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Newsletter 2010 January

  • Lithuania

    29-01-2010

    Company Law

    The amendments to the Civil Code have been adopted

    On 22 December 2009 Seimas has adopted the Law amending the Civil Code of the Republic of Lithuania.

    The aim of the amendments is to simplify the procedures of registration of legal entities, amendment of incorporation documents as well as registration data, and liquidation procedures of legal entities. By the amendments it is also pursued to take advantage of the stipulations provided by the Council Directive 78/660/EEC based on Article 54 (3) (g) of the Treaty on the Annual Accounts of Certain Types of Companies allowing not to announce all financial accounts of legal entities.

    By the amendments the requirement for one of the persons acting on behalf of the representative office or the branch of a legal entity to reside in the Republic of Lithuania has been amended. From now on this requirement shall not be applied to the representative offices or branches of legal entities or organisations of EU member states or EEE countries, incorporated in the Republic of Lithuania.

    According to the legal regulations applied until the adoption of the amendments, the requirement to indicate the corporate seat of the company in its articles of association has been applied, consequently, when changing the address of the corporate seat, the decision of the general meeting of shareholders regarding the amendment of articles of association had to be adopted, and the correspondence of the documents with the requirements of the laws had to be approved by a notary public. By the amendments of the Code the requirement to indicate the corporate seat of a company in its articles of association has been eliminated. Accordingly, the Law on Companies has also been amended.

    Moreover, the term of the registration of a legal entity has been shortened. Upon amendments coming into force, a legal entity shall have to be registered by the Registrar within 3 working days after the required documents have been submitted and the payment of the registration fee has been made. Until now a 30 days term has been established.

    Furthermore, according to the amendments adopted the registration certificate of a legal entity will no longer be issued. From now on, upon incorporation of the legal entity the Registrar shall issue the excerpt from the register.

    In pursuance of reducing the timing and financial costs incurred by the Register of Legal Entities when liquidating legal entities which do not carry on any activities, the amendments establish that the request concerning the liquidation of legal entities when submitted by the Register of Legal Entities, shall be examined by the court pursuant to the simplified procedure under Chapter XXXIX of the Civil Procedure Code, according to the place of corporate seat of a legal entity. In this way it is pursued to reduce liquidation costs and to shorten the term of liquidation of a legal entity.

    Some more amendments have also been adopted in pursuance of eliminating the inner contradictions of legal regulation and harmonising legal rules.

    The amendments have come into force as from 1 January 2010.

    The amendments to the Law on Companies have been adopted

    On December 2009 two laws amending the Law on Companies have been adopted.

    The first part of the amendments has come into force as from 5 January 2010. Upon amendments coming into force, the obligation to indicate the corporate seat of a company in its articles of association no longer exists. The address of the corporate seat shall only be indicated in the incorporation agreement. Moreover, the obligation to submit information about the beginning and the end of the financial year of a company to the Register of Legal Entities has been eliminated. In such a way the administrative burden is intended to be reduced.

    The second part of the amendments has been adopted on 25 December 2009. By the adopted amendments the requirement for private stock companies to convene the constituent meeting has been eliminated in cases when the members of the body elected by the general meeting ofm shareholders, in accordance with the articles of association, are indicated in the incorporation agreement or in the incorporation act. This amendment shall come into force as from 1 March 2010.

    Moreover, the opportunity to withdraw the application of the pre-emption right in the articles of association, when acquiring the shares in a company by the shareholders of a private stock company has been established, as well as the opportunity to establish a different order of the implementation of the pre-emption right than prescribed by the Law. In the effective wording of the Law such an opportunity is not established. The amendment shall come into force as from 1 March 2010.

    Further, the order of adoption of the board’s resolutions of a company has been amended. Upon amendments of the Law coming into force, the board shall adopt resolutions and its meeting shall be deemed to have taken place when the meeting is attended by 2/3 of the members of the board, if the articles of association of the company do not require a larger number of the members present at the meeting. A resolution of the board shall be adopted, if more votes are received for it than against it, if the articles of association do not require a larger majority. In the effective wording the number of more than 2/3 of participating members of the board is required; the resolution is adopted when the majority of the elected members of the board have voted for the resolution.

