Official translation                              LAW ON COMPANIES                              13 July 2000 No. VIII-1835...
this Law. Natural and legal persons of the Republic of Lithuania and other states may beincorporators. The number of incor...
6. The company’s Articles of Association and the amendments thereto shall bevalid only upon the registration thereof in th...
the company’s financial year. If the company is cancelled from the Register prior to theclose of the financial year, the l...
6. The company’s Memorandum of Association, drawn up and signed in themanner laid down in this Law, shall grant the right ...
1. Before the registration of the company the persons indicated in theMemorandum of Association shall be entitled to enter...
4. In case of failure to approve the company’s statutory report or to elect at thestatutory meeting members of the company...
2. The company shall be entitled to lend and borrow money. The company maynot engage in the activities credit institutions...
carried by the share shall be exercised by one shareholder as per common notarisedagreement. The holders of the share shal...
claim, without a specific authorisation, compensation for damage caused to theshareholders;       4) to conclude a contrac...
minutes of the Supervisory Board or the Board, the contracts entered into by thecompany, also the offered guarantees, sure...
1. The management bodies of the company shall include the General Meeting, theSupervisory Board, the Board, and the head o...
4. Every candidate to the members of the company’s management bodies ormember of the company’s management body shall notif...
9) adopt a resolution to reduce the authorised capital (with the exception of casesprovided for in paragraphs 5 and 6 of A...
7. The Government shall not elect the chairman and secretary of the Meeting if itis attended by less than three shareholde...
meeting did not receive a favourable decision of the company’s Board or head of theAdministration as regards the convening...
1. The agenda of the General Meeting shall be drawn up by the companymanagement body or institution upon adopting a decisi...
4) the company’s management body or the institution which adopted the decisionto convene the General Meeting and the perso...
1) election of the Supervisory Board or the Board in accordance with theregulations laid down in paragraph 3 of Article 32...
company not later than one day before the General Meeting. The general ballot signedby the shareholder (his proxy) and del...
5. The Supervisory Board shall elect the chairman of the Supervisory Board fromamong its members.      6. Only legally cap...
of the firm or auditors.      4. At the request of the Supervisory Board the company’shead of the Administration and the B...
1) members of the Supervisory Board of the same company or its parent companyregistered in the Republic of Lithuania;     ...
guarantee or surety for the discharge of obligations of other entities, when the amount ofthe obligations exceed 1/20 of t...
reasonable doubt, or if he acted within the limits of normal production-business risks.Disputes concerning the compensatio...
5. The company shall pay the internal auditor a salary for his work. The amount ofthe salary or the terms and conditions o...
10. The contract of employment shall be signed with the head of theAdministration by the chairman of the Board (if the Boa...
5. If the General Meeting failed to adopt the resolutions provided for in paragraph4 of this Article and the difference be...
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
Company law
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Company law

  1. 1. Official translation LAW ON COMPANIES 13 July 2000 No. VIII-1835 Vilnius CHAPTER ONE GENERAL PROVISIONS Article 1. Purpose of the Law The Law shall regulate the incorporation, reorganisation and liquidation of publicand private limited liability companies, their management and activities, the rights andduties of their shareholders. When the provisions of this Law apply both to a publicand a private limited liability company, the term "company" shall be used. Article 2. Public Limited Liability Company and Private Limited LiabilityCompany 1. The company is an enterprise whose authorised capital is divided into shares. Itmay be formed for any business not prohibited by the laws of the Republic ofLithuania. 2. The company is a legal person with limited liability. 3. The company’s assets shall be separated from the shareholders’ assets. It shallbe liable for its obligations only to the extent of its assets. The shareholders shall beliable for the obligations of the company only by the amounts which they must pay fortheir shares. 4. The amount of the authorised capital of a public limited liability company maynot be less than LTL 150,000. Its shares may be offered for sale and traded in publiclyin compliance with the legal acts regulating public trading in securities. 5. The amount of the authorised capital of a private limited liability company maynot be less than LTL 10,000. A private limited liability company must limit the numberof its shareholders to 100. The shares of a private limited liability company may not beoffered for sale or traded in publicly, unless other laws provide otherwise. 6. The company must have its name which must include the words “akcinėbendrovė” (public limited liability company) or “uždaroji akcinė bendrovė” (privatelimited liability company) or their respective acronyms (“AB” or “UAB”). 7. The company must have at least one account with the bank registered in theRepublic of Lithuania and its own seal. 8. The registered office of the company must be situated in the Republic ofLithuania. 9. The company may be set up for a period of limited or unlimited duration. If theArticles of Association of the company do not specify the period for which it is founded,it shall be deemed to have perpetual existence. The duration of the company may beextended, accordingly amending its Articles of Association. Article 3. The Incorporators The incorporators of the company shall be natural and legal persons of theRepublic of Lithuania or other states, the State or municipality, who have drawn up andsigned a Memorandum of Association in accordance with the procedure established by
  2. 2. this Law. Natural and legal persons of the Republic of Lithuania and other states may beincorporators. The number of incorporator of the public limited liability company shallnot be limited. The private limited liability company may have not more than 100incorporators. Each incorporator must acquire shares in the company and become itsshareholder. Article 4. Shareholders 1. Shareholders are natural and legal persons of the Republic of Lithuania or otherstates, also enterprises without legal personality, the State or municipality who haveeach acquired at least one share in the company in the manner prescribed by law. For thepurposes of this Law the State of Lithuania or municipalities shall also be deemed to belegal persons. 2. Each shareholder shall have such rights in the company which are incidental tothe shares in the company owned by him. All shareholders who are in the same positionshall have equal rights and duties. 3. If the holder of all shares in the company is one person, the persons writtendecisions shall be equivalent to the resolutions of the General Meeting. Article 5. The Companys Articles of Association 1 The Articles of Association of the company constitute the legal documentgoverning the conduct of the companys business. 2. The Articles of Association must state: 1) the name of the company; 2) the companys registered office; 3) the objects of the company and type of business activities; 4) the amount of the authorised capital; 5) the number of shares according to type and class, their nominal value and therights they carry; 6) the powers of the General Meeting, the procedure for convening the Meetingsand their voting rules; 7) the procedure for electing or removing from office members of the SupervisoryBoard, the Board, the head of the Administration and the powers of the above bodies; 8) the procedure for communicating the notices of the company; 9) the procedure for presenting the company documents and other information tothe shareholders; 10) the procedure for making decisions on the establishment of branches andrepresentative offices of the company. 3. The Articles of Association of the company may also contain other provisionswhich are in conformity with the laws of the Republic of Lithuania. 4. If business activities provided for in the companys Articles of Association areregulated by other laws of the Republic of Lithuania, said laws must be complied withwhen drafting and amending the companys Articles of Association. 5. The Articles of Association of the company being incorporated must be signedby all the incorporators or their representatives before the statutory meeting. Thesignature of a natural person must be notarised, whereas the signature of a legal personor his representative shall be attested by a seal. The procedure established for attestingthe signature of natural persons shall apply to a foreign legal person who does notposses a seal.
