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Newsletter 2012 February

  • Lithuania

    21-02-2012

    Administrative Law

    Amendments to the Law on Excise Duties adopted

    On 8 November 2011, the Parliament of the Republic of Lithuania (hereinafter the Parliament) adopted amendments to Articles 24 and 25 of the Law of the Republic of Lithuania on Excise Duties (hereinafter the Law on Excise Duties). The amendments provide for new rates of excise duty on wine from fresh grapes and other fermented drinks. Wine and other fermented drinks, in which the percentage of actual ethyl alcohol concentration by volume (in case of other fermented drinks, such concentration obtained only by fermentation) does not exceed 8.5 per cent, shall be subject to excise duty at the rate of 58 LTL per product hectolitre (compared to the previous rate of 53 LTL); other beverages not specified herein shall be subject to excise duty at the rate of 198 LTL per product hectolitre. Intermediate products, in which the percentage of actual alcohol concentration by volume does not exceed 15 per cent, shall be subject to excise duty at the rate of 216 LTL per product hectolitre. Intermediate products, in which the percentage of actual alcohol concentration by volume is higher than 15 per cent, shall be levied excise duty at the rate of 304 LTL per product hectolitre.

    These amendments came into force on 1 January 2012.

    On 29 November 2011, the Parliament adopted amendments to Articles 30, 31 and 53 of the Law on Excise Duties to modify, inter alia, the excise duties levied on cigarettes. The amendments provide that combined excise duty on cigarettes shall be not lower than 232 LTL for 1 000 cigarettes (in lieu of the previous rate of 80 LTL).

    The amendments will come into force on 1 March 2012.

    On 15 December 2011, the Parliament adopted an amendment to Article 34 of the Law on Excise Duties. The amendment provides that the highest retail price for cigarettes must be indicated on the packaging of cigarettes rather than on the tax stamp marking the packaging of cigarettes. This amendment was made in the hope to lessen the administrative burden on the business and on the tax administration bodies.

    This amendment will come into force on 1 March 2012.

    Company Law

    Amendments to the Law on Companies adopted

    On 15 December 2011, the Parliament adopted amendments to the Law of the Republic of Lithuania on Companies. The amendments provide for a possibility to allocate dividends for a period shorter than one financial year and detail the conditions of such dividend allocation. The decision to initiate the allocation of dividends for a period shorter than one fiscal year can be made by shareholders holding more than 1/3 of all votes (unless the articles of association do not provide for a greater majority). Should a company wish to pay dividends for a period shorter than one fiscal year, such a company may not have any undischarged obligations and, following the payment of dividends, must be capable of performing its obligations for the running fiscal year. The amendments also establish a requirement for an audit of the interim financial statements.

    The amendments will come into force on 1 March 2012.

    Labour Law

    Amendments to the Labour Code adopted

    On 17 November 2011, the Parliament adopted amendments to the Labour Code of the Republic of Lithuania (hereinafter the Labour Code) to supplement Article 140 with a new part on severance pay. If, pursuant to Articles 129 and 136(1.6) of the Labour Code, an employee is dismissed from work in a governmental or municipal authority financed from the State budget, a municipal budget, the budget of the State Social Insurance Fund or by means from other funds established by the State, dismissed from work in a state or municipal enterprise or in a non-profit organisation owned by the State or a municipality, or dismissed from work in the Bank of Lithuania, the payment of severance pay to such an employee shall commence within one month from the date of employment termination and shall be paid in equal parts on a monthly basis. The payment of severance pay shall cease if such a person assumes a public office or is employed at a governmental or municipal authority financed from the State budget, a municipal budget, the budget of the State Social Insurance Fund or by means from other funds established by the State, or is employed at a state or municipal enterprise or at a non-profit organisation owned by the State or a municipality, or is employed at the Bank of Lithuania. If such a person assumes a public office or his employment at a governmental or municipal authority financed from the State budget, a municipal budget, the budget of the State Social Insurance Fund or by means from other funds established by the State, or at a state or municipal enterprise or at a non-profit organisation owned by the State or a municipality, or at the Bank of Lithuania commences on a day other than the first day of a month, the severance pay shall be paid just for respective days of that month until the beginning of his public office or employment.

