Version valid as of 1 January 2024
REPUBLIC OF LITHUANIA LAW
ON COOPERATIVE SOCIETIES (COOPERATIVES)
1 June 1993 No I-164
Vilnius
(As last amended on 15 June 2023 – No XIV-2068)
CHAPTER ONE
GENERAL PROVISIONS
The State of Lithuania shall support the cooperative movement, recognise the provision of services to members of cooperative societies (cooperatives) (hereinafter: ‘cooperative societies’) as the primary purpose of cooperative societies, promote activities of cooperative societies, and legitimise their independence.
Article 1. Purpose of the Law
This Law regulates the establishment and activities of cooperative societies and associations thereof, the rights and obligations of members, the management and control of cooperative societies, the formation of capital, the distribution of profit, the transformation and liquidation of cooperative societies.
Article 2. Definitions
1. ‘Cooperation’ means mobilisation of activities and resources determined by law and aimed at achieving the common goals of members. Cooperative societies may be established for this purpose.
2. ‘Cooperative society’ means an enterprise established in accordance with the procedure laid down by law by natural and/or legal persons established in the Republic of Lithuania, by legal persons established in another Member State of the European Union or a state of the European Economic Area or other organisations as well as the branches thereof (hereinafter: a ‘legal person’) for the purpose of meeting economic, social and cultural needs of its members. Its members shall contribute funds for capital formation, share the risk and profit according to the turnover of members’ goods and services with this society and take an active part in the management of the cooperative society.
3. ‘Document acknowledging the contributed member share’ means a document confirming a person’s participation in the formation of a cooperative society’s capital, as well as the obligations of the cooperative society to a member of the cooperative society as determined by this Law. The Law on Securities shall not apply to member shares of a cooperative society.
4. ‘Share contribution’ means a person’s monetary or non-monetary property contribution to a cooperative society.
5. ‘Turnover of goods and services of a member of a cooperative society with that cooperative society’ (hereinafter: the ‘turnover’) means the value of economic operations and economic events, in money’s worth, performed during the financial year by a member of a cooperative society with that cooperative society.
6. ‘Payments in proportion to turnover’ means the payments to members of a cooperative society made from profit in proportion to turnover of goods and services of the members of the cooperative society with that cooperative society.
7. ‘Dividend’ means a part of profit paid to members of a cooperative society which is in proportion to the value of share held by each member.
8. ‘Economic size of an agricultural holding expressed in standard value of products’ means an indicator expressed in monetary units which is used to describe the size of an agricultural holding and which is equal to the sum of standard value of all products and income of the holding received from the agricultural services supplied and the calculation of which is regulated in accordance with the procedure laid down by the Minister of Agriculture.
Article 3. Status of a cooperative society
2. The assets of a cooperative society shall be separated from the assets of its members. A cooperative society shall be liable, in accordance with its obligations, only to the extent of its assets. A member of a cooperative society shall be liable, in accordance with the obligations of the cooperative society, for the member share to the extent of share contribution subject to payment.
4. A cooperative society shall have its own name. The name of the cooperative society must contain the words ‘kooperatinė bendrovė’ (cooperative society) or ‘kooperatyvas’ (cooperative).
Article 31. Agricultural cooperative society (cooperative)
1. An agricultural cooperative society (cooperative) shall mean a cooperative society (cooperative) which has been recognised as an agricultural cooperative society (cooperative) in accordance with the requirements of this Article. A registered cooperative society (cooperative) shall have the right to be recognised as an agricultural cooperative society (cooperative) provided that it meets the following requirements:
1) the value of the products purchased from the members and the goods and services sold to the members exceeds 50% of the value of all the products purchased by the cooperative society (cooperative) and of all the goods and services sold;
2) the sales income indicated in the profit and loss account of the preceding reporting period (previous financial year) exceeds the minimum amount of sales income referred to in paragraph 7 of this Article;
3) it has no tax arrears to the state budget of the Republic of Lithuania, municipal budgets or the funds the taxes paid whereto are administered by the State Tax Inspectorate (except for the cases of deferral of the payment of taxes, interest, fines or ongoing tax disputes in relation to these taxes, interest, fines) and it is not in arrears to the budget of the State Social Insurance Fund Board;
4) no member of the cooperative society (cooperative) is a member of another agricultural cooperative society (cooperative) purchasing products of the same type or selling goods of the same kind or providing services of the same kind;
5) it meets one of the criteria referred to in paragraph 2 of this Article and submits a list of members who are natural and/or legal persons meeting and not meeting the recognition criteria chosen by the cooperative society (cooperative) indicating the identification data of each member, including the personal number of the member being a natural person or the registration number of the member being a legal person.
2. The criteria for recognising a cooperative society (cooperative) as an agricultural cooperative society (cooperative) shall be as follows:
1) more than 80% of its members are natural and/or legal persons whose part of income from agricultural activity in a previous year amounted to more than 50% of total income and whose income received from agricultural products sold to the cooperative society (cooperative), purchased by the cooperative society (cooperative), in a previous year amounted to more than 50% of income received from agricultural products sold to all economic entities, and where the quantity of each agricultural product sold to the cooperative society (cooperative) purchased by the cooperative society (cooperative) amounts to more than 50% of the total quantity of this agricultural product sold to all economic entities, whereas the total value of the shares of these members amounts to more than 80% of the value of the shares of all the members of the cooperative society (cooperative). Agricultural products mentioned in this point must be interpreted as they are defined in the Law of the Republic of Lithuania on Agricultural, Food Business and Rural Development; for the purposes of this point, agricultural products shall be interpreted as they are defined in the Law of the Republic of Lithuania on Agricultural, Food Business and Rural Development;
2) more than 80% of its members are natural and/or legal persons whose part of income from agricultural activity in a previous year amounted to more than 50% of total income, and where the value of goods and/or services purchased from the cooperative society (cooperative), sold by the cooperative society (cooperative), amounts to more than 50% of the value of these goods and services purchased from all economic entities, whereas the total value of the member shares held by these members amounts to more than 80% of the value of the member shares held by all members of the cooperative society (cooperative);
3) it has more than 30 members and more than 70% of its members are natural and/or legal persons whose economic size of agricultural holding expressed in standard value of products according to the calculation performed in accordance with the procedure laid down by the Minister of Agriculture for a previous year from 1 January to 31 December is not less than EUR 2 000, whereas the total value of member shares held by these members amounts to more than 70% of the value of member shares held by all members of the cooperative society (cooperative);
3. The procedure for recognising cooperative societies (cooperatives) as agricultural cooperative societies (cooperatives) shall be laid down by an institution authorised by the Government. A cooperative society (cooperative) aiming to be recognised as an agricultural cooperative society (cooperative) shall file to an institution authorised by the Minister of Agriculture an application for the recognition as an agricultural cooperative society (cooperative) and the documents listed in the description of the procedure for the recognition of cooperative societies (cooperatives) as agricultural cooperative societies (cooperatives) adopted by the institution authorised by the Government.