  3. 3. 6. The company’s Articles of Association and the amendments thereto shall bevalid only upon the registration thereof in the Register of Enterprises of the Republic ofLithuania in the manner prescribed by law. Article 6. Branch and Representation of a Company 1. The company shall have the right to set up its branches and representations inthe Republic of Lithuania and abroad. 2. The company shall be liable for the obligations of the branch or representativeoffice by way of all its assets. Article 7. Parent Company and Subsidiary 1. A company shall be a parent company if it directly or indirectly holds a majorityof the votes in another company which is its subsidiary or if it may directly or indirectlyexercise a dominant influence on another company. 2. A company shall directly hold a majority of the votes in another company if itowns shares in another company which grant over 50% of votes at the General Meeting. 3. A company shall indirectly hold a majority of the votes in a third companywhen it directly holds the majority of votes in another company which directly orindirectly holds a majority of votes in a third company. 4. For the purposes of this Law, the company shall be able to directly exercise adominant influence on another company only provided it satisfies at least one of thefollowing conditions: 1) the company has the right to elect or remove the head of the Administration, themajority of members of the Board or Supervisory Board of another company and at thesame time is a shareholder of this other company; 2) is a shareholder of another company and may decide, under agreementsconcluded with other shareholders of this other company, on the use of over 50% of thevotes granted by the shares in this other company. The proxy giving power to thecompany to represent another shareholder and to vote for him and make decisions shallbe a sufficient proof of such an agreement. 5. The company can exercise indirect dominant influence on a third company onlyif it satisfies at least one of the following conditions: 1) it is in the position to directly exercise dominant influence on another companywhich directly or indirectly holds the majority of the votes in a third company or whichmay directly or indirectly exercise dominant influence on a third company; 2) it holds directly or indirectly the majority of votes in another company whichmay directly or indirectly exercise dominant influence on a third company; 3) together with the other companies in which it directly or indirectly holds themajority of votes in them or upon which it may directly or indirectly exercise dominantinfluence, or those other companies jointly hold shares in a third company which carryover 50% of votes at the General Meeting or provided it satisfies the conditions listed inparagraph 4 of this Article. Article 8. Financial Year of the Company The company’s financial year shall be the calendar year. Other 12-month periodsspecifying the beginning and the end of the financial year may also be set in thecompany’s Articles of Association. If the company was registered after thecommencement of the financial year, the day on which the company’s financial yearends, as provided for in its Articles of Association, shall be considered as the close of
  4. 4. the company’s financial year. If the company is cancelled from the Register prior to theclose of the financial year, the last financial year shall end: 1) in case of liquidation - on the day of drawing up of the document of liquidation; 2) in case of reorganisation - on the day of drawing up of the document of transferof property. CHAPTER TWO INCORPORATION OF THE COMPANY Article 9. Memorandum of Association 1. The incorporators of the company shall sign the Memorandum of Association. Ifthe company is formed by one person only, he shall sign not the Memorandum ofAssociation, but a document of incorporation to which the requirements of theMemorandum of Association shall apply, except for the requirements laid down insubparagraphs 10 and 12 of paragraph 3 of this Article. 2. The company’s Memorandum of Association shall be a public document. 3. The Memorandum of Association must indicate: 1) the incorporators (names, surnames, personal codes and addresses of naturalpersons; names of legal persons, their codes, addresses of their registered offices, namesand surnames of the representatives of the said persons); 2) the name of the company; 3) the powers and obligations of the incorporators in the incorporation of thecompany as well as liability for defaulting on their obligations; 4) persons (incorporators and other persons) who may represent the companybeing incorporated and their powers; 5) the amount of the company’s authorised capital, nominal value of shares, theprice of issue of the shares; 6) the number of shares acquired by each incorporator, specifying their numberaccording to types and classes; 7) the rights granted by the shares acquired by the incorporators; 8) the procedure and time limits for the payment for shares, including theprocedure and time limits for the payment of initial contributions, default interest forshares not paid up by the due date. The default interest may not be less than 0.05% ofthe unpaid amount for each missed day; 9) the procedure for convening the statutory meeting; 10) the procedure for submitting to the incorporators the documents of thecompany which is being incorporated, also of information relating to the statutorymeeting; 11) compensation of incorporation costs and remuneration for incorporation; 12) procedure of settlement of disputes between the incorporators; 13) the date of signing the Memorandum of Association. 4. The Memorandum of Association may also contain other provisions which donot conflict with other laws of the Republic of Lithuania. 5. The Memorandum of Association shall be signed by all incporporators or theirrepresentatives. Where at least one of the inocporators is a natural person, theMemorandum must be notarised. Where all incorporators are legal persons, thesignatures of their managers or authorised persons shall be attested by seals. Theprocedure established for attesting the signatures of natural persons shall be applied withrespect to a foreign legal person who does not possess a seal.
  5. 5. 6. The company’s Memorandum of Association, drawn up and signed in themanner laid down in this Law, shall grant the right to open an accumulative depositaccount of the company which is being incorporated with a bank registered in theRepublic of Lithuania and, in case of incorporation of a public limited liabilitycompany, to register the shares with the Securities Commission. Article 10. Subscription and Payment for Shares of a Company which isbeing Incorporated 1. The shares of the company which is being incorporated shall be signed by itsincorporators. The terms and conditions of the share subscription agreement shall be setout in the Memorandum of Association. 2. Where a public limited liability company is being incorporated, the terms andconditions of the Memorandum of Association, laid down according to the requirementsof subparagraphs 6, 7 and 8 of paragraph 3 of Article 9 of this Law shall becomeeffective only after the registration of the shares with the Securities Commission. 3. The shares of a company which is being incorporated must be fully paid withinthe time limit set in the Memorandum of Association, which may not be longer than 12months from the date of drawing up and signing of the Memorandum of Association. 4. Paragraphs 1, 2, 7, 8 and 9 of Article 48 of this Law shall apply to the paymentfor shares of a company which is being incorporated. 5. At the time the company is incorporated, the initial contributions for the sharessubscribed for shall be paid only in cash into the accumulative account of the companywhich is being incorporated within the time limit set in the Memorandum ofAssociation. The company shall be entitled to use the funds in the account only after itsregistration. The initial contribution of each incorporator shall be not less than onequarter of the nominal value of the shares subscribed for by him plus the whole of anypremium, whereas the total amount of initial contributions received prior to the statutorymeeting must be not less than the minimum authorised capital of the companyprescribed by Article 2 of this Law. 6. If the incorporator partly pays up the shares in money’s worth, the assets usedfor payment for company shares and the value thereof must be indicated in theMemorandum of Association. Valuation of the contribution made otherwise than in cashprior to the signing of the Memorandum of Association must be made by assets valuersaccording to the procedure specified in the laws and other legal acts of the Republic ofLithuania which regulate property valuation. 7. The assets valuers who make valuation of contributions made otherwise than incash must draw up a valuation report indicating, besides other information: 1) the person valuation of whose assets has been made; 2) description of every element of the assets the valuation whereof has been made; 3) description of the valuation methods used; 4) the nominal value of shares acquired for consideration other than in cash; 5) conclusion whether the established value of the assets comprising thecontribution made otherwise than in cash corresponds to the number and issue price ofshares to be issued for the contribution. 8. The report of the valuers of assets who made the valuation of assets comprisingthe consideration other than in cash for shares of a public limited liability companywhich is being incorporated shall be disclosed in the manner prescribed by law. Article 11. Right to Act on Behalf of the Company which is beingIncorporated
  6. 6. 1. Before the registration of the company the persons indicated in theMemorandum of Association shall be entitled to enter into contracts on behalf of thecompany. Such a contract shall impose obligations on the company upon its approval bythe General Meeting. If the General Meeting refuses to approve the contract, the personswho entered into it shall be jointly liable for the obligations under the contract. 2. The incorporators of the company or other persons indicated in theMemorandum of Association may receive remuneration from the company for theincorporation of the company or compensation of company incorporation expensessubstantiated by documents. Disputes between the incorporators and other personsindicated in the Memorandum of Association regarding the compensation of companyincorporation expenses and remuneration for company incorporation shall be settled incourt. 3. The shareholders or the company may demand that the incorporators or otherpersons indicated in the Memorandum of Association compensate for the losses incurredby the company prior to its registration due to their misfeasance, dealing with companyincorporation matters in bad faith. The shareholders or the company shall not be entitledto compensation for damage incurred due to contracts approved of by the GeneralMeeting. Disputes concerning compensation for damage shall be settled in court. Article 12. Statutory Report 1. After all initial contributions for the shares have been paid, the incorporators ofthe company shall, no later than 15 days before the statutory meeting, draw up thestatutory report, which shall specify: 1) incorporation expenses; 2) paid-up authorised capital (paid-up nominal value of shares); 3) proceeds from the sale of shares; 4) expected assets comprising the contribution to be made otherwise than in cashfor the subscribed for shares, the value of the contributions and reference to the reportsof the valuers of assets who made the valuation of assets comprising the contributionother than in cash; 5) the number of shares subscribed for by each incorporator, for which he has paidthe initial contribution, also the number of the shares by types and classes; 6) incorporation expenses subject to reimbursement, remuneration for companyincorporation. 2. Each incorporator shall be granted access to the statutory report and shall beentitled to receive its copy. Article 13. Statutory Meeting 1. After all initial contributions have been paid, the incorporators must convene thestatutory meeting before the registration of the company. 2. Provisions prescribed by this Law for the General Meeting, except for therequirements set forth in Articles 24(1), 26, 27(1) and 28 of this Law, shall apply to thestatutory meeting. The incorporators shall have right to vote at the statutory meeting. Ifthe statutory meeting does not have a quorum, a repeat statutory meeting shall be called.The agenda of the statutory meeting shall be drawn up by the person authorised by theincorporators in the Memorandum of Association. 3. The statutory meeting shall approve the statutory report of the company,approve the firm of auditors, elect members of the company management bodies,address other issues within the competence of the General Meeting.
  7. 7. 4. In case of failure to approve the company’s statutory report or to elect at thestatutory meeting members of the company management body who, pursuant to theArticles of Association, are elected by the General Meeting, a repeat statutory meetingshall be convened. Article 14. Registration of the Company 1. The company shall be subject to registration in the Register of Enterprises of theRepublic of Lithuania. The company shall be deemed incorporated and shall acquire therights of legal person as from the day of its registration. 2. The company shall be registered upon the payment of all initial contributions forshares subscribed for and after the holding of the statutory meeting which approved thecompany’s statutory report and elected members of company management bodies who,under the company’s Articles of Association, are due to be elected by the GeneralMeeting. 3. If the company is not registered within 4 months from the signing of theMemorandum of Association, it shall be deemed not to have been incorporated and,upon the expiry of the said time limit, the contributions paid in for the shares subscribedfor shall be returned. 4. The incorporators shall within 7 days from the day of company registrationtransfer the documents to the company (to the company Board or, in case such has notbeen formed, to the head of the Administration), signing the document of transfer. Article 15. Acquisition of Assets from the Incorporator of Public limitedLiability Company 1. For two years after the registration of the public limited liability company everycontract of the company for the acquisition of assets from the company incorporator,where the sum of the contract or the aggregate sum of such contracts is not less than1/10 of the company’s authorised capital, shall become effective only after the valuationthereof by the assets valuers appointed by the Board in the manner prescribed by thelaws and other legal acts of the Republic of Lithuania regulating assets valuation andafter the approval of the contract/contracts at the General Meeting by an at least two-thirds majority vote and after the disclosure of the assets valuation report in the mannerlaid down by law. 2. In addition to other information, the assets valuation report shall containinformation specified in subparagraphs 1, 2 and 3 of paragraph 7 of Article 10 of thisLaw and the conclusion as to whether the value of the acquired assets corresponds to theamount paid for them. 3. Paragraphs 1 and 2 of this Article shall not apply where the assets are acquiredin the course of regular business activities of the company, also in respect of contractsentered into in the Central Market of the Securities Exchange. CHAPTER THREE RIGHTS AND DUTIES OF THE COMPANY AND SHAREHOLDERS Article 16. Rights and Duties of the Company 1. The company may enter into contracts, assume obligations and have other rightsand duties, provided they do not contradict the laws of the Republic of Lithuania.