    These amendments became effective on 1 December 2011 and are applicable to the above-mentioned persons dismissed from work on or after 1 December 2011.

    Amendments to the Law on Health and Safety at Work adopted

    On 1 December 2011, the Parliament adopted amendments to Articles 43, 44 and 45 of the Law of the Republic of Lithuania on Health and Safety. In the amended articles, “the State public health territorial authority under the Ministry of Health” was replaced with “a regional public health centre”. The amendments will come into force on 1 July 2012. The Code of Administrative Offences of the Republic of Lithuania was also respectively amended; the amendments will be effective as of 1 July 2012.

    Finance Law

    Amendments to the Law on Banks adopted

    On 17 November 2011, the Parliament amended and supplement the provisions of the Law of the Republic of Lithuania on Banks, whereby the Bank of Lithuania and its assigned temporary administrator (along with the Government of the Republic of Lithuania, the Government-authorised institution, and the State-owned enterprise “Deposit and Investment Insurance“) are authorised to solve issues relating to the functioning of banks and to possible negative influence on the stability of the financial system quickly, efficiently and at the lowest expense of the State and of the funds of deposit and investment insurance. The amendments also regulate the ways of solving problems of a bank, the financial condition of which poses a threat to the stability and soundness of the entire banking system: appointment of a temporary administrator; transfer of the problem bank’s assets, rights, transactions and liabilities to another bank; regulation of the implementation process.

    The amendments came into force on 18 November 2011.

    Amendments to the Law on Financial Sustainability Adopted

    On 17 November 2011 the Parliament adopted amendments to the Law on Financial Sustainability, which provided for a possibility for the Government of the Republic of Lithuania to adopt a resolution to incorporate a bank all the shares of which would be owned by the State and the goal of which is to temporarily carry out activities related to the assets, rights and liabilities taken over from the bank the financial condition of which poses a threat to the stability and soundness of the banks‘ system (hereinafter “the interim bank”). If, after the expiry of the term prescribed by law, which, in case of necessity, may be extended, the shares of a bank are not sold to, or assets and liabilities of a bank are not transferred to another private capital bank, the activities of the interim bank should be terminated, and the bank should settle with creditors in the manner prescribed by law and be liquidated. The amendments to the law came into force on 18 November 2011.

    Amendments to the Law on Insurance of Deposits and Liabilities to Investors adopted

    On 17 November 2011 the Parliament adopted amendments to the Law on Insurance of Deposits and Liabilities to Investors, which established the provisions concerning the participation of the State-owned company Insurance of Deposits and Investments in the financing of the transfer of the bank’s assets, rights, transactions, and liabilities to another bank in accordance with the provisions of the Law on Banks (which was amended at the same time) and set the ways and conditions for the participation in such financing. Such participation should not require more finances of the funds under the administration of the insurance enterprise than such finances would be spent on disbursement of insurance compensations to depositors and investors of a problem bank in the event of occurrence of an insured event. The amendments to the Law on Insurance of Deposits and Liabilities to Investors dropped the provisions concerning the powers of the insurance enterprise to resolve on the issues of taking the bank’s shares for the public needs. The amendments to the law came into force on 18 November 2011.

    Real Estate Law

    Amendments to Article 17 of the Constitutional Law on the Implementation of Part 3 of Article 47 of the Constitution adopted

    On 17 November 2011 the Parliament adopted amendments to the Constitutional Law on the Implementation of Part 3 of Article 47 of the Constitution, which provide that foreign subjects which meet criteria prescribed in Article 4 of the above-mentioned law, except for those foreigners who have resided in Lithuania for at least 3 years and engaged in agricultural activities as well as foreign legal entities and other foreign organisations which established representative offices or branches in Lithuania, may not acquire agricultural land and forestry land until 30 April 2014. Previous wording of the law had provided for a term defined as the expiry of the 7-year transition term prescribed in the Treaty concerning the accession of the Republic of Lithuania to the European Union. The amendments to the law came into force on 12 November 2011.

