REPUBLIC OF LITHUANIA

LAW

AMENDING ARTICLES 161, 18, 19, 20, 21, 25, 31, 32, 33, 34 AND 37 OF LAW ON COMPANIES NO VIII-1835 AND SUPPLEMENTING THE LAW WITH ARTICLE 372

21 November 2017 No XIII-784

Vilnius

Article 1. Amendment to Article 161

Article 161 shall be amended to read as follows:

Article 161. Shareholder’s Right to Submit in Advance Questions to a Company

1. A company must reply to the questions and submitted by a shareholder to the company in advance and related to the issues on the agenda of the general meeting of shareholders or the company must specify the reasons for refusing to reply in writing before the general meeting of shareholders, where the questions were received by the company not later than three working days before the general meeting of shareholders. All answers to the questions related to the issues on the agenda of the general meeting of shareholders and submitted to the company by its shareholders in advance shall be submitted at the general meeting of shareholders or simultaneously to all shareholders of the company before the general meeting of shareholders.

2. If several questions of the same content have been submitted, the company may provide one overall answer thereto.

3. A company shall be deemed to have presented to a shareholder an answer to the question submitted by him when the relevant information is available in the question and answer format on the company’s website, if the company has one.

4. A company may refuse to present answers to the questions submitted by a shareholder if they are related to the company’s commercial/industrial secret or confidential information, whereof it must inform the shareholder, or if the shareholder who has submitted the question cannot be identified.

Article 2. Amendment to Article 18

Article 18(1) shall be amended to read as follows:

“1. A company must, at a shareholder’s written request and not later than within seven days from the receipt of the request, grant to the shareholder access to and/or submit to him copies of the articles of association of the company, sets of annual and interim financial statements, annual and interim reports of the company, the auditor’s opinion and reports on audit of financial statements, minutes of the general meetings of shareholders or other documents executing decisions of the general meetings of shareholders, the recommendations and responses of the supervisory board to the general meetings of shareholders, the lists of shareholders, the lists of members of the supervisory board and the board, other documents of the company that must be publicly accessible under laws, also other documents indicated in the articles of association of the company. The company may refuse to grant to the shareholder access to and/or submit copies of the documents related to the company’s commercial/industrial secret or confidential information, except for cases when the company’s information is necessary for the shareholder to fulfil imperative requirements provided for in other legal acts and the shareholder ensures the confidentiality of such information. The company must grant to the shareholder access to other company-related information and/or submit copies of documents if such information and documents, including also the information and documents related to the company’s commercial/industrial secret and confidential information are necessary for the shareholder to meet the requirements provided for in other legal acts and the shareholder ensures the confidentiality of such information and documents. The company shall refuse to submit to the shareholder the copies of the documents if it is not possible to identify the shareholder who has requested the documents. A refusal to grant to the shareholder access to and/or submit the copies of the documents shall be executed by the company in writing if the shareholder so requests. Disputes related to the shareholder’s right to information shall be settled in court.”

Article 3. Amendment to Article 19

1. Article 19(2) shall be amended to read as follows:

“2. The supervisory board, which is a collegial supervisory body, and the board, which is a collegial management body, may be established in a company. At least one collegial body, the supervisory board or the board, must be formed in a public limited liability company. If the supervisory board is not established in a public limited liability company whose shares are admitted to trading on the regulated market, the board which performs the supervisory functions specified in Article 34(11) of this Law must be established.”

2. Article 19(3) shall be amended to read as follows:

“3. Where the supervisory board is not established in a company, the functions stipulated for the supervisory board by this Law shall not be assigned to the remit of other bodies of the company, with the exception of the cases specified in Article 34(8) and (11) and Article 372(4) of this Law.

Article 4. Amendment to Article 20

1. Article 20(1)(5) shall be amended to read as follows:

5) select and remove an auditor or an audit firm for carrying out the audit of a set of annual financial statements, establish payment conditions for audit services;”.

2. Article 20(2) shall be amended to read as follows:

“2. The general meeting of shareholders may also decide on other matters assigned to its remit under this Law or by the articles of association of the company, unless these have been assigned under this Law to the remit of other bodies of the company and provided that, as to their substance, these are not the functions of the management bodies.