  8. 8. 2. The company shall be entitled to lend and borrow money. The company maynot engage in the activities credit institutions. The amount of funds lent by the companyto natural and legal persons may not exceed its equity capital. 3. The company shall be entitled to borrow from its shareholders, both natural andlegal persons, in the ways prescribed by laws. When borrowing from its shareholders,the company may not offer its assets to the shareholders as a colateral. When thecompany borrows from the shareholders under a loan agreement, the annual rate ofinterest may not be higher than the last quarter’s weighted average rate of annualinterest on the Republic of Lithuania Treasury bills published in “Valstybės žinios”(Official gazette) by the Government or the institution authorised by it. 4. The company may not make advance payments, either directly or indirectly,grant loans or guarantee discharge of obligations where the purpose of the above actionsis to provide conditions for other persons to acquire shares in the company. 5. If the company has not settled accounts with the creditors within the fixed timelimits and the total debt to the creditors amounts to over 1/20 of the company’sauthorised capital, it must obtain the creditors’ written consent before investing assetsinto another enterprise. Article 17. Information Contained in the Company’s Letters and Documents 1. The company’s documents whereby orders are placed, also its letters shallindicate: 1) the register in which the company is registered, the administrator of the registerand his address; 2) the code of the company; 3) the name of the company as indicated in the company registration certificate; 4) the address of the registered office of the company recorded in the companyregistration certificate; 5) if the company is in liquidation, the word “in liquidation” must precede thename of the company. 2. Where reference to the capital of the company is made in the letters anddocuments of the company, the amount of the authorised capital and the amount of thepaid-up authorised capital must be indicated. 3. The company’s documents whereby orders are placed and its letters mustcontain all information about the company referred to in paragraphs 1 and 2 of thisArticle and about the register in which the company is registered, the registeradministrator and his address, the name, code number and address of the branch. Article 18. Rights and Duties of Shareholders 1. Property and non-property rights and duties of shareholders shall be establishedby this Law and other laws of the Republic of Lithuania and the company’s Articles ofAssociation. The property and non-property rights of shareholders specified in Articles19 and 20 of this Law may not be subjected to any restrictions, except in cases specifiedby laws or by court order. 2. The shareholders shall have no financial obligations to the company save for theobligation to pay up, in the prescribed manner, all the shares subscribed for at their issueprice. The resolution of the General Meeting obligating all or part of the shareholders tomake additional contributions shall be invalid if at least one of them objects to theresolution. 3. A share shall not be divisible into parts. If a share is held by severalshareholders, all its holders shall be considered to be a single shareholder. The rights
  9. 9. carried by the share shall be exercised by one shareholder as per common notarisedagreement. The holders of the share shall be jointly liable for the shareholders’obligations. 4. In order to implement their property and non-property rights, two or moreshareholders may conclude the shareholders’ agreement. The agreement must specifythe following: 1) the shareholders - name and surname, personal code number and address ofnatural persons; name, code number and address of the registered office of legalpersons; 2) the company’s name; 3) commitments of the shareholders - parties to the agreement as regards voting onall or on individual items on the agenda of the General Meeting, regarding theimplementation of resolutions adopted by the meeting or non-property rights; 4) responsibility for failure to honour the commitments entered into; 5) the procedure for settling disputes between the shareholders - parties to theagreement; 6) the period of validity of the agreement. 5. The person who acquired all shares of the company or the holder of all shares inthe company who transferred a part of his shares to another person must within 15 daysnotify the head of the company Administration of the acquisition or transfer of shares.Notifying of the acquisition of all shares, a natural person must give his name, surname,personal code number and address, whereas a legal person shall indicate its name, codenumber, address of the registered office. If all shares of the company are acquired byone person or the holder of all shares of the company transfers all or a part of thecompany shares to other persons, the company shall notify the administrator of theregister of enterprises thereof within 15 days from the day the company learnt or shouldhave learnt thereof. Article 19. Property Rights of Shareholders 1. The shareholder shall have the following property rights: 1) to receive a part of the companys profit (dividend); 2) to receive a part of assets of the company in liquidation; 3) to receive shares without payment if the authorised capital is increased out ofthe company funds, except in cases specified in paragraph 2 of Article 44 of this Law; 4) to have the pre-emption right, except in cases when the General Meetingdecides to withdraw the pre-emption right in acquiring the company’s newly issuedshares for all the shareholders; 5) to bequeath all or part of shares to one or several persons; 6) to transfer all or part of the shares into the ownership of other persons. In theprivate limited liability company this right is limited according to the procedureestablished in Article 49 of this Law; 7) other property rights provided for by laws or the Articles of Association of thecompany. Article 20. Non-property Rights of Shareholders 1. Shareholders shall have the following non-property rights: 1) to participate in the General Meetings; 2) to receive information on the business activities of the company; 3) to appeal to the court against the resolutions or actions of the General Meeting,the supervisory Board and head of the Administration. One or several shareholders may
  10. 10. claim, without a specific authorisation, compensation for damage caused to theshareholders; 4) to conclude a contract with the firm of auditors for auditing the company’sactivities and documents as prescribed by paragraph 3 of Article 60 of this Law; 5) other non-property rights provided for by laws or the company’s Articles ofAssociation. 2. If all the voting shares of the company are of the same nominal value, all shares,except for special shares the status whereof is regulated by Article 46 of this Law, shalleach carry one vote at the General Meeting 3. The company’s Articles of Association may establish that shares of certainclasses do not carry voting rights. 4. Except in cases where the shareholder has acquired all the shares of thecompany, he shall not be entitled to vote: 1) on the approval of the contracts concluded by him with the company wheresuch approval is required under the laws or the company’s Articles of Association; 2) on the adoption of the resolution to withdraw the right of pre-emption in respectof the shares or convertible debentures issued by the company if the right to acquire theabove securities is thereby granted to him, his spouse, parents (adoptive parents) andchildren (adopted children); 3) where the company is operating at a loss due to the violation of provisions ofparagraph 8 of Article 22 of this Law, on the suitability for the office held by themembers of the Supervisory Board, the Board or the head of the Administration, whenthis issue is considered by the General Meeting, if he himself is the person underconsideration. 5. If voting shares are of different nominal value, one share of the lowest nominalvalue shall give its holder one vote. The number of votes granted by other shares shallbe equal to their nominal value divided by the smallest nominal value of a share. Anumber of votes shall also be given where in the cases set forth by this Law the right tovote is granted to the owners of non-voting shares. A different procedure fordetermining the number of votes may also be provided for by the Articles ofAssociation, however, the number of votes given by a share shall be proportionate to itsnominal value. 6. The right to vote at the General Meeting convened prior to the expiry the timelimit for the payment for the first issue of shares, specified in the Memorandum ofAssociation, shall be given by the shares for which initial contributions have been paid,thereafter voting rights shall be carried only by fully paid shares. 7. At the shareholder’s written request the company must within 5 working daysfrom the receipt of the request present to him for inspection and/or copying annual andinterim financial statements, reports on the activities of the company, minutes of theGeneral Meetings and the register of shareholders; the company shall also presentminutes of the Supervisory Board and Board meetings to the shareholders who havegiven a written pledge prescribed by the company not to disclose a commercial secretprovided that the minutes contain no restricted information relating to the company’sstock events. A commercial secret shall be information (except for the publicinformation specified by the laws of the Republic of Lithuania) which is attributed tocommercial secrets by the resolution of the company Board. Having given a writtenpledge not to disclose the commercial secret, the shareholder who owns shares the totalnominal value whereof accounts for at least 1/20 of the company’s authorised capital orthe proxy of the shareholders who own shares the total nominal value whereof accountsfor at least 1/20 of the company’s authorised capital shall have the right of access to all
  11. 11. minutes of the Supervisory Board or the Board, the contracts entered into by thecompany, also the offered guarantees, surety, contracts of mortgage and exchange offixed assets. The shareholders who own shares which carry over 1/2 of all votes shallhave the right of access to all company documents. The shareholder or the proxy shallbe liable under law for the disclosure of a commercial secret. At the shareholdersrequest, refusal to present the requested documents must be executed in writing.Disputes relating to the shareholder’s right to information shall be settled in court. 8. Documents or other information relating to the company must be furnished tothe shareholders free of charge, unless the company’s Articles of Association provideotherwise. The charge fixed in the Articles of Association may not exceed the cots offurnishing of the documents and other information. 9. The register of shareholders presented to the shareholders shall state the names,surnames (names of legal persons) of the shareholders, the number of registered sharesowned by the shareholders, the shareholders’ addresses for correspondence according tothe most recent data available to the company. Article 21. Proxies 1. The shareholder shall have the right to authorise another person to vote for himas his proxy at the General Meeting or perform other legal acts. The proxy of theshareholder who is a natural person must be notarised, whereas the proxy of theshareholder who is a legal person must be attested by its managers signature and theseal. The procedure for attesting the signature established for natural persons shall beapplied with respect to a foreign legal person who does not possess a seal. Theshareholder may by a general written proxy authorise the intermediary of public tradingin securities who manages his personal account of the company securities. 2. Upon arrival at the General Meeting and signing in the shareholders registrationlist, the shareholder’s proxy must present to the person in charge of the registration ofthe participants in the Meeting the original of the proxy or a notarised copy thereof. Thename of the person who gave the proxy and the time when the proxy was given as wellas the number and period of validity of the proxy shall be recorded in the registrationlist. 3. The shareholder may withdraw his proxy. He must notify the company inwriting of the withdrawal of the proxy. 4. If the proxy fills in the general ballot on behalf of the shareholder and submits itto the company before it receives the shareholder’s notice of the withdrawal of theproxy, the general ballot shall be deemed valid and the shareholder shall not be entitledto vote at the shareholders’ meeting, except in the case where the shareholder provesthat the proxy knew or should have known about the withdrawal of the proxy before thesubmission of the general ballot to the company. 5. If shares are sold or otherwise transferred to the depository (an institution whichkeeps records of securities, organises and controls operations with securities) and thebank further converts them issuing depositary receipts or using other financialinstruments, the authorised agent of the depository shall vote at the General Meetingfollowing the written directions of the shareholders or according to the shareholders’agreement. CHAPTER FOUR MANAGEMENT OF THE COMPANY Article 22. Management Bodies