4. A cooperative society (cooperative) shall not be recognised as an agricultural cooperative society (cooperative) where:
2) not all the documents which are listed in the description of the procedure for the recognition of cooperative societies (cooperatives) as agricultural cooperative societies (cooperatives) adopted by the institution authorised by the Government and which confirm the fulfilment of the requirements referred to in paragraph 1 of this Article have been submitted or incorrect data have been provided.
5. Cooperative societies (cooperatives) shall be recognised as agricultural cooperative societies (cooperatives) by an institution authorised by the Minister of Agriculture and shall be issued a certificate. A local state tax inspectorate and a territorial department of the State Social Insurance Fund Board under the Ministry of Social Security and Labour shall, at the request of an institution authorised by the Minister of Agriculture, provide the information referred to in point 3 of paragraph 1 of this Article. Recognition as an agricultural cooperative society (cooperative) shall be granted and a certificate shall be issued for a period of two years from the issuance of this certificate. A cooperative society (cooperative) may re-apply for recognition as an agricultural cooperative society (cooperative) for another two-year period.
6. A cooperative society (cooperative) must, for the entire period of its recognition as an agricultural cooperative society (cooperative), meet the requirements referred to in this Article according to which it is recognised as an agricultural cooperative society (cooperative). An institution authorised by the Minister of Agriculture shall, in accordance with the procedure laid down by an institution authorised by the Government, initiate and carry out checks on the compliance of cooperative societies (cooperatives) with the requirements referred to in this Article. Upon establishing that a cooperative society (cooperative) is recognised on the basis of incorrect data or fails to meet the requirements referred to in this Article, the institution authorised by the Minister of Agriculture shall take a decision on the withdrawal of the granted recognition as an agricultural cooperative society (cooperative).
7. The minimum amount of sales income indicated in a profit and loss account of a preceding reporting period (previous financial year) shall be the following:
1) for cooperative societies (cooperatives) in the cereals and milk sector – EUR 20 000 and when the recognition is sought for the first time – EUR 10 000;
Article 32. Forest owners’ cooperative society (cooperative)
1. A forest owners’ cooperative shall be a cooperative society that is recognised as a forest owners’ cooperative in accordance with the requirements referred to in this Article. Forest owners’ cooperatives of shall have the status of agricultural cooperatives. A cooperative society registered in accordance with laws and other legal acts may be recognised as a forest owners’ cooperative subject to the fulfilment of the following criteria of recognition:
1) more than 70% of its members are forest owners being natural and/or legal persons who have registered an agricultural and rural holding and whose value of the member shares held amounts to more than 70% of the value of member shares held by all members of the cooperative society;
2) the part of income of the cooperative society from forestry activity amounted to 50% and more of total income;
4) it has no tax arrears to the state budget of the Republic of Lithuania, municipal budgets or the funds the taxes paid whereto are administered by the State Tax Inspectorate (except for the cases of deferral of the payment of taxes, interest, fines or ongoing tax disputes in relation to these taxes, interest, fines) and it is not in arrears to the budget of the State Social Insurance Fund Board.
Article 4. Founders and memorandum of association
1. The founders of a cooperative society must comprise not less than five natural and/or legal persons.
3. Founders of a cooperative society shall conclude a memorandum of association of a cooperative society, draft articles of association of the cooperative society and call the statutory meeting. The memorandum of association shall be a public document.
4. The memorandum of association of a cooperative society shall indicate:
1) the full name, personal number and place of residence of the founder being a natural person; the name, registered number and registered office as well as the full name of the authorised representative of the founder being a legal person;
2) the rights and obligations of the founders when establishing the cooperative society and liability for defaulting on the obligations related to the establishment;
4) the persons (the founders, also other persons) authorised to represent the cooperative society being established and their rights and obligations;
6) each founder’s obligation to pay a membership fee prior to the statutory meeting and to pay share contribution, which is not less than the minimum member share;
7) the procedure for, terms and conditions as well as time limits of the payment of a membership fee and share contribution, late payment interest for a failure to timely pay the membership fee and share contribution;
8) the procedure for calling the statutory meeting and voting at it, as well as participants of such meeting;
10) the procedure for reimbursing the initial membership fee paid and the share contributions made, where the cooperative society is not established;
5. The memorandum of association of a cooperative society must be signed by all its founders: natural persons and/or persons authorised by legal persons. The authenticity of the signatures of the natural persons who have signed the memorandum of association of a cooperative society shall not be notarised.
Article 5. Articles of association
1. The founding documents of a cooperative society shall consist of the articles of association and the memorandum of association.
2. The articles of association of a cooperative society shall be a document governing the conduct of the cooperative society’s business.
3. The articles of association of a cooperative society must indicate:
4) the duration of activities of the cooperative society, where the activities are of limited duration;
5) the amount of the initial membership fee, the minimum and maximum sizes of member shares, the procedure for paying the initial membership fee and share contribution, additional share contributions, the arrangements for evaluating the non-monetary share contribution and for settling accounts with a person whose membership of the cooperative society has terminated;
6) the terms and conditions of membership in the cooperative society, the rights and obligations of the members of the cooperative society, the rules for determining the votes held by a member of the cooperative society at the meeting of members of the cooperative society, the procedure for disposing of the member share;
7) the management, supervisory and controlling organs of the cooperative society, their competence, the procedure for electing and revoking members of such organs, the requirements for a member and the chair of the supervisory board, the requirements for a member and the chair of the board, the head of administration, and a member of the controllers’ commission (controller);
8) the terms of and procedure for admitting new members of the cooperative society, the terms of and procedure for withdrawing from or expelling members of the cooperative society, the procedure for entering members of the cooperative society in the register of members of the cooperative society;
9) the procedure for calling meetings of members of the cooperative society and the procedure for voting at the meetings;
10) the procedure for registering and performing operations of the turnover of goods and services of the cooperative society and members thereof, the procedure for drawing up and approving annual financial statements of the cooperative society;
4. The competence of the meeting of members of the cooperative society and the procedure for calling it, the rules for determining the votes held by a member of the cooperative society at the meeting of members of the cooperative society, the procedure for appointing and revoking the head of administration and his competence, the procedure for settling accounts with the person whose membership in the cooperative society has terminated need not be specified in the articles of association of the cooperative society, unless this differs from those laid down in this Law and this is indicated in the articles of association. The articles of association of the cooperative society may also contain other provisions which are not contrary to laws of the Republic of Lithuania.
