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Newsletter 2009 November

  • Lithuania

    10-11-2009

    Company law

    The Directive regarding mergers and divisions of companies has been adopted

    On 16 September 2009 the Directive No 2009/109/EC of the European Parliament and of the Council amending Council Directives 77/91/EEC, 78/855/EEC and 82/891/EEC, and Directive 2005/56/EC as regards Reporting and Documentation Requirements in the Case of Mergers and Divisions has been adopted.

    The Directive has been adopted in order to reduce the administrative burden for companies and to enhance the competitiveness of companies in the European Community.

    In one of the amended directives it has been established that a report on any consideration other than in cash shall be drawn up before the company is incorporated or is authorised to commence business, by an independent expert(s) appointed or approved by an administrative or judicial authority. Meanwhile, the amendments establish that Member States may decide not to apply this requirement to the formation of a new company by way of merger or division where an independent expert’s report on the draft terms of merger or division is drawn up.

    The requirements for publication of draft terms of merger (division) have also been amended. Until now it has been established that draft terms of merger (division) of each company under reorganisation must be published in the manner prescribed by the laws of each Member State and by following other requirements of the Directive at least one month before the date fixed for the general meeting which is to decide thereon. The amendments establish the possibility not to apply the mentioned publication requirement for each of the company under reorganisation if for the mentioned period a company makes the draft terms of such merger (division) available on its website free of charge for the public. It should be noted that the new Directive provides the Member States with the right to require that the publication of the mentioned terms would be effected via the central electronic platform or any other website designated by them for that purpose. Where Member States avail themselves of one of those possibilities, they shall ensure that companies are not charged a specific fee for such publication.

    By the amendments it has also been established that the report, which was drawn up until now by the administrative or management bodies of each company under reorganisation explaining the draft terms of merger (division), and information of any material change in the assets and liabilities between the date of preparation of the draft terms of merger (division) and the date of the general meeting shall not be required if all the shareholders and the holders of other securities conferring the right to vote of each company under reorganisation have so agreed. Until now, as a rule, to draft the mentioned reports and to submit the mentioned information was compulsory in all cases.

    The order of making the documents available at the registered office of a company as well as other articles related to the reorganisation of companies by merger (division) have been amended.

    The Member States have been obliged to bring into force legal acts necessary for implementing this Directive by 30 June 2011.

    Competition law

    Article 3 of the Law on Competition has been amended

    On 24 September 2009 Seimas of the Republic of Lithuania has adopted the Law amending Article 3 of the Law on Competition.

    The definition of dominant position has been amended by the Law. Until now it has been established that, unless proved otherwise, an undertaking holding not less than 40 percent of the market share shall be considered to have a dominant position in the relevant market. Unless proved otherwise, each of a group of three or two undertakings with the largest shares of the relevant market, combined holding 70 percent or more of the relevant market, shall be considered to have a dominant position. Upon the amendments coming into force, the stricter requirements shall be applied to the assessment of the market share held by undertakings involved in retail. The amendments establish that, unless proved otherwise, the undertaking involved in retail holding not less than 30 percent of the market share shall be considered to have a dominant position in the relevant market. Unless proved otherwise, each of a group of three or two undertakings involved in retail with the largest shares of the relevant market, jointly holding 55 percent or more of the relevant market, shall be considered to have a dominant position.

    This amendment has been adopted in order to establish legal grounds for more efficient protection of fair competition in retail.

    This amendment shall come into force as from 1 January 2010.

    Finance law

    The Requirements for the Content of Informational Document that has to be prepared in case of Public Offering of Middle-sized issues have been approved

    As from 1 September 2009 the resolution of the Securities Commission by which it has approved the Requirements for the Content of the Informational Document that has to be prepared in case of Public Offering of Middle-sized issues and cases when it does not have to be prepared have come into force.

    The Requirements are applicable to middle-sized issues of transferable securities, i.e. the issues offered publicly during a period of 12 months the total sale value of which exceeds LTL 350,000 but amounts to less than LTL 8,632,000 and the public offering of which does not fall within the area regulated by the legal acts applicable to the securities market.

    The resolution establish that certain information about the company offering securities (e.g. short company development history, production manufactured, services provided, amount of the authorised capital, main financial information of the last 2 financial years, information about the company‘s head and owners of blocks of shares), also information about the offered securities (offering procedure, class of the offered securities, contracts signed with mediators or consultants as regards the offering and accounting of securities, etc.) shall be included in the informational document which must be prepared before the offering of the securities of a middle-sized issue.

    The resolution also establish the cases when preparation of the mentioned informational document is not required, e.g. when securities are only offered to professional investors, when securities are offered to less than 100 natural persons, excluding professional investors, when the shares are allocated free of charge for present shareholders and so forth.