  12. 12. 1. The management bodies of the company shall include the General Meeting, theSupervisory Board, the Board, and the head of the Administration. 2. The compulsory management bodies of a public limited liability company shallbe the General Meeting, the head of the Administration and at least one collegialmanagement body - the Supervisory Board or the Board. 3. The compulsory management bodies of a private limited liability company shallbe the General Meeting and the head of the Administration. Formation of theSupervisory Board and the Board in a private limited liability company shall not becompulsory. 4. If the Supervisory Board is not formed in the company, its functions shall not beassigned to other management bodies. 5. Where the Board is not formed in the company, its functions, rights, duties andresponsibility established by this Law shall be taken over by the head of theAdministration, save for the rights and duties taken over pursuant to this Law by theSupervisory Board or the General Meeting. 6. In case the General Meeting adopts amendments to the Articles of Associationregarding the number of the Supervisory Board or Board members or a newmanagement body, the newly-elected members of the management body shallcommence their activities no earlier than from the day of registration of the amendmentsto the Articles of Association in the Register of Enterprises of the Republic of Lithuania. 7. The General Meeting shall not be entitled to charge other management bodies toaddress the issues assigned to its competence. The General Meeting shall have the rightto obligate to address the issues assigned to the competence of the Supervisory Board,the Board or the Administration 8. The management bodies of the company shall act only for the benefit of thecompany and its shareholders. The management bodies of the company shall not beentitled to make decisions or perform other actions which violate the company’sArticles of Association or are against the objects of the company specified in theArticles of Association, manifestly go beyond normal production-business risks, areundoubtedly unprofitable (purchase of goods, services or works at prices exceedingmarket prices or their underselling, waste of the company’s assets) or are unmistakablyineffective from the economic point of view. Article 23. Restriction of Rights of the Members of Management Bodies 1. Unless he is given consent of the management body which elected him, amember of the Supervisory Board, the Board, the head of the Administration may not beon the Supervisory Board or Board (or bodies equivalent to them) of the enterpriseengaged in similar business activities or enterprise which continues the company’sproduction or service process and sale of products. Without having been givenauthorisation by the management body which elected him, the head of theAdministration may not be the head of Administration of any other enterprise. 2. If a member of the company’s Supervisory Board, the Board or the head of theAdministration violated the requirements set in paragraph 1 of this Article, he shallresign from the management bodies of the enterprise or company and be heldresponsible under law. 3. Every candidate to the members of the company’s management bodies mustinform the management body which is electing him where and what office he holds,how his other activities are connected with the company and its parent or subsidiarycompanies.
  13. 13. 4. Every candidate to the members of the company’s management bodies ormember of the company’s management body shall notify the management body whichis electing or has elected him if he owns shares accounting for 1/4 or more of theauthorised capital of an enterprise engaged in similar activities or an enterprise whichcontinues the company’s production or services process and sale of products. 5. If a member of the company’s management body violates the requirements ofthis Law, every shareholder of the company shall be entitled to appeal to the court forthe compensation of damage caused to the company within 90 days from the day whenhe found out or should have found out of the violations committed by the managementbody member. Article 24. General Meeting 1. The General Meeting is the supreme management body of the company. Allpersons who are the shareholders of the company on the day of the meeting, irrespectiveof the number and class of shares they hold, shall have the right to attend the companysGeneral Meeting, unless the company’s Articles of Association provide that the GeneralMeeting (including a repeat meeting) may be attended by persons who wereshareholders of the public limited liability company at the close of the shareholders’registration day of the General Meeting. The shareholders’ registration day of theGeneral Meeting shall be not earlier than 30 days and not later than 10 days prior to theGeneral Meeting in respect of which the day is designated and not earlier than the tenthday after the Board meeting which designated the day. Members of the SupervisoryBoard and the Board as well as the head of the Administration, even though they are notshareholders, shall be entitled to participate in the Meeting and be given the floor.Every General Meeting shall elect the chairman and secretary of the meeting, except inthe case specified in paragraph 7 of this Article. 2. Only the General Meeting may: 1) amend and supplement the Articles of Association of the company (except forthe cases provided for in paragraph 6 of Article 39, paragraph5 of Article 51,paragraph 3 of Article 52 and paragraph 6 of Article 55 of this Law); 2) approve the firm of auditors, elect the members of the Supervisory Board, if theSupervisory Board is not formed - members of the Board, if the Board is not formed -the head of the Administration; 3) dismiss the firm of auditors, members of the Supervisory Board, members ofthe Board elected by the General Meeting, the head of the Administration. If thecompany is operating at a loss, the General Meeting must consider the suitability foroffice of the members of the Supervisory Board, the Board, or the head of theAdministration; 4) fix the conditions of payment for auditing services, the annual payments(bonuses) from the net profit to the members of the Board and the Supervisory Boardpursuant to the provisions of Article 61 of this Law; 5) approve the annual financial statements, the business report of the Board (if theBoard is not formed - the head of the Administration); 6) adopt a resolution to increase the authorised capital: 7) determine the type, class, number and set the minimum issue price of the sharesissued by the company; 8) adopt a resolution to withdraw for all the shareholders the pre-emptive right toacquire the shares or convertible debentures of the specific issue of shares or convertibledebentures issued by the company;
  14. 14. 9) adopt a resolution to reduce the authorised capital (with the exception of casesprovided for in paragraphs 5 and 6 of Article 39 and paragraph 6 of Article 55 of thisLaw; 10) adopt a resolution to issue convertible debentures; 11) adopt a resolution to exchange the company’s shares of one type or class forthose of another type or class, approve the procedure of exchange of shares; 12) adopt a resolution for the company to purchase its own shares; 13) adopt a resolution to liquidate the company or to cancel the liquidation of thecompany (with the exception of the cases provided for in subparagraphs 2, 3 and 4 ofparagraph 1 of Article 75 of this Law); 14) elect and dismiss the liquidator of the company (with the exception of thecases provided for in subparagraphs 2, 3 and 4 of paragraph 1 of Article 75 andparagraph 1 of Article 76 of this Law); 15) adopt a resolution to reorganise the company and approve the draft plan ofreorganisation (except in the case provided for in Article 73 of this Law); 16) for a period of two years from the registration of a public limited liabilitycompany approve the contracts for the acquisition of assets from the incorporator of thecompany if the sum of a separate contract or the total sum of contracts amounts to atleast 1/10 of the company’s authorised capital; 17) adopt a resolution on the appropriation of the profit (except in the caseprovided in paragraph 8 of Article 61 of this Law); 18) adopt a resolution to build up reserves, with the exception of the revaluationreserve; 19) adopt a resolution on the transfer, lease or mortgage of fixed assets the valuewhereof amounts to over 1/20 of the company’s authorised capital as well as on offeringguarantee, surety for the discharge of obligations of other entities, when the amount ofthe obligations exceeds 1/20 of the company’s authorised capital. 3. The General Meeting may also adopt other resolutions which are not providedfor under this Law for the other management bodies of the company. 4. The person who is on the list of registered share holders, compiled on the day ofthe General Meeting or on the day of record of shareholders of the General Meeting ofthe public limited liability company, may attend the General Meeting upon producing adocument which is a proof of personal identity. The holder of bearer shares may alsoattend the General Meeting upon presenting an excerpt from the account issued by thesecurities account manager about the bearer shares owned by him or which he owned atthe close of the day of record of the General Meeting. 5. The shareholders (their proxies) taking part in the General Meeting shall beregistered by signing in the shareholder registration list. The shareholder registrationlist must indicate the number of votes held by each shareholder. The list shall be signedby the chairman and secretary of the Meeting. The shareholders who have already votedby the general ballot must be named in the registration list. 6. The minutes of the General Meeting shall be within 3 working days signed bythe chairman, the secretary of the Meeting and at least one shareholder authorised by theMeeting. The shareholders who have at least 1/20 of votes at the General Meeting shallbe entitled to additionally appoint their representative for the signing of the minutes ofthe General Meeting. To that end they shall present to the chairman of the Meeting anapplication signed by the shareholders. The person authorised (appointed) to sign theminutes shall be entitled to present his commentaries or opinion in writing about thefacts set out in the minutes.