5. The articles of association of a cooperative society must be signed by all the founders being natural persons and/or the persons authorised by legal persons before the statutory meeting. The authenticity of the signature of a natural person who has signed the articles of association of the cooperative society shall not be notarised.
Article 6. Registration
1. A cooperative society must be registered in the Register of Legal Entities in accordance with the procedure laid down by law. Upon registration of a cooperative society which is being established, it shall be considered established and acquire the rights of a legal person.
2. The statutory meeting shall be called and voting shall be conducted thereat in accordance with the procedure laid down in the memorandum of association. The statutory meeting may be called if the founders have paid all initial membership fees specified in the memorandum of association and made share contributions. The articles of association of a cooperative society must be approved at the statutory meeting. The moment of approval of the articles of association of the cooperative society at the statutory meeting shall be considered to be the moment of conclusion of such articles of association. Requests to register the cooperative society may be made only following the statutory meeting at which the articles of association of the cooperative society have been approved and of its management organs have been elected.
3. Upon registration of a cooperative society, the founders as well as other persons who have been authorised to represent the cooperative society which is being established must, within ten days, transfer the founding documents and the formed management organs must accept such documents by drawing up a statement of transfer and acceptance.
Article 61. Data of the Information System of Legal Entities Participants
1. The administrator of the Information System of Legal Entities Participants shall be provided the following data on members of a cooperative society:
1) the full name, personal number, and place of residence of a member being a natural person (when a member of the cooperative society is a natural person and has indicated his place of residence and correspondence address to the cooperative society, the administrator of the Information System of Legal Entities Participants shall be provided only the correspondence address); name, legal form, registration number and registered office of a member being a legal person. When data are submitted on a member being a foreign natural person, the date of birth of the person (where under foreign legal acts no personal number is given, only the date of birth shall be indicated) and the name of the state that has issued personal documents shall be additionally submitted, whereas when data are submitted on a member being a foreign legal person, the state where the legal person is registered, the register where the legal person is registered, and the date of its registration in the register shall be additionally submitted;
3) the amount (when a share contribution is monetary) and/or value (when a share contribution is non-monetary) of a member share;
2. The data specified in points 1–4 of paragraph 1 of this Article on members of a cooperative society shall be submitted to the administrator of the Information System of Legal Entities Participants in accordance with the procedure laid down in the Regulations of the Information System of Legal Entities Participants no later than within five calendar days after the registration of the cooperative society in the Register of Legal Entities and after the change of members of the cooperative society or data thereon, such information shall be submitted no later than within five calendar days of the changes.
3. The head of administration of a cooperative society shall be responsible for the submission of data on members of the cooperative society to the administrator of the Information System of Legal Entities Participants.
4. The information prepared according to the data collected in the Information System of Legal Entities Participants shall be given for a fee to natural and legal persons entitled to receive it, except for the cases when it:
1) is given once each calendar year to members of a cooperative society, when the data thereon are processed in the Information System of Legal Entities Participants;
3) provided to state and municipal institutions and agencies as requested and/or under agreements, for the purpose of exercising the functions determined in legal acts;
5. Credit unions registered under this Law, which are established and governed by the Civil Code of the Republic of Lithuania, the Law of the Republic of Lithuania on Credit Unions, the Law of the Republic of Lithuania on Financial Institutions and this Law, shall not submit data on their members to the administrator of the Information System of Legal Entities Participants.
Article 7. Rights of a cooperative society
1. A cooperative society shall have the right:
1) to engage in the activities complying with laws and the purposes laid down in the articles of association of the cooperative society;
3) to manage, use and dispose of the assets belonging thereto by the right of ownership in accordance with the procedure laid down by law;
4) to form unions of cooperative societies, as well as other organisations in accordance with the procedure established by other laws;
7) to borrow funds under an agreement from its members according to the procedure laid down in the articles of association of the cooperative society;
2. A cooperative society may also have other rights which do not contradict laws and other legal acts.
Article 8. Members
2. A person who wishes to become a member of a cooperative society must file an application. The application shall be considered, and a person shall become a member of the cooperative society under the terms and conditions and in accordance with the procedure prescribed by the articles of association of the cooperative society, provided that he has paid the initial membership fee and the sum of his share contribution is not less than the minimum amount of a member share. If a person is not admitted to the cooperative society, the initial membership fee and share contribution which have been paid shall be refunded in accordance with the procedure and within the time limits specified in the articles of association, but not later than within three months from the taking of the decision.
3. Members of a cooperative society shall be registered in the register of members of the cooperative society in accordance with the procedure prescribed in the articles of association of this cooperative society.
4. The register of members of a cooperative society shall indicate:
1) the full name, personal number and place of residence of a natural person, or the name, registration number and registered office of a legal person;
3) the amount of the member share (a description of the share contribution and monetary expression of its value), as well as each increase in the amount of the member share;
Article 9. Grounds for termination of membership
Membership in a cooperative society shall terminate:
Article 10. Procedure for termination of membership and settlement of accounts after its termination
1. The procedure of a person’s withdrawal from a cooperative society shall be laid down in the articles of association of the cooperative society.
2. A member may be expelled from a cooperative society in accordance with the procedure laid down in the articles of association by a decision of the meeting of members of the cooperative society, if he fails to fulfil the obligations of a member, violates the articles of association of the cooperative society, decisions of the meeting of the members, the laws of the Republic of Lithuania related to activities of cooperative societies, causes damage to the cooperative society. Where a member expelled from the cooperative society does not agree with such a decision, he shall have the right to refer to court within three months from the day when he learnt or ought to have learnt about the taking of the decision.
