the Supervisory Board,
bonuses to employees and for other purposes (items 5 and 6 of
Par.1 hereof) may not exceed 1/5 of net profit.
4. Bonuses to employees paid from the profit may be paid in
advance every quarter, if the current results of business
activities allow to anticipate sufficient profit. It shall be
prohibited to pay in advance share of profit to the Supervisory
Board and members of the Board.
5. If the aggregate sum of the compulsory reserve fund and
the capital reserve fund is less than 1/10 of the authorised
capital, deductions to the compulsory reserve fund shall be
mandatory and may not be less than 1/20 of net profit.
6. It shall be prohibited to pay dividends, annual share of
profit to members of the Board and Supervisory Board, bonuses to
the employees or to distribute profit in any other way until the
accounts are settled with the agriculturural producers for the
produce sold.
Article 49. Dividends
1. A dividend is the part of the profit a shareholder
receives, which is proportionate to the par value of the shares
held by him. If a share is not fully paid, the shareholder's
dividend shall be reduced in proportion to the unpaid amount of
the price of the share. The Articles of Association may provide
that the dividend on fully paid share must be reduced if the last
installment of their price was paid in the business year for
which the dividend is paid.
2. Dividends declared by the general meeting shall become
the Company's liability to its shareholders. The shareholders
shall have the right to demand the payment of his dividend as a
creditor of the Company. The Company shall have the right to
recover the dividend paid out to a shareholder if the shareholder
knew or should have known that the declared dividend was
unlawful.
3. The general meeting shall be prohibited from declaring or
paying dividends if the Company is insolvent or if after the
payment of dividends it would become insolvent. If the balance
sheet of the Company shows losses, the general meeting shall have
no right either to declare or pay dividends until the losses are
covered or until the authorised capital is reduced due to losses.
4. The Company must pay dividends not later than within 3
months from the date of the general meeting which has declared
them. It shall be prohibited to pay dividends in advance.
5. The Company shall pay dividends in money. If the
shareholder does not object, dividends may be paid in the
Company's shares or other securities.
6. Persons, who on the day of the general meeting which has
declared dividends, were members of the Company, shall be
entitled to receive dividend.
Chapter 7
FINAL PROVISIONS
Article 50
1. Public and private companies shall have to amend their
Articles of Association according to this Law and have them
registered according to the procedure established by the Law on
the Register of Enterprises within 9 months as of the date of the
enactment of this Law. Companies which fail to re-register their
Articles of Association within the time specified above, shall be
liquidated according to the procedure established by the
Government of the Republic of Lithuania.
2. Public and private companies the authorised capital of
which is less than the minimum amount established by this Law,
shall have, within 2 years from the promulgation of this Law, to
increase their authorised capital correspondingly. Companies
which fail to meet this requirement must be reorganised or
liquidated according to the procedure established by the laws of
the Republic of Lithuania.
3. State and state stock enterprises, with the exception of
those state enterprises which are not planned by the Government
of the Republic of Lithuania either to be reorganised into
companies or to be privatised by 2000, as well as private
(personal) enterpises with the rights of legal person, must be
reorganised into companies according to the procedure established
by the Government of the Republic of Lithuania, and within 9
months from the enactment of this Law, must be registered in the
Register of Enterprises of the Republic of Lithuania. For
enterprises which are being privatised according to the Law on
the Initial Privatisation of State Property, the specified time
shall be calculated from the completion of their privatisation.
The Government of the Republic of Lithuania must prepare and
submit by 1 November 1994 the list of such enterprises
(indicating their authorised capital) to the Seimas for approval,
as well as prepare a draft law on state and local government
enterprises.
4. The total value of shares of a commercial (joint stock)
bank, registered in the Republic of Lithuania, in other
companies, with the exception of commercial (joint stock) banks
and companies directly servicing banks, may not exceed 10% of the
bank's fixed capital registered with the Bank of Lithuania.
5. To declare the Law on Stock Corporations (No. I-425, 30
July 1990) invalid.
6. Law on State Enterprises of the Republic of Lithuania
shall be binding only upon state enterprises that are specified
in Par.3 hereof.
I promulgate this Law passed by the Seimas of the Republic
of Lithuania.
Algirdas Brazauskas
President of the Republic
Vilnius
5 July 1994 No. I-528