  15. 15. 7. The Government shall not elect the chairman and secretary of the Meeting if itis attended by less than three shareholders. In such event the shareholder registration listand the minutes of the General Meeting shall be signed by each shareholder attendingthe General Meeting. 8. Settlement of disputes relating to the invalidity of the minutes of the GeneralMeeting or parts thereof shall be within the jurisdiction of the court. The list ofregistration of the attending shareholders, the proxies and the general ballots ofshareholders who voted in advance as well as documents which are proof of theshareholders having been notified of the convening of the General Meeting shall beattached to the minutes of the General Meeting. The minutes of the General Meeting atwhich the resolutions changing the information on the company kept with the Registerof Enterprises of the Republic of Lithuania were adopted, the minutes (copies thereof)with annexes (copies thereof) must be presented to the administrator of the Register ofEnterprises within 10 days after the meeting. Minutes of the General Meetings areofficial documents. They shall be preserved and kept in accordance with the procedureestablished by the Law of the Republic of Lithuania on Archives. Falsification of theabove minutes shall be punishable in the manner prescribed by law. Article 25. Inspector of the General Meeting 1. The General Meeting of the company may elect the inspector of the GeneralMeeting for the next General Meeting. The inspector of the General Meeting shall be ashareholder of the company. 2. If the General Meeting fails to elect the inspector for the next General Meetingor where the elected inspector is not in the position to perform his duties, he shall beappointed by the Board prior to the Meeting, in case the election of the inspector isprovided for in the Articles of Association of the company. 3. The inspector of the General Meeting shall establish: 1) the total number of shares carrying the right to vote at the Meeting; 2) the number of submitted valid and invalid general ballots filled in advance; 3) the number of valid and invalid proxies submitted; 4) the number of vote-carrying shares represented at the Meeting (both personallyand through a proxy and having filled in the general ballot-papers); 5) whether the Meeting has a quorum; 6) the results of voting at the Meeting. Article 26. Convening the General Meeting 1. The right of initiative to convene the General Meeting shall be vested in theSupervisory Board, the Board and the shareholders who have at least 1/10 of all votes,unless the Articles of Association provide for a smaller amount of votes, as well as theinstitution which holds special shares. 2. The General Meeting shall be convened on the resolution of the Board. If theBoard has not been formed in the company, or if the number of the company’s Boardmembers is not more than one half of their number specified in the Articles ofAssociation, the General Meeting shall be convened on the decision of the head of theAdministration. The General Meeting must be convened on the decision of the head ofthe Administration if the Board of the company fails to convene the Meeting in theinstances and within the time limits provided for in this Law. The General Meeting maybe convened on the decision of the shareholders with more than 1/2 of all votes orholding special shares if the persons who attempted to initiate the convening of the
  16. 16. meeting did not receive a favourable decision of the company’s Board or head of theAdministration as regards the convening of the General Meeting. 3. The General Meeting may be called upon the court order if: 1) the meeting has not been called within 4 months of the end of the financial yearand at least one shareholder has brought the matter to court; 2) the initiators of the General Meeting applied to the court with a complaint aboutthe failure by the Board or the head of the Administration to convene the GeneralMeeting as prescribed by paragraph 6 of this Article; 3) the creditors of the company applied to the court complaining about the failureto call an Extraordinary General Meeting in the case specified in subparagraph 1 ofparagraph 5 of this Article. 4. The Board must convene the Annual General Meeting each year within 4months of the end of the financial year. 5. The Extraordinary General Meeting must be convened if: 1) the company’s equity capital falls below 3/4 of the authorised capital specifiedin the Articles of Association; 2) the number of the Supervisory Board or Board members has declined to 2/3 oftheir number specified in the company’s Articles or less than their minimum numberprescribed by this Law (because of the retirement or inability to continue in office); 3) the head of the Administration of a private limited liability company, elected bythe General Meeting, resigns or is not in the position to continue performing his duties; 4) the firm of auditors terminates the contract with the company or is for any otherreasons unable to audit the company’s annual statements; 5) it is requested by the shareholders with the right of initiative, the SupervisoryBoard or the Board; 6) the duration of the company specified in the Articles of Association is drawingto a close; 7) it is required under other laws or the company’s Articles. 6. The persons who initiated the convening of the General Meeting shall file anapplication with the Board (if the Board is not formed or the number of Board membersis not more than half of their number indicated in the Articles - to the head of theAdministration), indicating the reasons and objectives of convening the Meeting, thedrafts of the proposed resolutions, proposals regarding the date and place of theMeeting. If the Board (or the head of the Administration) fails to come to an agreementwith the persons initiating the Meeting on settling in any other way the issues proposedfor the Meeting, it must convene the General Meeting within 40 days of the receipt ofthe application. 7. In the case provided for in subparagraph 6 of paragraph 5 of this Article theExtraordinary General Meeting must be convened at least 30 days before the expiry ofthe company duration period specified in the Articles of Association. The period ofduration of the company may be extended at the Meeting by amending the Articles ofAssociation of the company or the liquidator shall be elected. 8. The venue of the General Meeting must be in territory of the municipality inwhich the registered office of the company is located. If the shares of the public limitedliability company are listed on the Official List of the Stock Exchange registered in theRepublic of Lithuania, the venue of the General Meeting may be in the territory of themunicipality where the headquarters of the Stock Exchange are located. Article 27. Agenda of the General Meeting
  17. 17. 1. The agenda of the General Meeting shall be drawn up by the companymanagement body or institution upon adopting a decision to convene the GeneralMeeting. Issues proposed by the persons initiating the Meeting must be included in theagenda of the Meeting. 2. The agenda of the General Meeting may be supplemented upon the proposal toinclude new issues, put forward by the Supervisory Board, the Board (if the Board is notformed - the head of the Administration), the institution holding special shares orshareholders with not less than 1/20 of all votes. The proposal to supplement the agendamay be submitted not later than 15 days before the General Meeting. The companymanagement bodies and persons specified in this paragraph may also submit new draftsof resolutions, propose additional candidates to the company management bodies, thefirm of auditors. The Articles may also provide for less votes entitling the shareholdersto supplement the agenda of the General Meeting, propose new draft resolutions,additional candidates to the members of company management bodies elected by theGeneral Meeting, the firm of auditors. 3. If the agenda of the Meeting referred to in the notice on the calling of theMeeting has been changed, the shareholders must be notified of the changes in theagenda in the same manner in which the notice of the General Meeting is given no laterthan 10 days before the Meeting. 4. If removal from office of the members of the company management bodies ordismissal of the firm of auditors is on the agenda of the General Meeting, the issuesregarding the election of new members of the management bodies or approving a newfirm of auditors must accordingly be included in the agenda. 5. The General Meeting shall not be entitled to adopt resolutions on issues not onthe agenda if it is not attended by all the voting shareholders. 6. Only the agenda of the Meeting which failed to take place shall be valid atrepeat meeting. Article 28. Notice of the General Meeting 1. The management body of the company or the institution which passed adecision to convene the General Meeting shall present to the head of the Administrationinformation and documents required for giving a notice of the General Meeting. Thehead of the Administration must publish the notice of the General Meeting in theperiodical publications specified in the Articles of Association or hand in the notice toevery shareholder against by his signature or send the notice by registered mail no laterthan 30 days before the day of the Meeting. The General Meeting may be convenedwithout observing the above time limits if all voting shareholders or their proxies givetheir written consent thereto. The shareholders of private limited liability companiesshall in all cases be delivered the notices upon their signed acknowledgement of thedelivery or by a registered letter. The head of the Administration shall inform theshareholders at the opening of the Meeting of the documents proving that theshareholders have been given notice of the General Meeting. The documents must beattached to the minutes of the General Meeting. 2. If a repeat meeting is convened, the shareholders must be informed in themanner laid down in paragraph 1 of this Article. In this case an at least 10 days’ noticeis required. 3. Notices of the General Meeting must specify: 1) the name of the company and the address of the registered office; 2) the date, time and place of the Meeting; 3) the agenda of the Meeting;