    Construction law

    The Law on Construction has been amended

    On 1 September 2009 the amendments to the Law on Construction have come into force. The amendments have been adopted in order to accelerate the construction organisation process and to make it more transparent.

    First of all, the amendments set the definition of building renovation (modernisation). Moreover, the new concepts related to building renovation (modernisation) have been established, e.g. the definition of typical construction element. “The block of flats” and “the building of residential purpose (block of flats)” are now included in the definition of “building of exceptional significance”. Such expansion of the definition has been made in order to ensure that higher quality standards would be applied to the construction of blocks of flats which until now have been applied to the buildings of exceptional significance.

    One of the major amendments made to the Law is its supplement with Article 23-1, providing for the simplified order of the issuance of a construction permit. According to the simplified order, construction permits shall be issued for renovation (modernisation) of buildings following the typical projects of buildings adjusted to particular renovated (modernised) buildings as approved by the Ministry of Environment or other authorised institution, or following the projects, prepared by using typical constructional elements approved by the Ministry of Environment or other authorised institution. In such a way it is pursued to simplify the order of renovation (modernisation) of blocks of flats.

    Moreover, in order to simplify the order of renovation (modernisation) of blocks of flats, the order of the issuance of design conditions of a building has been simplified, when it is applied to the issuance of the mentioned conditions in cases of renovation (modernisation).

    Employment of aliens

    The Description of Conditions and Order of Issuance of Work Permit to Aliens have been approved

    On 19 August 2009 the Description of Conditions and Order of Issue of Work Permit to Aliens approved by the Minister of Social Security and Labour has come into force. The Description has replaced the legal act of the same title effective until a new description has been approved.

    According to the new description a person, applying to the territorial labour exchange regarding a work permit, must along with the application of approved form submit additional documents which were not required until now, e.g. the certificate issued by the Centre for Quality Assessment in Higher Education as regards the assessment of qualification, also in such cases, when an alien of a non-regulated (by Lithuanian legal acts) profession is intended to be employed and when a higher education is required for such employment. Until now the certificate regarding the assessment of qualification was only required in case of regulated professions. From now on the employer‘s certificate shall have to be submitted together with other documents, including, inter alia, the information about any dismissal of employees in the last 6 months before applying (by indicating the reasons of dismissal, employees‘ qualification and work functions) and the confirmation that an employer do not hold any valid administrative penalty according to Article 206-3 of the Code of Administrative Offences (“Employment of or creation of conditions for other activities, from which the funds for living would be obtained, for aliens who do not hold a work permit, temporary residence permit or permanent residence permit“).

    In the new Description the terms of examination of applications have been shortened. From now on the decision regarding the issue of a work permit shall have to be adopted within 20 calendar days from the day of forwarding the documents to the Lithuanian Labour Exchange, and in case of employees of high qualification – within 10 calendar days. Until now, accordingly the terms of 2 months and 1 month have been established. Upon the Description coming into force, a work permit for an alien on attachment shall have to be issued within 10 days after forwarding the documents to the Lithuanian Labour Exchange. Until now the term of 1 month has been established.

    Moreover, new grounds of refusal to issue (extend) a work permit have been set in the Description. From now on it might be refused to issue (extend) a work permit if an employer has a valid administrative penalty under Article 206-3 of the Code of Administrative Offences, also in cases when an employer within the last 6 month dismissed from work the employees of the same qualification or performing the same functions.

    Other News

    Eversheds Saladžius has sponsored the basketball tournament in the UK The Ambassador‘s Cup 2009. The tournament has been organised on yearly basis by the Embassy of the Republic of Lithuania to the United Kingdom of Great Britain and Northern Ireland. The event, which was held on 17-18 October this year, is dedicated to support the Lithuanian community in the UK.

    Eversheds Saladžius greets winter season by signing the sponsorship agreement with the National Children Ice Hockey League in Lithuania. The purpose of this sponsorship project is to prompt out-of-school activities of children as well as to promote ice hockey in Lithuania.

    Jonas Saladžius, Managing Partner of Eversheds Saladžius, participated at the International Bar Association meeting organised in Madrid, Spain. Jonas is a member of the International Bar Association, Member of the Committees on Banking Law, Corporate and M&A Law, Arbitration and Litigation of the Section on Legal Practice. He is also a member of European Forum and Capital Markets Forum of IBA as well as member of Law Firm Management Committee of the PPID of IBA.

    BCC Paper, newsletter issued by the British Chamber of Commerce operating in Lithuania, publishes Eversheds Saladžius insight into the status of global and local energy sector.

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