3. Membership of a person who has transferred his member share shall terminate upon taking of a decision by the meeting of members of the cooperative society regarding the admission of the person who has acquired the transferred member share to members of the cooperative society.
4. A cooperative society must settle accounts with a person whose membership in the cooperative society has terminated due to his withdrawal, expulsion, or transfer of a member share to another person no later than within one year after the date of the meeting of members of the cooperative society which approved financial statements and a distribution of profit and loss of the financial year of the termination of the membership of this member in the cooperative society, or within the period laid down in the articles of association of the cooperative society, which may not exceed five years.
5. A cooperative society must return to the person whose membership terminated due to his withdrawal, expulsion or transfer of a member share to another person his share contribution made for the member share, provided that such share has not been transferred to another person, refund a portion of the assets assigned, by decisions of the meetings of members, to the member before the beginning of the financial year in which membership in the cooperative society terminated, in cash at market prices, pay the payment and dividend proportionate to the turnover, if a decision on payment thereof for that year has been taken by the meeting of members. Non-monetary share contributions, if the person wishes so, shall be returned in kind, except for the cases when this is impossible or would cause disproportionate damage to the cooperative society or to the person whose membership in the cooperative society has terminated. The initial membership fee shall not be refunded.
6. The heirs of a deceased natural person who was a member of a cooperative society, the successors to the rights of a liquidated or reorganised legal person which was a member of a cooperative society, where they are not members of the cooperative society and do not become members of this cooperative society in accordance with the procedure laid down by its articles of association within a year from the acquisition of these rights, shall be refunded the share contribution referred to in paragraph 5 of this Article and made for a member share, shall be returned a portion of the assets assigned to the member and shall be paid the payment and dividend proportionate to the turnover in accordance with the procedure and under the terms laid down in this Article and the articles of association of the cooperative society.
Article 11. Rights and obligations of a member of a cooperative society
1. A member of a cooperative society shall have the right:
1) to participate in the meeting of members of the cooperative society, elect members of management and controlling organs and be elected thereto;
2) to have one vote, regardless of the size of the member share, or the articles of association of the cooperative society may establish that the number of votes held by the member is determined according to his participation in the activities (turnover) of the cooperative society, except for capital investments (share contributions), and may laid down the procedure of such calculation of votes – a member may be entitled to not more than five votes, but not more than 20% of the total number of the votes, and a member of a cooperative society with more than half of its members being cooperative societies may be entitled to not more than 30% of the total number of the votes. Where the articles of association of the cooperative society with more than a half of its members being cooperative societies determines that a member is allocated more than 20% of the total number of the votes, the limit set in the articles of association shall not apply and the votes of each member of the cooperative society shall be proportionately reduced so that not more than 20% of the total number of the votes would be allocated if the number of the members being cooperative societies that constitute the cooperative society decrease to half of all the members or decreased even below. A member of the cooperative society shall be entitled to transfer, in accordance with the procedure laid down in the articles of association, his voting right to another member of the cooperative society by concluding an agreement on the transfer of the voting right the format of which is approved by the head of administration of the cooperative society, or to appoint by a power of attorney in a simple written form a proxy to represent him at the meeting of members;
3) to dispose of the member share in accordance with the procedure laid down by this Law and other laws as well as the articles of association;
6) to make use of the assets and services of the cooperative society in accordance with the procedure and under the terms and conditions laid down in the articles of association;
7) to receive a portion of assets (its equivalent in money’s worth) of the cooperative society in liquidation in accordance with the procedure laid down in the articles of association;
9) to be a member of several cooperative societies, unless the articles of association of these cooperative societies provide otherwise;
10) to lend funds to the cooperative society under an agreement in accordance with the procedure laid down by its articles of association;
2. A member of a cooperative society must adhere to the articles of association, implement decisions of the organs of the cooperative society, carry out turnover with the cooperative society, have care of the assets of the cooperative society, and promote the increase thereof.
Article 12. Structure of capital
1. The capital of a cooperative society shall consist of the equity and loan capital. The equity shall be formed from the initial membership fees and share contributions of members of the cooperative society, deductions from the profit of this society, other income not prohibited by law. The equity of the cooperative society, with the exception of the share contributions made for member shares, may be indivisible or assigned (the whole or a part of it) to the members of the society. The loan capital shall consist of loans and other borrowed funds.
2. The equity shall be comprised of the fixed and reserve capital. The fixed capital shall be used for business activities of a cooperative society and for the acquisition of assets. By a decision of the meeting of members, the reserve capital shall be used for covering extraordinary expenditure and losses, and a part of the reserve capital exceeding 1/10 of the equity may be used for other purposes by a decision of the meeting of members.
Article 13. Member share of a member of a cooperative society
1. The size of a member share of a member of a cooperative society shall be equal to the value of the share contributions made by the member.
2. The minimum and maximum sizes of the member share, the procedure for paying the member share and additional share contributions, liability for violations of this procedure as well as the procedure for evaluating non-monetary share contribution (items, results of intellectual activities, as well as other tangibles and intangibles) must be established in the articles of association.
3. Agricultural land and assets the right to dispose whereof is restricted in respect of the person who makes a share contribution, also the assets to which a cooperative society may not acquire the right of ownership may not serve as a share contribution.
4. A share contribution made by a member of a cooperative society for the member share shall be registered in accounting documents, and the member of the cooperative society shall, in accordance with the procedure laid down by the articles of association, be issued a document acknowledging the contributed member share. It shall indicate the following:
2) the full name, personal number of the holder of the member share who is a natural person, or the name and registration number of a legal person;
5. Members of a cooperative society shall have the right to transfer member share to other persons in accordance with the procedure laid down by the articles of association. A member of a cooperative society shall have the right of priority in acquiring the member share being transferred under the same conditions. A member of a cooperative society must, in accordance with the procedure laid down by the articles of association, give a written notice to other members of the cooperative society and the management organ of the intention to transfer a member share. Where none of members of the cooperative society who have been notified of the member share being transferred acquires the said member share within a month, the member who transfers the member share shall acquire the right to transfer it to a third party, where the third party intending to acquire the member share applies, in accordance with the procedure laid down by the articles of association of the cooperative society, to the cooperative society for admission to members of the cooperative society, and the meeting of members of the cooperative society takes a decision on admission thereof to members of the cooperative society in accordance with the procedure laid down by the articles of association of the cooperative society. The decision shall come into force as of the moment of transfer of the member share. Admission of the person intending to acquire the member share to members of the cooperative society shall not be subject to the provision of Article 8(2) of this Law concerning payment of the amount of the share contribution not less than the minimum size of the member share. A member of a cooperative society shall dispose of the member share in accordance with the procedure laid down by this Law and other laws as well as the articles of association.