  18. 18. 4) the company’s management body or the institution which adopted the decisionto convene the General Meeting and the persons who initiated the calling of theExtraordinary General Meeting; 5) where the passing of the resolution on the reduction of the authorised capital ison the agenda of the Meeting - the purpose and intended method of the reduction ofcapital. 4. At least 30 days before the General Meeting the shareholders must be grantedaccess to the documents available to the company, relating to the agenda of the Meeting,including drafts of the resolutions, as well as the application filed with the Board (or thehead of the Administration) by the persons who initiated the convening of the GeneralMeeting. If the shareholder so desires in writing, the head of the Administration shallwithin 3 days from the receipt of the written request deliver to him upon his signedacknowledgement all draft resolutions of the Meeting or shall send him the above draftsby a registered letter. A notice must be given with the drafts of the resolutions indicatingon whose initiative they have been included. Where the person who initiated the draftresolution has submitted explanations of the draft resolution, these must be attached tothe draft resolutions. Article 29. Quorum of the General Meeting and Passing of Resolutions 1. A General Meeting may pass resolutions provided that it is attended by theholders of shares which carry over 1/2 of all votes. After the presence of a quorum hasbeen established, the quorum shall remain continuously throughout the Meeting. If aquorum is not present, a repeat Meeting must be convened within 15 days, which shallbe authorised to adopt resolutions on the issues on the agenda irrespective of the numberof shareholders attending the Meeting. If the consent of the holders of a certain type orclass of shares is necessary in order to adopt a resolution, a resolution regarding theconsent may be adopted by a meeting of the holders of a certain type or class of shares,attended by the shareholders who own over 1/2 of all the shares of the type or class. Theprocedure for convening the General Meeting shall be applicable for calling themeeting. 2. For the purpose of establishing the total amount of the votes carried by theshares of the company and the quorum of the General Meeting, the shares the exerciseof the voting right granted by which is prohibited under paragraph 7 of Article 55 ofthis Law, under other laws and on the basis of the court order, shall be considered asnon-voting shares. 3. A possibility for voting in advance may be provided for in the Articles ofAssociation of the company. In this case the shareholder entitled to vote at the meeting,having been presented for scrutiny the agenda and draft resolutions, may notify theGeneral Meeting in advance in writing (by filling in the general ballot) whether he is“for” or “against” each resolution. The advance voting by ballot shall be included in thequorum of the meeting and the results of voting. The general ballots of the meetingswhich have not taken place shall be valid at repeat meetings. The shareholder shall haveno right to vote at the General Meeting for the resolution in respect of which he hasexpressed his will in advance in writing. 4. Voting at the General Meeting shall be decided on a show of hands. On theissues on which at least one shareholder requests a secret vote be taken and providedthat he is supported by shareholders possessing at least 1/10 of votes at the GeneralMeeting, secret voting shall be mandatory to all shareholders. 5. The resolutions of the General Meeting shall be adopted by a simple majorityvote of the shareholders present, with the exception of the following cases:
  19. 19. 1) election of the Supervisory Board or the Board in accordance with theregulations laid down in paragraph 3 of Article 32 of this Law; 2) adoption of resolutions on the issues specified in subparagraphs 1, 6, 7, 9, 10,11, 13, 15, 16, 17, 18, 19 of paragraph 2 of Article 24 this Law, requiring a 2/3 majorityvote of those present at the Meeting; 3) adoption of the resolution specified in subparagraph 8 of paragraph 2 of Article24 of this Law, which requires a 3/4 majority vote of those present at the Meeting; 4) adoption of resolutions which requires approval of the holders of certain typesor classes of shares. 6. The company’s Articles of Association may provide for a larger than 2/3majority required in order to adopt resolutions specified in subparagraph 2 of paragraph5 of this Article and a larger than 3/4 majority for the adoption of the resolution referredto in subparagraph 3 of paragraph 5 of this Article. 7. If in the cases specified paragraph 4 of Article 20 of this Law the shareholder isnot entitled to vote, the results of the voting shall be established according to the numberof votes of shareholders present at the Meeting who are entitled to vote on deciding theissue. Article 30. General Ballot 1. If the company’s Articles of Association provide for the possibility to vote inadvance, the company shall prepare the general ballots. The following shall be indicatedin the ballot: 1) drafts of the resolutions which shall be put to a vote at the General Meeting.The wording of the draft resolutions must be such as to allow the shareholder to voteeither for or against the resolution; 2) candidates to the members of the company’s management bodies elected at theGeneral Meeting, the firm which is a candidate to the firm of auditors which has to beapproved. The above candidates must be presented in the manner which would enablethe shareholder to mark the candidate he is voting for or to indicate the number of voteshe gives to each candidate to the Supervisory Board (if the Supervisory Board is notformed - the Board) members. 2. All draft resolutions and candidates to the members of the company’smanagement bodies elected by the General Meeting, the candidate firms from which thefirm of auditors has to be approved, which have been put forward by the persons onwhose initiative the Meeting has been convened and the company’s management bodiesor persons specified in paragraph 2 of Article 27of this Law must be entered in thegeneral ballot not later than 15 days before the General Meeting. 3. The company must not earlier than 15 days and not later than 10 days before theGeneral Meeting send the general ballots by registered mail or hand them in personallyagainst signature to the shareholders entitled to vote should the shareholders so requestin writing. 4. After the general ballot has been sent or handed in to the shareholder, the ballotmay not be changed. The company’s Articles of Association may provide that newdrafts of resolutions and candidates to the management bodies elected by the GeneralMeeting or to the firm of auditors to be approved may not be put forward after thegeneral ballot has been sent or handed in. 5. The name, surname and personal code (name and code of the legal person) ofthe shareholder must be indicated on the general ballot. 6. The general ballot signed by the shareholder (his proxy) shall be deemed valid ifit contains the requisites prescribed by paragraph 5 of this Article and is delivered to the
  20. 20. company not later than one day before the General Meeting. The general ballot signedby the shareholder (his proxy) and delivered to the company shall be irrevocable, savefor the exception laid down in paragraph 4 of Article 21 of this Law. Article 31. Invalidity of the Resolutions of the General Meeting 1. On the application of the interested persons, the resolution of the GeneralMeeting shall be declared invalid in accordance with the judicial procedure if: 1) the issue on which the resolution is adopted has not been entered in the agendaof the Meeting in accordance with the procedure established by law; 2) the registration documents and information changed by the resolution adoptedby the Meeting have not been registered in the Register of Enterprises of the Republic ofLithuania in the cases and within the time limit prescribed by laws; 3) the procedure for convening the meetings or drawing up the agenda, prescribedby Articles 26, 27 and 28 of this Law, has been violated; 4) the company has not prepared and/or sent/or delivered the general ballots drawnup in the manner prescribed by this Law to the shareholders who requested the ballots, ifthe possibility of advance voting is provided for in the company’s Articles ofAssociation, except where this did not have a decisive effect upon the quorum of theMeeting or the adoption or rejection of the resolution; 5) the shareholder was represented at the General Meeting by a person who did nothave the shareholder’s proxy, the shareholder’s proxy voted at the Meeting exceedinghis powers, vote was taken by holders of non-voting shares, except where theshareholder’s vote did not affect the quorum of the Meeting or the passing or rejectionof the resolution; 6) the resolution is not in compliance with the Articles of Association of thecompany, this Law, or other laws of the Republic of Lithuania; 7) the resolution is detrimental to the company. 2. A resolution of the General Meeting may be appealed against to the court notlater than within 30 days from the day when the person learned or should have learntabout its adoption. Article 24. Formation of the Supervisory Board 1. The Supervisory Board is a collegial body supervising the activities of thecompany and directed by its chairman. 2. The number of members of the Supervisory Board shall be set by the Articles ofAssociation of the company; the number of members must be not less than 3 and notmore than 15. 3. The Supervisory Board shall be elected by the General Meeting. During theelection of the Supervisory Board members each shareholder shall have the number ofvotes which is equal to the number of votes carried by the shares held by him asestablished pursuant to Article 20 of this Law multiplied by the number of members ofthe Supervisory Board being elected. The shareholder shall distribute the votes at hisdiscretion, giving them for one or several candidates. Candidates who receive thegreatest number of votes shall be elected. If the number of candidates who received anequal number of votes is larger than the number of vacancies on the Supervisory Board,a repeat voting shall be held in which each shareholder may vote only for one of thecandidates who received an equal number of votes. 4. The Supervisory Board shall be elected for a term not exceeding 4 years. Thenumber of terms a member may serve on the Supervisory Board shall not be limited.