    Also, the new requirement for the heads of private stock companies to make the list of shareholders of the company and to submit it to the Registrar has been established by the amendments. Upon changing of the data of the list, the updated list shall have to be made immediately after receipt of the documents, on the ground of which the records in the securities accounts or in the registration journal of the owners of material securities are made. The updated list has to be submitted to the Registrar within 5 days after it has been made. The companies incorporated before 1 March 2010 shall have to submit the mentioned lists of shareholders not later than until 1 October 2010.

    As from 1 October 2010 the new rules of publication of notices of the company will come into force. It has been established, that the source indicated in the articles of association, in which the notices of the company shall be published, shall have to be a daily of the Republic of Lithuania or an electronic source allowed by the Registrar for the announcement of public notices. It shall be allowable to establish in the articles of association that notices of the company shall be published in both mentioned sources.

    By the amendments the order of resignation of the head of the company has been amended by establishing specific terms for approval of resignation and by granting the right to the resigned head to submit a notice concerning the resignation to the Register of Legal Entities. This amendment shall come into force as from 1 March 2010.

    Construction Law

    The amendments to the Law on Territorial Planning

    In December 2009 Seimas has adopted two laws, amending the Law on Territorial Planning.

    The first part of the amendments has been adopted in pursuance of transferring the functions of supervision of the general and special territorial planning documents, state supervision of detailed plans implemented by the county governor’s administration which are attributed to the municipalities, State Territorial Planning and Construction Inspectorate under the Ministry of Environment. In this way it is pursued to improve the control of supervision.

    The second part of the amendments has been adopted in pursuance of simplification of implementation of the provisions of the Law when preparing territorial planning documents.

    First of all, by the amendments the list of documents which are equated to the documents of the detailed territorial planning has been supplemented. Besides the documents indicated in the wording effective until now, the following documents shall be equated to the documents of the detailed planning: the plans of the land plots in the territory of towns prepared under the order approved by the Government and approved by the administration director of the municipality concerning, e.g. plans of land plots formed for exploitation of buildings in accordance with their main purpose, as regards the plan of increase of existing land plot size by more than 6 areas in the free state-owned land, when there is no possibility to form a separate land plot, etc.

    The list of the cases, when the detailed plan must be prepared has been amended as well. From now on, besides the cases, applicable until now, the detailed plan shall also be prepared when: (1) territories for the industrial parks are being formed; (2) for construction of electric equipment (buildings), meant for transmission and allocation of electricity, when such equipment (buildings) are not foreseen in the general plans of municipality or its part.

    Moreover, the list of the cases, when the detailed plan shall not be prepared has also been modified. One of such cases, which has not been established in the wording of the Law effective until now, is when the management and use regime of the land plot and the established construction regulations are not changed when constructing (reconstructing) the buildings.

    The amendments have come into force as from 1 January 2010. It should be noted that territorial planning documents, which have been started to be prepared before 1 January 2010 and for which the planning conditions have already been issued, the planning agreements have been concluded and the procedures of public hearing have been started, shall be finished and approved under the provisions of the Law effective until the amendments have come into force.

    The Law on Construction has been amended

    On 1 January 2010 the Law amending the Law on Construction have come into force.

    First of all, the competence of the institutions executing the supervision of construction has been amended: the functions of the state supervision of construction carried out by the divisions of governor‘s administrations have been transferred to the State Territorial Planning and Construction Inspectorate under the Ministry of Environment, and the function of supervision of the use of buildings and issue of construction permits according to the competence – to the administrations of municipalities.

    Further, the terms of issue of construction permits have been modified. From now on the construction permit shall be issued within 10 working days, and in case of construction of exceptional significance buildings – within 15 working days. Until now these terms were calculated as calendar days.

    Moreover, a possibility for one public administration body (the StateTerritorial Planning and Construction Inspectorate under the Ministry of Environment) to suspend the validity of the administrative act issued by another one (municipality administration) has been eliminated. Only a public administration body, which has issued a respective act, or the court shall be entitled to adopt the decision as regards the suspension of the validity of the administrative act.