Article 14. Distribution of net profit and covering of losses
1. The distribution of the net profit earned by a cooperative society during a financial year shall be approved not later than within four months of the close of the financial year.
2. Net profit shall be distributed in the following order:
3. The balance of profit shall be used in accordance with the procedure laid down in the articles of association.
5. The maximum amount of a dividend shall be established in the articles of association of the cooperative society.
Article 15. Organs of a cooperative society
1. The organs of a cooperative society shall be the meeting of members, the board and the head of administration. A collegial supervisory organ – the supervisory board – may be formed in the cooperative society. If the supervisory board is not formed in the cooperative society, the functions of the supervisory board specified in this Law shall not be assigned to the competence of other organs of the cooperative society.
2. In a cooperative society with more than 100 members, the meeting of members may be replaced by the meeting of representatives of members of the cooperative society. The meeting of representatives of members of the cooperative society shall have the powers of the meeting of members established by this Law. At the meeting of representatives of members of the cooperative society, each representative shall have one vote. The procedure for and conditions of the election and revocation of elected representatives of members of the cooperative society must be specified in the articles of association of the cooperative society. Audit shall be mandatory for a cooperative society whose articles of association provide for the replacement of the meeting of members with the meeting of representatives of the members.
Article 16. Meeting of members of the cooperative society
1. The meeting of members of the cooperative society shall:
1) adopt decisions concerning the admission or expulsion of members of the cooperative society, termination of membership upon transferring a member share to another person. The meeting of members may entrust the board with adopting these decisions, except those regarding the expulsion of a member;
3) elect, revoke members of the supervisory board (where it is formed), members of the board and the chair thereof or, where the board is not formed, elect, revoke the head of administration; also elect, revoke members of the controllers’ commission and the chair thereof/controller or, where the controllers’ commission/controller is not formed or audit of financial statements is mandatory under the Law of the Republic of Lithuania on Financial Reporting by Undertakings, approve an auditor/audit firm;
4) assess the work of the board or, where the board is not formed in the cooperative society, the work of the head of administration and the controllers’ commission/controller, also the opinion of the controllers’ commission/controller or the auditor’s report with regard to the financial statements of the cooperative society;
5) approve annual financial statements, adopt a resolution on the distribution of profit and covering of losses;
7) adopt a decision on the joining of unions by the cooperative society, withdrawal therefrom, establishment of branches and representative offices, other enterprises and organisations, termination of their activities, as well as other organisational issues;
8) approve the rules of procedure of the board, the head of administration and the controllers’ commission/controller;
9) approve the procedure of remuneration for the work of members of the board and the chair thereof or, where the board is not formed, the head of administration, as well as the controllers’ commission/controller;
10) adopt a decision on acquisition, transfer, lease or pledge of fixed assets of the cooperative society, taking and granting of long-term loans, offering of surety or guarantee for the discharge of obligations of other economic entities, where the amount of transactions exceeds 1/10 of the equity of the cooperative society;
2. The meeting of members of the cooperative society may have other rights and powers provided for in the articles of association of the cooperative society.
3. A meeting of members of the cooperative society shall be called by the board of the cooperative society or, if the board is not formed or the board does not call the meeting in the specified cases and within the specified time limits, by the head of administration or not less than ¼ of members of the cooperative society.
4. Regular meetings of members of the cooperative society shall be called by the board (where the board is not formed – by the head of administration) on an annual basis, but not later than within four months after the close of the financial year.
5. Extraordinary meetings of members shall be called by the board (where the board is not formed – by the head of the administration) or on the initiative of not less than 1/4 of members of the cooperative society.
6. The articles of association shall lay down a procedure for drawing up the agenda of a meeting of members and notifying of the calling thereof.
7. A meeting of members of the cooperative society may adopt decisions if it is attended by not less than a half of the members of the cooperative society. If the meeting is not attended by the specified number of the members of the cooperative society, a repeat meeting concerning the same issues on the agenda must be called. Decisions may be adopted at the repeat meeting if it is attended by not less than 1/3 of the members of the cooperative society. If the repeat meeting is not attended by the specified number of the members of the cooperative society, one more meeting shall be called. It shall adopt decisions regardless of the number of the members of the cooperative society attending.
8. Decisions of a meeting of members of the cooperative society shall be adopted by the majority of votes of the members of the cooperative society entered on the list of participants of the meeting, with the exception of the cases indicated in points 2 and 11 of paragraph 1 of this Article and in the cases of expulsion of the members. In these cases, decisions shall be adopted by the majority of votes of not less than 2/3 of members of the cooperative society entered on the list of participants of the meeting.
9. Voting at a meeting of members of the cooperative society shall be by open ballot, except in the cases where voting by secret ballot is prescribed by this Law, the articles of association of the cooperative society or when this is requested by not less than 1/10 of the members of the cooperative society entered on the list of participants of the meeting. Members of the board of the cooperative society and the chair thereof or, where the board is not formed, the head of administration, as well as members of the controllers’ commission and the chair thereof/controller shall be elected by secret ballot.
10. Decisions concerning the acquisition, transfer or lease of a part of fixed assets which exceeds 1/10 of the value of the equity of a cooperative society shall require a decision of the meeting of members adopted by a majority vote, and decisions concerning guarantee or surety of the obligations of other economic entities, or pledge of assets, or taking and granting of long-term loans, when the amount of such a transaction exceeds 1/10 of the equity capital of the cooperative society shall require a decision of the meeting of members adopted by the majority of not less than 2/3 of the votes cast. The total value of such transactions made without the decision of the meeting of members over the financial year may not exceed 1/10 of the value of the equity of the cooperative society.
11. Minutes of a meeting of members of the cooperative society shall, not later than within five working days, be signed by the secretary, the chair of the meeting and a member of the cooperative society authorised by the meeting.
12. A list of members of the cooperative society who arrived and registered before the beginning of a meeting, also the members who voted in writing and/or by electronic means shall be attached to the minutes of the meeting of members.