    Commercial Law

    Amendments to the Regulations on Retail Trade adopted

    On 14 December 2011 the Government of the Republic of Lithuania adopted a resolution to amend the Regulations on Retail Trade. The amendments modified Items 4 and 25.4 and repealed Items 11.7 to 11.9 governing the specifics of sale of commodities.

    Case Law

    Lithuanian case law

    Concerning the peculiarities of unilateral termination of a lease-purchase contract

    On 21 December 2011 a panel of the Civil Division of the Supreme Court of Lithuania (hereinafter referred to as the SCL) ruled in civil case No. 3K-3-527/2011, in which a dispute arose around recognising unilateral termination of a contract null and void and indemnification of damages. On the grounds that the plaintiff was constantly late with payments of instalments, the defendant (a leasing company) gave notice on terminate of a lease-purchase contract. The plaintiff disputed such unilateral termination of the contract as illegal and unsubstantiated; in his opinion, such termination does not comply with the balance of interests of the parties and violates the principles of fairness and justice. The SCL clarified that in the case of a lease-purchase contract the Civil Code of the Republic of Lithuania (hereinafter “the Civil Code”) provides for additional guarantees to the credit recipient, apart from the general grounds for contract termination, where the credit giver intends to unilaterally terminate a credit in the event of an essential breach of a contract or in cases directly provided in a contract. In case of failure to ascertain these conditions, the termination of the disputed contract should be reasonably considered illegal. In the case of lease-purchase legal relationships, a special remedy for the credit recipient’s violated rights is provided in Article 6.891 of the Civil Code, which entitles the credit recipient to claim back the instalments paid by him, where, in case of a contracted concluded with the credit giver and a seller or a service provider, the seller defaults on his contractual obligations. The SCL referred to the judgement of the European Court of Justice of 17 April 2008 in case C-404/06 Quelle AG v Bundesverband der Verbraucherzentralen und Verbraucherverbände, which reflects the general tendency for prohibition, in the light of consumer protection, for a seller, whose fault resulted in the termination of a consumer contract, to require the consumer to pay compensation for the use of the goods under the contract. The SCL declared the termination of the contract by the defendant wrongful.

    Other News

    Eversheds Saladžius sponsored Baltic IP Innovation Challenge

    Eversheds Saladžius sponsored Baltic IP event held in Riga, Latvia. The eagerly anticipated Baltic IP Innovation Challenge took place on the 25th of January 2012 at the Stockholm school of Economics in Riga. The competition has been set up as an incentive for research organisations (ROs) to get involved with Baltic IP where they can begin to understand and realise the real value of the innovations (intellectual property) that they are producing in their relevant organisations.
    More information on this event may be found at http://balticip.wordpress.com/innovation-challenge/

    Eversheds Saladžius invited to the webinar Food for thought Preparing for the Food Information Regulation

    Eversheds Saladžius invited clients and other contacts to the webinar Food for thought Preparing for the Food Information Regulation.

    During the webinar Eversheds food & drink sector experts delivered a practical briefing on the new Regulation which will bring together general food labelling requirements into one Europe-wide piece of legislation. The Regulation will make a number of highly significant changes and will affect producers, retailers and caterers.

    The session also covered the regulation changes for mandatory nutrition labelling, print size and legibility as well as country of origin labelling for ingredients. It also looked at the interpretation between the new labelling rules and the interaction of the Nutrition and Health Claims Regulation.

    Webinar was led by Eversheds food & drink sector experts Parmjit Singh, a partner, Head of Eversheds International Food and Drink sector; Professor Owen Warnock, a partner with specialist expertise in food labelling originating from the European Commission for implementation on a national basis; Dr Joos Hellert, a partner with specialist expertise in food labelling, manufacturing, packaging and nutrition.

    Should you wish to receive more information on the webinar, please contact law.firm@eversheds.lt

    Eversheds Saladžius offers practical and useful publication Legal Drafting in English

    Eversheds Saladžius offers practical and useful publication Legal Drafting in English. This Eversheds guide to legal drafting in English is a pioneering attempt to provide some practical assistance to busy lawyers around the world whose native language is not English, but who, in the course of their daily work, need to read, write, negotiate and converse in 'legal English'.

    Should you wish to read the publication, please contact us at law.firm@eversheds.lt or visit www.eversheds.lt

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