  21. 21. 5. The Supervisory Board shall elect the chairman of the Supervisory Board fromamong its members. 6. Only legally capable natural persons may serve as members of the SupervisoryBoard. Prohibited from serving on the Supervisory Board shall be: 1) members of the company’s Board; 2) head of the Administration of the company; 3) a person indicated in paragraph 1 of Article 23 of this Law; 4) a person who, pursuant to the laws of the Republic of Lithuania, has no right toperform these duties. 7. The General Meeting may remove from office the entire Supervisory Board incorpore or its individual members before the expiry of their term. 8. A member of the Supervisory Board may resign from office prior to the expiryof his term upon giving a written notice thereof to the Supervisory Board at least 14calendar days in advance. 9. If a member of the Supervisory Board is removed from office, resigns or for anyother reason stops performing his duties and the shareholders who hold at least 1/20 ofall votes in the company object to the election of individual members of the SupervisoryBoard, the operating Supervisory Board must be dismissed and a new SupervisoryBoard in corpore must be elected. Should individual members of the Supervisory Boardbe elected, they shall be elected only until the expiry of the term of office of theoperating Supervisory Board. 10. The general meeting may remunerate (pay bonuses to) members of theSupervisory Board for their work only out of the net profit, taking into account theprovisions of Article 61 of this Law. Article 33. Powers and Responsibility of the Supervisory Board 1. The Supervisory Board shall: 1) elect members of the Board (if the Board is not formed - the head of theAdministration) and remove them from office. If the company is operating at a loss, theSupervisory Board must consider the suitability of the Board members (if the Board isnot formed - the head of the Administration) for their office; 2) analyse the work of the Board and the head of the Administration, the use offinancial resources, the organisation of production and management, the profitability ofcapital, remuneration for work, the correctness of depreciation deductions, thecompany’s financial prospects; 3) make proposals and comments to the General Meeting on the company’sannual financial statements, the draft of the profit distribution and the report on thecompany’s activities drawn up by the Board (the head of the Administration); 4) represent the company when disputes between the company and its Boardmember or the head of the Administration or his deputy are brought before the court; 5) submit proposals to the Board and the head of the Administration to revoketheir resolutions which are not in conformity with the laws of the Republic of Lithuaniaor the Articles of Association of the company or the resolutions of the General Meeting; 6) consider other issues provided for in the Articles of Association or in theresolutions adopted by the General Meeting. 2. The Supervisory Board shall have no right to assign or delegate its functions tothe Board or the head of the Administration. 3. The Supervisory Board shall be entitled to appoint a firm of auditors to auditthe accounting documents and financial statements of the company. The GeneralMeeting may fix the maximum amount of funds that may be allotted to pay the charges
  22. 22. of the firm or auditors. 4. At the request of the Supervisory Board the company’shead of the Administration and the Board must present documents relating to theactivities of the company and provide conditions for inspecting the companys assets.Members of the Supervisory Board must keep the companys commercial secretsdivulged to them in the course of their duties confidential. 5. The Supervisory Board shall commence its activities upon the closure of theGeneral Meeting which elected it, save for the exception provided for in paragraph 6 ofArticle 22. 6. The procedure of work of the Supervisory Board shall be laid down in the workregulations of the Supervisory Board adopted by it. 7. The Supervisory Board must meet at least once quarterly. Its regular meetingsshall be called according to the schedule by the chairman of the Supervisory Board or,in his absence, by the vice chairman. Extraordinary meetings shall be called at therequest of no less than 1/3 of the members of the Supervisory Board. The procedure forannouncing meetings shall be laid down in the work regulations of the SupervisoryBoard. 8. Members of the Supervisory Board shall have equal rights. During voting eachmember shall have one vote. In the event of a tie the chairman’s vote shall be casting. 9. If a member of the Supervisory Board is unable to attend the meeting, he maytake a written vote "for" or "against" the resolution which is being voted on, providedthat he has familiarised himself with the draft resolution. 10. The Supervisory Board may adopt resolutions if its meeting is attended bymore than half of its members. The members of the Supervisory Board who voted inadvance shall also be included in the quorum. Resolutions of the Supervisory Boardshall be adopted by a simple majority vote of those present (including members whocast their vote in advance in writing), with the exception of resolutions on removingmembers of the Board from office. Such resolutions shall be adopted by a 2/3 vote ofthe Supervisory Board members present at the meeting (including members who votedin advance in writing). 11. Members of the Supervisory Board shall be liable in the manner established bylaw for concealing violations of the companys business activities, inadequate control ofbusiness activities, if that provided conditions for the Board or the head of theAdministration to ignore the laws of the Republic of Lithuania or the Articles ofAssociation of the company. Article 34. Formation of the Board 1. The Board is a collegial body, whose activities shall be directed by the chairmanof the Board. 2. The number of the Board members, which may not be less than 3, shall beestablished by the company’s Articles of Association. 3. The Board and its chairman shall be elected by the Supervisory Board for a termnot exceeding 4 years; in its absence, the Board members shall be elected by the GeneralMeeting in accordance with the procedure established by Article 32 of this Law for theelection of the Supervisory Board. The Board shall elect its chairman from among itsmembers. The institution holding special shares shall be entitled to appoint one Boardmember. There is no limitation on the number of terms of office a member of the Boardmay serve. 4. Only competent natural persons may be appointed/elected as members of theBoard. The following persons may not be appointed or elected as members of the Board:
  23. 23. 1) members of the Supervisory Board of the same company or its parent companyregistered in the Republic of Lithuania; 2) a person specified in paragraph 1 of Article 23 of this Law; 3) a person who, under the laws of the Republic of Lithuania, may not serve onthe Board. 5. The Supervisory Board (if the Supervisory Board is not formed - the GeneralMeeting) may remove the Board in corpore or its individual members from officebefore the expiry of their term. 6.A member of the Board may resign from his post before the expiry of his term ofoffice, notifying the Board in writing at least 14 calendar days in advance. 7. The General Meeting may remunerate (pay bonuses to) members of the Boardfor their work on the Board only out of the net profit, taking into account the provisionsof Article 61 of this Law. Article 35. Powers and Responsibility of the Board 1. The Board shall consider and approve: 1) the structure of the company management and positions; 2) posts in which persons are employed only by holding competitions; 3) salaries of the head of the Administration and his deputies; 4) the office rules of the head of the Administration and his deputies, the rules ofthe branches of the company. 2. The Board shall elect and remove from office the head of the Administration.The Board shall approve of the candidates nominated by the head of the Administrationto his deputies as well as well as of the candidates to the posts to which employees arechosen on the basis of competition. 3. The Board shall analyse and evaluate the material submitted by the head of theAdministration on: 1) the strategy of production, technical, research, design and experimental work aswell 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 entered into by the company; 5) financial situation of the company; 6) results of business activities, income and expenditure estimates, stock-takingdata and other records of valuables. 4. The Board shall analyse, assess the company’s draft annual financial statementsand draft of the appropriation of profit and, having approved of the above drafts, submitthem to the General Meeting. The Board shall determine the method of estimating assetdepreciation and depreciation rates. 5. The Board must hold General Meetings in due time, ensure the compiling of thelist of holders of registered shares, draw up the agendas of the General Meetings,present to the shareholders the companys annual financial statements, the draft of theappropriation of profit, the report on the company’s activities and other requiredinformation for considering the items on the agenda. 6. The Board shall adopt: 1) decisions on the company becoming the incorporator, member of otherenterprises; 2) decisions on the transfer, lease or mortgage of fixed assets the value whereofamounts to over 1/20 of the company’s authorised capital as well as on offering
  24. 24. guarantee or surety for the discharge of obligations of other entities, when the amount ofthe obligations exceed 1/20 of the company’s authorised capital; 3) decisions on the acquisition of fixed assets the price whereof exceeds 1/20 ofthe company’s authorised capital; 4) other decisions which are assigned to the competence of the Board by thecompany’s Articles of Association or resolutions of the General Meeting. 7. A resolution of the General Meeting adopted by an at least 2/3 majority voteshall be required for every decisions of the Board specified in subparagraph 2 ofparagraph 6 of this Article. During a financial year the sum of the total balance-sheetvalue of the fixed assets transferred, leased, or mortgaged under the contracts enteredinto without the approval of the General Meeting and the amount of other entities’liabilities for the fulfilment whereof guarantee or surety is offered may not exceed 1/20of the companys authorised capital value. The company’s Articles of Association mayprovide for other cases where the approval of the General Meeting is required for thedecisions of the Board. 8. The Board shall discharge its functions for the term fixed in the Articles ofAssociation or until a new Board is elected and commences its work. 9. The procedure of work of the Board shall be set forth in the Rules of Work theBoard adopted by it. 10. Every member of the Board shall have the right of initiative to convene theBoard meeting. The decisions adopted by the Board shall be valid if voted in favour ofby at least a half of the Board members. The Articles of Association of the companymay prescribe a larger majority of votes required for the adoption of decisions. Whenthis is provided for by the laws of the Republic of Lithuania, the member of the Boardappointed by the institution representing special shares shall have the right of vetowhen voting on separate issues. When other issues are put to the vote, the Boardmember appointed by the institution representing special shares shall not be entitled tovote. A member of the Board shall not be entitled to vote when the Board meeting istaking a decision on his pecuniary liability issues or personal matters relating to hiswork in the company. 11. The Board must invite the head of the Administration to every meeting of theBoard, provided he is not a member of the Board, and provide him with an opportunityto have access to the information relating to the issues on the agenda. 12. The Board shall be prohibited from restricting the auditor’s powers orinterfering with his work in any other way. 13. The members of the Board must keep the companys commercial secretsconfidential. 14. The chairman and members of the Board must jointly compensate for thelosses incurred by the company by reason of the decisions of the Board adopted inviolation of the companys Articles of Association, this Law and other laws of theRepublic of Lithuania. Released from the obligation to compensate for the losses shallbe persons who voted against the decision or did not attend the meeting at which thedecision was adopted, provided that they file with the presiding officer a written protestwithin 7 days after they learnt or should have learnt about the decision. The resignationof a member of the Board or his removal from office shall not release him from theobligation to compensate for the losses incurred through his fault. A member of theBoard may be released from the obligation to compensate for the losses inflicted by himthrough the performance of his duties provided that he acted in accordance with thecompany’s documents and other information the accuracy whereof was beyond
  25. 25. reasonable doubt, or if he acted within the limits of normal production-business risks.Disputes concerning the compensation for losses shall be settled in court. Article 36. Report on the Company’s activities 1. 10 days before the Annual General Meeting the Board must draw up a report onthe company’s activities. The report shall contain: 1) an overview of the company’s activities in the financial year; 2) names of the company’s subsidiary companies, the number of shares of thecompanies acquired by the company, the total nominal value of the said shares and theshare in the authorised capital of the these companies represented by them, assessmentof benefit derived by the company form holding a majority of votes or exercising adominant influence in the said companies; 3) the number of own shares and shares of other companies acquired andtransferred in the course of the financial year as well as substantiation of the saidacquisitions and transfers; 4) information on the company’s branches; 5) material events in the company at the close of the financial year; 6) plans and forecasts of the company’s activities. 2. The company’s Articles of Association may also set other requirements for thereport on the company’s activities. 3. If the Board is not formed in the company, the report on the company’sactivities, meeting the requirements of this Article, must be drawn up by the head of theAdministration. 4. The reports on the activities of public limited liability companies and privatelimited liability companies specified paragraph 2 of Article 60 of this Law must beaudited by the auditor prior to the Annual General Meeting. The reports on the activitiesof the above companies shall be public: upon the request of every interested person thecompany must provide conditions for access at the company’s registered office to thereport on the company’s activities and the auditor’s opinion on the report or present acopy of the above documents or a part thereof. 5. If the General Meeting fails to approve the report on the company’s activities orgives the report a negative evaluation, the Board (if the Board is not formed - the headof the Administration) shall lose its powers. The Board (the head of the Administration)shall discharge its functions until the election of a new Board (the head of theAdministration). If the report on the company’s activities is not approved, the head ofthe Administration or the Board, if it is elected by the General Meeting, must forthwithconvene the General Meeting for the election of a new head of the Administration or theBoard. Article 37. Internal Auditor of the Company 1. The company’s Articles of Association may stipulate that the financial activitiesof the company shall be controlled by the internal auditor. 2. The internal auditor shall be elected by the General Meeting for the term set inthe Articles of Association. 3. The procedure of work of the internal auditor shall be established by the workregulations of the internal auditor. 4. The Administration and Board of the company must submit to the internalauditor the accounting and financial documents requested by him.