13. A member of a cooperative society may vote in writing by filling in the general ballot paper in accordance with the procedure laid down in the articles of association of the cooperative society.
14. A cooperative society may provide an opportunity for members of the cooperative society to attend and vote at a meeting by open ballot by electronic means, except in cases where voting must be conducted by secret ballot in accordance with paragraph 9 of this Article. In order for members of the cooperative society to participate and vote at the meeting of members of the cooperative society by electronic means, only the requirements for and restrictions on the use of the electronic means which are necessary for establishing the identity of a member of the cooperative society and ensuring the security of the information transmitted may be applied.
Article 161. Formation of the supervisory board
1. The supervisory board shall be a collegial organ supervising the activities of a cooperative society. The supervisory board shall be managed by the chair of the supervisory board.
2. The number of members of the supervisory board shall be established in the articles of association of the cooperative society; there must be not less than 3 and not more than 15 members of the supervisory board.
4. The supervisory board shall be elected for the period specified in the articles of association of the cooperative society, which shall not be longer than four years. The supervisory board shall commence the performance of its functions on the day following the election thereof at the meeting of members of the cooperative society and shall perform them during the period specified in the articles of association of the cooperative society or until a new supervisory board is elected, but not longer than until the regular meeting of members of the cooperative society held during the last year of the term of the supervisory board. The number of the terms of office of a member of the supervisory board shall not be limited.
6. The following persons may not be a member of the supervisory board:
3) an auditor or an employee of an audit firm who participates and/or participated in the inspection of the economic and financial activities of the cooperative society within two years of the inspection;
7. More than a half of members of the supervisory board must have no employment relationships with the cooperative society.
8. The supervisory board or its members shall commence their activities after the close of the meeting of members of the cooperative society which elected the supervisory board or its members.
9. Where the articles of association of the cooperative society are amended due to the formation of the supervisory board or increase in the number of its members, newly elected members of the supervisory board may commence their activities solely from the registration of the amended articles of association. In this case, a decision regarding the amendment of the articles of the cooperative society may be adopted and election of the new members of the supervisory board may take place at the same meeting of members of the cooperative society, provided that this is included in the agenda of the meeting.
10. The meeting of members of the cooperative society may revoke the entire supervisory board or its individual members before the expiry of the term of office of the supervisory board.
11. A member of the supervisory board may resign before the expiry of his term of office by giving a written notice thereof to the cooperative society not later than 14 days in advance.
12. If a member of the supervisory board is revoked, resigns or discontinues the performance of his duties for other reasons and not less than 1/4 of members of the cooperative society object to the election of individual members of the supervisory board, the supervisory board shall lose its powers, and the entire supervisory board must be elected. The individual members of the supervisory board shall be elected only until the expiry of the term of office of the current supervisory board.
Article 162. Competence of the supervisory board and decision-making
1. The supervisory board shall:
1) consider the programme of activities of a cooperative society and submit proposals thereon, analyse and evaluate information on the implementation of the programme of activities of the cooperative society, submit this information to the meeting of members of the cooperative society;
3) submit to the meeting of members of the cooperative society comments and proposals on annual financial statements, distribution of profit or covering of losses, payments proportionate to turnover, payment of dividends, as well as activities of the board and the head of administration;
4) submit to the board and the head of administration proposals to revoke their decisions which are in conflict with laws and other legal acts, the articles of association of the cooperative society or the decisions of the meeting of members of the cooperative society;
2. The supervisory board shall not be entitled to assign or delegate the functions within its competence under this Law and the articles of association of the cooperative society to other organs of the cooperative society.
3. The supervisory board shall be entitled to receive from the board of the cooperative society and the head of administration the documents and data related to the activities of the cooperative society, as well as other information.
4. Members of the supervisory board must keep the commercial/industrial secrets and confidential information of the cooperative society which they received in the course of their duties as members of the supervisory board.
5. The meetings of the supervisory board shall be called by the chair of the supervisory board. The meetings of the supervisory board may also be called by a decision taken by not less than 1/3 of members of the supervisory board.
6. A member of the supervisory board shall have the right to issue a proxy in a simple written form to another member of the supervisory board of the cooperative society to represent him during voting at a meeting of the supervisory board of the cooperative society, except where the articles of association of the cooperative society stipulate otherwise.
7. Members of the supervisory board shall have equal rights. During voting, each member shall have one vote. If the vote is a tie (an equal number of votes for and against), the chair of the supervisory board shall have the casting vote.
8. A member of the supervisory board may express his will in respect of a decision put to vote upon familiarising himself with the draft thereof by casting his vote in writing or by electronic means, on the condition that the security of the information transmitted is ensured and it is possible to establish the identity of the person who has cast the vote.
9. The supervisory board may adopt decisions, and its meeting shall be considered to have been held if attended by more than a half of members of the supervisory board. The members of the supervisory board who voted in advance in the manner referred to in paragraph 8 of this Article shall be deemed to have attended the meeting. A decision of the supervisory board shall be adopted if the number of votes cast for it exceeds the number of votes cast against, unless the articles of association of the cooperative society require a larger majority of votes necessary for the adoption of a decision.
Article 17. Board and head of administration of a cooperative society
1. The board shall be the collegial management organ of a cooperative society. The activities of the board shall be directed by the chair thereof. The number of members of the board shall be fixed in the articles of association, but it may not be less than three.
2. The members of the board and the chair thereof shall be elected by the meeting of members of the cooperative society for a period not exceeding four years. The members of the board and the chair thereof shall commence their activities on the day following the meeting of members of the cooperative society which elected them. A member of the board, the chair of the board or the entire board may be revoked or may resign before the expiry of the term of office in accordance with the procedure laid down by the articles of the cooperative society.
3. The working procedure of the board, duties and powers of the members of the board and the chair thereof shall be laid down in the rules of procedure of the board/the head of administration approved by the meeting of members of the cooperative society.
4. The board shall adopt decisions at a meeting which shall be valid if attended by not less than 2/3 of all the members of the board. The decisions shall be adopted by a simple majority vote. The procedure for calling meetings of the board and the working procedure thereof shall be laid down in the rules of procedure of the board. The board shall invite to each meeting the head of administration, unless he is a member of the board.
5. Irrespective of the fact whether the board is formed or not, a cooperative society must have the head of administration.