    Provision of Services

    The Law on Services has been adopted

    On 22 December 2009 Seimas has adopted the Law on Services. The Law has been adopted in order to implement the Directive 2006/123/EC of the European Parliament and of the Council on Services in the Internal Market and liberalise the provision of services.

    The Law establishes the conditions of implementation of freedom of establishment, freedom of services provision and freedom of services activity, and thereby establishes assumptions for assurance of high quality services. The Law also establishes the principles of implementation of the abovementioned freedoms, administrative simplification means in the Republic of Lithuania and the system of administrative cooperation between the competent authorities of the Republic of Lithuania and the competent authorities of member states and the European Commission in pursuance of securing the appropriate implementation of freedom of establishment, freedom of services provision and freedom of services activity.

    The Law also establishes the requirements applicable for freedom of establishment (e.g. requirement to have certain legal form, to have certain capital, etc.) and the requirements which are forbidden to be established in other legal acts regulating the freedom of establishment (e.g. requirements, which restrict the opportunity to establish in more than one member state, or allowing the discrimination on the ground of nationality or place of residence), also regulates the issuance of licences, related to the freedom to provide services. Moreover, the Law regulates free provision of services and its exceptions, restrictions of freedom to provide services and other issues related to implementation of freedom of services provision.

    With the enactment of the Law, business subjects will be able to receive information and perform all procedures (e.g. to submit documents, required for issuance of a certain permit, to receive permits) using „single point of contact“ through the contact centre, situated in every member state. The Law establishes  functions of such contact centre, the order of performance of procedures and formalities, as well as regulates other matters related to the activities of a contact centre.

    It should be noted, that the Law does not liberalise the provision of all services. The following services are exempted from the regulation of the Law: financial services, health care and pharmaceutical services, electronic connections, transport, gambling and other services defined by the Law.

    The Law has come into force as from 28 December 2009.

    Civil metrication

    Convention “On the Issue of Certain Extracts from Civil Status Records for Use Abroad” has been ratified

    As from 5 December 2009 the Convention “On the Issue of Certain Extracts from Civil Status Records for Use Abroad” ratified by Seimas has come into force.

    The Convention has been ratified in order to reduce the administrative burden incurred by persons willing to submit the documents issued by Lithuanian civil metrication offices to the institutions of foreign countries.Until now, when submitting the mentioned civil status acts (such as birth certificate, death certificate, marriage certificate, etc.) to a foreign country, the documents had to be translated to a respective foreign language and legalised by the Ministry of Foreign Affairs.

    Upon Lithuania becoming the member of the Convention of 1976 “On the Issue of Certain Extracts from Civil Status Records for Use Abroad”, the extracts shall be issued according to the approved forms and shall be accepted in the territories of any country and member of the Convention without any additional formalities. Such extracts will have the same legal power as the ones issued under the national law of the state, i.e. according to the effective order of issue.

    By now, twenty countries have joined the Convention, including Austria, Belgium, Spain, Poland, the Netherlands, Portugal, France, Switzerland, Turkey, Germany, etc. The extracts issued by the competent authorities of these countries shall also be accepted in Lithuania without any additional formalities.

    Other News

    Assistant to attorney at law Gabija Kuncytė commenced the new professional year by participating at the European Union structural assistance project Development of Business, Finance, Marketing and Human Resources in Small and Medium Sized Enterprises. During the open workshop, arranged on 7 January, Gabija delivered the presentation on Particular Issues of Contractual Law for Business.

    Independent journal Lithuanian Business Review has just published an article by Dr. Lina Aleknaitė – Van der Molen, associate at Eversheds Saladžius. The article titled Protection of Investors’ Rights in Lithuania touches upon the status of capital markets in Lithuania together with the fast advancement of Lithuanian economy in the last decade starting to provide an increasing range of opportunities for debt and equity investors. The article further elaborates on some essential clues for investors entering the new market on how to proceed in case something goes wrong and their rights are offended.

    Daily business newsletter Verslo žinios is to publish an article by associate Nerijus Zaleckas titled Aid to business by simplifying administrative procedures. The article deals with the simplified requirements ofadministrative procedures (issue of respective permits, licences, etc.) enabling to provide services in Lithuania, as well as the information on the technical requirements applied to products sold on the Lithuanian market and useful contact information.

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