  26. 26. 5. The company shall pay the internal auditor a salary for his work. The amount ofthe salary or the terms and conditions of payment for work shall be determined by theGeneral Meeting. 6. The internal auditor must keep the company’s commercial secrets divulged tohim in the exercise of control over the company’s financial activities confidential. 7. The internal auditor’s qualification requirements shall be set by the Governmentof the Republic of Lithuania or the institution authorised by it. Article 38. Head of the Administration and the Administration 1. The company shall have the head of the Administration (the president, directorgeneral, director). 2. The head of the Administration shall direct the Administration which shallorganise and carry out the company’s business activities. The head of theAdministration shall approve the work regulations of the Administration, employ anddismiss the Administration staff members, conclude employment contracts with them. 3. The head of the company’s Administration shall represent the company in therelations with the third parties both in the court and in the arbitration institution. Thehead of the Administration shall acquire the right to represent the company from thedate fixed in the employment contract. 4. The head of the Administration may enter into contracts specified inparagraph 6 of Article 35 of this Law only on the basis of the decisions of the Board.The company’s Articles of Association may specify other cases when the head of theAdministration may enter into contracts with third parties only having been given theconsent of the General Meeting or the Board. The limits on the powers of the head ofthe Administration of the company, arising under the Articles of Association, maynever be relied on as against third parties, even if the Articles of Association have beendisclosed in the manner prescribed by law. 5. The head of the Administration must communicate to the Board materialspecified in paragraphs 3 and 4 of Article 35 of this Law. 6. In his activities the head of the Administration of the company shall beguided by the company’s Articles of Association, resolutions of the General Meeting,decisions of the Board and work regulations of the Administration. 7. The head of the Administration may have deputies. The Articles ofAssociation of the company may specify spheres of activity where the deputies of thehead of the Administration shall be entitled to act independently and to enter intocontracts of the company. The limits on the powers of the deputy head of theAdministration may be relied on by the company as against third parties only from theday of disclosure of the Articles of Association in the manner prescribed by law. 8. The head of the Administration shall be elected and removed from officeby the Board of the company (if the Board is not formed - by the Supervisory Board,and where the Supervisory Board is not formed either - by the General Meeting). Acompetition may be held to choose the head of the Administration. The Board of thecompany (if the Board is not formed - the Supervisory Board, and where theSupervisory Board is not formed either - the person authorised by the General Meeting)must within 2 working days notify the administrator of the Register of Enterprises inwriting of the election or removal from office of the head of the Administration. 9. The head of the Administration may be a competent natural person withwhom a contract of employment shall be concluded. A person not entitled under thelaws of the Republic of Lithuania to occupy the post may not be appointed head of theAdministration.
  27. 27. 10. The contract of employment shall be signed with the head of theAdministration by the chairman of the Board (if the Board is not formed - by theSupervisory Board, and where the Supervisory Board is not formed either - by theperson authorised by the General Meeting). If the head of the Administration is amember of the company Board, the contract of employment with him shall be signed bythe chairman of the Supervisory Board (if the Supervisory Board is not formed - by theperson authorised by the General Meeting). 11. If the head of the Administration is not a member of the Board, he shallparticipate in the meetings of the company in a deliberative capacity. 12. If the head of the Administration or his deputy enters into a contract whichis beyond his competence, exceeding exposure to normal business risk, or performedother unlawful actions thereby inflicting damage on the company (including loss ofprofit) or if by reason thereof the persons derive direct or indirect benefit at the cost ofthe company or shareholders, the company and the shareholder or shareholders of thecompany shall be entitled to claim through the court compensation for the damage(including the loss of profit) incurred because of the contract or the above actions. 13. Having entered into a contract beyond his competence, the head of theAdministration shall bear subsidiary liability if the claims of the third person are notsatisfied in full from the company. CHAPTER FIVE CAPITAL OF THE COMPANY Article 39. The Capital Structure 1. The companys capital shall be divided into equity capital and borrowedcapital. The equity capital shall be formed out of the share issue price and the profit ofthe company. The borrowed capital shall be formed by issuing debentures, taking loansand by borrowing funds in any other way. 2. The companys equity capital shall consist of: 1) the authorised capital; 2) the share premium (the amount above nominal value); 3) revaluation reserve; 4) legal reserve; 5) reserves for purchasing own shares (in public limited liability companies); 6) reserves specified in the Articles of Association; 7) other reserves; 8) profit (losses) brought forward; 7) grants and subsidies; 10) deferred charges (expenditure formed by increasing the current period costsor reducing the income, which are anticipated in the subsequent periods in order tocorrectly reflect the performance of the periods). 3. The authorised capital shall amount to the sum total of the nominal values of allsubscribed for shares of the company. 4. If the companys equity capital becomes less than 3/4 of the authorised capitalspecified in the Articles of Association, the Board shall convene the ExtraordinaryGeneral Meeting. The Meeting may adopt a resolution to reduce the company’sauthorised capital by the amount which is not less than the difference between the equitycapital and the authorised capital or to liquidate the company. The shareholders mayalso decide to cover the difference by additional contributions.
  28. 28. 5. If the General Meeting failed to adopt the resolutions provided for in paragraph4 of this Article and the difference between the equity capital and the authorised capitalwas not covered by additional contributions, the Board shall within 15 days from theGeneral Meeting, but not later than within 2 months from the moment when it learnt orshould have learnt of the equity capital having fallen below 3/4 of the authorised capital,must apply to the court for the reduction of the authorised capital of the company by thesum whereby the equity capital has fallen below the authorised capital. 6. After the court order to reduce the company’s authorised capital becomeseffective, the Board of the company must change the amount of the authorised capital ofthe company accordingly, first of all by cancelling its own shares acquired by thecompany and, should this prove insufficient, by reducing the nominal value of theremaining shares or cancelling the shares, reducing the number of shares for allshareholders in proportion to the number of shares of the company owned by them andby making appropriate amendments in the Articles of Association of the company. Theamended Articles of Association of the company must be presented for registration inthe Register of Enterprises of the Republic of Lithuania within 15 days from thecoming into effect of the court order. 7. Paragraphs 4, 5 and 6 of this Article shall not apply until the expiry of the timelimit for payment for the company shares of the last issue. Article 40. Reserves and their Composition 1. The revaluation reserve - the amount whereby the value of long-term tangibleand financial assets increased upon the asset revaluation. The revaluation reserve shallbe reduced when the revalued assets are written off, subjected to wear, depreciated ortransferred into the ownership of the State, municipality or other persons. Therevaluation reserve may not be used to reduce losses. The revaluation reserve may beapplied to increase the authorised capital in accordance with the procedure establishedin Article 53 of this Law. 2. The legal reserve shall be formed from the deductions from the net profit inaccordance with the procedure established in paragraph 4 or Article 61 of this Law andshall be used to cut the losses. In case of reduction of the authorised capital the legalreserve may be reduced retaining the ratio specified in paragraph 4 of Article 61 of thisLaw. When decreasing the authorised capital, the difference in the amount of the legalreserve shall be attributed to the profit or loss of the accounting period to beappropriated. 3. The reserve for purchasing own shares shall be formed in order to cover theacquisition value of the own shares of a public limited liability company. The amount ofthe reserve may not be less than the sum total of the values of own shares acquired bythe public limited liability company. 4. The reserves specified in the Articles of Association and other reserves shallconsist of the reserves available for distribution and reserves not available fordistribution. 5. Reserves not available for distribution shall be formed in accordance with theprocedure established by law and the company’s Articles of Association for specificpurposes by transferring part of the net profit of the accounting period. Reserves notavailable for distribution shall be formed, reduced and liquidated upon the resolution ofthe General Meeting by an at least 2/3 majority vote. When reserves not available fordistribution are being reduced or liquidated, the authorised capital shall be increased byan appropriate amount and the nominal value of shares shall be increased pro rata to the

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