6. The head of administration shall be elected and revoked by the board or, if the board is not formed, by the meeting of members of the cooperative society. An employment contract with the head of administration shall be signed by the chair of the board or, if the board is not formed, by a person authorised by the meeting of members of the cooperative society.
7. A member of the board, the chair thereof, a member of the cooperative society as well as any other legally capable natural person may be the head of administration. Requirements for the head of administration shall be set in the articles of association. A member of the controllers’ commission, the chairperson thereof (controller) may not be the head of the administration.
8. The head of administration shall be a single-member management organ who directs the administration. The head of administration shall organise and carry out the economic and financial activities of the cooperative society, represent the cooperative society in relations with third parties in court, arbitral tribunal, conclude transactions, hire and dismiss employees, conclude employment contracts with them, submit to the board material pertaining to his own work, drafts of programmes of activities of the cooperative society, revenue and expenditure estimates, financial statements and appropriation of profit (loss), carry out other actions assigned to him in the articles of association of the cooperative society. The working procedure of the administration shall be laid down in the rules of procedure of the administration.
9. The head of administration shall participate in meetings of the board in a deliberative capacity, unless he is a member of the board.
10. Members of the board and the chair of the board, the head of administration must compensate the cooperative society for the losses incurred by decisions of the board or the head of administration adopted in violation of the articles of association of the cooperative society or the laws related to activities of cooperative societies. The resignation or removal of a member of the board and the chair of the board or the head of administration shall not release them from the obligation to compensate for the losses incurred through their fault.
11. Members of the board of the cooperative society shall jointly and severally compensate for the damage incurred to the cooperative society. The individual members of the board who voted against when adopting unlawful decisions detrimental for the cooperative society (this must be recorded in the minutes) shall be released from compensation for the damage.
Article 18. Control of activities
1. The economic and financial activities of a cooperative society shall be controlled by the controllers’ commission/controller. The members of the controllers’ commission and the chair thereof/controller shall be elected by the meeting of members of the cooperative society for a period not exceeding four years. The articles of association of the cooperative society may provide that its economic and financial activities shall be controlled by an audit firm approved by the meeting of members of the cooperative society.
2. A member of the board of a cooperative society, the chair thereof, the head of administration, as well as a person related to the member of the above mentioned management organs by blood, marriage or partnership may not be members of the controllers’ commission or chair thereof/controller. Other requirements for a member of the controllers’ commission/controller shall be established in the articles of association of the cooperative society.
3. The controllers’ commission/controller or an audit firm shall:
2) report the violations established in the activities of the cooperative society to the meeting of members of the cooperative society, the board and the head of administration;
4. The meeting of members of the cooperative society, the board (if it is not formed – the head of administration), the controllers’ commission/controller may invite experts to take part in inspections.
5. The working procedure of the controllers’ commission/controller shall be laid down in the rules of procedure thereof.
Article 19. Reorganisation of a cooperative society
1. Reorganisation means termination of a cooperative society as a legal person without going into liquidation.
2. Cooperative societies may be reorganised in the following ways:
3. The possible modes of merging cooperative societies shall be merger by acquisition and merger by formation of a new cooperative society:
1) merger by acquisition shall be joining of one or several cooperative societies to another cooperative society whereto all rights and duties of the cooperative society being reorganised are passed;
4. The possible modes of dividing cooperative societies shall be division by acquisition, division by formation of a new cooperative society:
1) division by acquisition shall mean parcelling out the rights and duties of a cooperative society being reorganised to other cooperative societies in operation;
5. The management organs of the cooperative societies which are being reorganised must draft terms of reorganisation. They shall indicate:
1) the name, registered office, registration number of each cooperative society being reorganised, the VAT payer’s code, the register wherein data on these cooperative societies are accumulated and stored;
2) the mode of reorganisation, the cooperative societies which terminate their operation and the cooperative societies continuing after the reorganisation;
3) the procedure, terms and time limits for a member of a cooperative society being reorganised to become a member of a cooperative society continuing after the reorganisation, as well as payments to the members of the cooperative society;
4) the moment from which the rights and duties of the cooperative society which terminates its operation are passed to a cooperative society which continues after the reorganisation;
5) additional rights granted to the management and controlling organs of the cooperative societies being reorganised as well as to experts during the period of reorganisation;
6. The articles of association of each cooperative society which will operate after the reorganisation must be drafted together with the terms of reorganisation.
7. The management organs of each cooperative society being reorganised must draft written reports. Such reports must indicate the purposes of reorganisation, explain the terms of reorganisation, continuity of the operation of the cooperative society, as well as specify the time limits and economic grounds of reorganisation, if this is requested by the members of the cooperative society being reorganised who hold not less than 1/20 votes.
8. The terms of reorganisation of a cooperative society must be assessed by the independent experts of proper qualification. Each cooperative society being reorganised shall assign an expert.
9. The drawing-up of the terms of reorganisation must be published three times, with not less than 30-day intervals between the publications, or it must be published once, notifying all the creditors of the cooperative society thereof in writing. The notice must specify: the name, registered office, registration number of each cooperative society being reorganised, the VAT payer’s code, the register wherein data on this cooperative society are accumulated and stored, mode of reorganisation, the moment from which the rights and duties of the cooperative society which terminates its operation are passed to the cooperative society continuing after the reorganisation, the venue whereat and the time from when it is possible to familiarise with the terms of reorganisation, the founding documents of the cooperative societies continuing after the reorganisation and/or new cooperative societies, or drafts thereof, and the reports drafted by the management organs of all the cooperative societies participating in the reorganisation, expert assessments and financial statements for the last three financial years.
10. A decision on reorganisation of a cooperative society must be adopted by not less than 2/3 of the votes cast by the members of the cooperative society entered on the list of participants of a meeting. The decision on reorganisation of the cooperative society may be adopted only after the lapse of 30 days from the publication of the terms of reorganisation. The decision on the reorganisation of the cooperative society must approve the terms of reorganisation and amend the articles of association or adopt new articles of association.
11. A documentary proof of a decision on reorganisation of a cooperative society must be submitted to the Register of Legal Entities not later than on the first day of publication. The data processor of the Register of Legal Entities must publish the decision to reorganise the cooperative society in accordance with the procedure laid down by legal acts.
12. Reorganisation shall be deemed completed when all the new cooperative societies formed after the reorganisation are registered or the amended articles of association of the cooperative societies continuing after the reorganisation are registered in the Register of Legal Entities.
13. The first meeting of members of a new cooperative society formed through reorganisation must elect the management and controlling organs of the cooperative society.
Article 20. Restructuring of a cooperative society
1. A cooperative society shall be restructured in accordance with the procedure laid down by the Civil Code and this Law. All rights and duties of the cooperative society being restructured shall be transferred to a legal person continuing after the restructuring.
2. The cooperative society may be restructured into a small partnership if all members of the cooperative society are natural persons and the number of them is not more than ten.
3. A decision to restructure a cooperative society as well as the founding documents of a legal person continuing after the restructuring shall be adopted by a meeting of members by not less than 2/3 of the votes cast by the members of the cooperative society entered on the list of participants of the meeting.
4. The restructuring of the cooperative society must be published in accordance with the procedure established in the articles of association three times with not less than 30-day intervals between the publications, or it must be published once, not later than 30 days prior to the adoption of a decision on restructuring notifying all the creditors of the cooperative society thereof in writing. The notice shall indicate:
4) the register wherein data on the cooperative society being restructured are accumulated and stored;
6) the procedure, terms and time limits for a member of the cooperative society being restructured to become a member of a legal person continuing after the restructuring;
7) the moment from which the rights and duties of the cooperative society being restructured are passed to a legal person continuing after the restructuring;
8) the venue whereat and time from when it is possible to familiarise with the terms of restructuring, if they are drawn up, the founding documents of a legal person continuing after the restructuring and the financial statements of the cooperative society being restructured for the last three financial years.
5. A documentary proof of a decision on restructuring of a cooperative society must be submitted to the Register of Legal Entities not later than on the first day of publication. The data processor of the Register of Legal Entities must publish the decision to restructure the cooperative society in accordance with the procedure laid down by legal acts.
6. Restructuring shall be deemed completed upon the registration of the founding documents of a legal person continuing after the restructuring in the Register of Legal Entities.
Article 21. Liquidation of a cooperative society
1. A cooperative society shall be liquidated:
3) when the number of members of the cooperative society decreases below the minimum number permitted by this Law, unless the members of the cooperative society decide, within six months after such decrease, to reorganise or restructure the cooperative society;
4) by a decision of a court or the meeting of creditors to liquidate the bankrupt cooperative society;
5) by a court decision invalidating the establishment of the cooperative society, as stipulated in the Civil Code;
6) by a decision of the data processor of the Register of Legal Entities, as stipulated in the Civil Code;
2. The procedure for liquidating the cooperative society shall be laid down by the Civil Code and this Law. If the society is liquidated on the basis of a decision of the data processor of the Register of Legal Entities, the cooperative society shall be liquidated in compliance with the provisions of the Civil Code governing the liquidation of a legal person at the initiative of the data processor of the Register of Legal Entities.
3. A person who has adopted a decision to liquidate the cooperative society shall appoint a liquidator, except in cases where the decision to liquidate the cooperative society is adopted by the data processor of the Register of Legal Entities. The liquidator must be a person having the required qualifications. Several liquidators may be appointed. If several liquidators are appointed, a liquidation commission shall be set up and one of the liquidators shall be appointed the chair of the liquidation commission.
4. Upon the appointment of the liquidator/liquidation commission, the organs of the cooperative society, except for the meeting of members, shall lose their powers, and the competence of the meeting of members of the cooperative society concerning conclusion of transactions as well as the rights and duties of the management and controlling organs shall be passed to the liquidator/liquidation commission.
5. The liquidator/liquidation commission shall:
1) submit to the Register of Legal Entities the documents necessary to register the modified register data;
2) publish a notice of liquidation in accordance with the procedure laid down in paragraph 7 of this Article;
3) represent the cooperative society being liquidated in relations with state institutions, agencies and other legal and natural persons;
5) pursuant to the transactions of the cooperative society, complete the discharge of obligations, including the amounts unpaid to the budget of the State Social Insurance Fund, also the amounts calculated by the tax administrator’s officers and other state institutions, including penalties and late payment interest, not later than within six months from the publication of a notice of liquidation, and enter into new transactions which do not conflict with the laws governing the activities of the cooperative society being liquidated, report to the meeting of members of the cooperative society within the time limits set by it;
6) within six months from the publication of a notice of liquidation, accept and satisfy creditors’ claims, recover debts;
7) in case of disputed obligations, allot an appropriate amount from the assets of the cooperative society for the discharge thereof and pay it to the deposit account of a notary’s office;
8) after the lapse of six months from the publication of a notice of liquidation, distribute the remaining assets among the members of the cooperative society in accordance with the procedure prescribed by the articles of association having regard to the amount of their member share. In the event of disputes between the members of the cooperative society over the distribution of the remaining assets, the liquidator/liquidation commission shall suspend the distribution of the assets. Disputes among the members and disputes between the members and the liquidator shall be settled in court;
6. The liquidator/liquidation commission failing to perform his duties or performing them inappropriately must compensate to the cooperative society for any damage inflicted through the liquidator’s/liquidation commission’s fault, unless otherwise provided for in the articles of association of the cooperative society. The liquidation commission shall be jointly and severally responsible to the cooperative society and third parties for the losses incurred through the liquidation commission’s fault.
7. A notice of liquidation of a cooperative society shall be published two times, with a 30-day interval between the publications; it shall also be notified to each member and creditor of the cooperative society against his signature or by registered mail. A notice of liquidation of a cooperative society shall be given to the Register of Legal Entities not later than on the first day of publication.
8. A cooperative society being liquidated may enter only into the transactions which are related to the termination of the activities of the cooperative society or which are provided for in a decision to liquidate the cooperative society.
Article 22. Establishment and activities of unions of cooperative societies
1. Cooperative societies may form unions for the purpose of fulfilment of the objectives provided for in their articles of association. Other legal persons (companies, associations, societies, etc.) may also be members of the unions, provided that their membership is in conformity with the objectives of the unions of cooperative societies. A union of cooperative societies must consist of two or more cooperative societies.
2. Unions of cooperative societies shall be established, be managed, operate, be reorganised and be liquidated in accordance with the same procedure as cooperative societies.
3. Unions of cooperative societies shall operate in accordance with their articles of association. The articles of association shall be adopted by the congresses, conferences or meetings of their delegates. A union shall be deemed established when it is registered in accordance with the procedure laid down in this Law.