Article 5. Amendment to Article 21

Article 21(2) shall be amended to read as follows:

“2. Members of the supervisory board, members of the board, the manager of the company, the inspector of the general meeting of shareholders, the auditor who prepared the auditor’s opinion and report on audit of financial statements may also attend and speak at the general meeting of shareholders.”

Article 6. Amendment to Article 25

Article 25(4) shall be amended to read as follows:

“4. The supervisory board, the board (if the board is not formed, the manager of the company), the shareholders whose shares carry at least 1/20 of all votes, unless a smaller number of votes is stipulated in the articles of association of the company, may, at any time before the general meeting of shareholders or during the meeting and provided that the security of the transmitted information is ensured and it is possible to identify these persons, propose in writing or by electronic means new draft decisions on issues on the agenda of the meeting, nominate additional candidates to members of the company’s bodies, an auditor or an audit firm.”

Article 7. Amendment to Article 31

1. Article 31(6) shall be amended to read as follows:

“6. The following persons may not be a member of the supervisory board:

a) the manager of the company;

2) a member of the company’s board;

3) an auditor or an employee of an audit firm who is participating and/or has participated in carrying out the audit of a set of financial statements of the company, where less than two years have lapsed after the completion thereof;

4) a member of the management body of a subsidiary company;

5) a person who may not hold this office under legal acts.”

2. Article 31 shall be supplemented with paragraph 8 as follows:

“8. At least 1/3 members of the supervisory board of a public limited liability company whose shares are admitted to trading on a regulated market must have no family, kinship, marriage or partnership relations with the company, the company’s controlling shareholder and members of the bodies of the company; moreover, at least one year prior to his appointment a member of the supervisory board may not have or have had any business relations with this company either directly or as a shareholder, a member of a collegial management body or manager of this company having such relations. A natural or legal person who is the supplier of goods or provider of services (including financial, legal, advisory and consultancy services), a partner or a person who generates income from this company, except for remuneration for the performance of the duties of a member of a collegial body or a member of a committee, shall be deemed to have business relations with the public limited liability company. The company’s controlling shareholder shall be subject to the provisions of Article 5 of this Law which are applicable mutatis mutandis.”

3. Former paragraphs 8-13 of Article 31 shall be accordingly considered paragraphs 9-14.

Article 8. Amendment to Article 32

1. Article 32(1) shall be amended to read as follows:

“1. The supervisory board shall:

1) consider and approve the operating strategy of the company, analyse and evaluate information on the implementation of the operating strategy of the company, provide this information to an annual general meeting of shareholders;

2) elect the members of the board (if the board is not formed, the manager of the company) and remove them from office. If the company is operating at a loss, the supervisory board must consider the suitability of the board members (if the board is not formed, the manager of the company) for their office;

3) take decisions on transactions with associated parties, as stipulated in Article 372 of this Law;

4) supervise the activities of the board and the manager of the company;

5) submit its comments and proposals to the general meeting of shareholders on a set of annual financial statements, a draft of profit/loss appropriation and an annual report of the company as well as the activities of the board and the manager of the company;

6) submit to the general meeting of shareholders its comments and proposals regarding a draft decision on the allocation of dividends for a period shorter than the financial year and the set of interim financial statements and the interim report drawn up for the purpose of adoption of the decision;

7) submit proposals to the board and the manager of the company to revoke their decisions which are in conflict with laws and other legal acts, the articles of association of the company or the decisions of the general meeting of shareholders;

8) address other issues assigned to the remit of the supervisory board by the articles of association of the company as well as by decisions of the general meeting of shareholders regarding the supervision of the activities of the company and its management bodies.”

2. Article 32(3) shall be amended to read as follows:

“3. The supervisory board shall be entitled to ask the board of a company and the manager of the company to submit the documents related to the activities of the company, data and other information.”

Article 9. Amendment to Article 33

1. Article 33(3) shall be amended to read as follows:

“3. The board shall be elected by the supervisory board for a term specified in the articles of association of the company, which may not exceed four years. If the supervisory board is not formed, the board shall be elected by the general meeting of shareholders according to the procedure laid down in Article 31(3) and (13) of this Law for electing the supervisory board. If individual members of the board are elected, they shall serve only until the expiry of the term of office of the current board.”

2. Article 33(6) shall be amended to read as follows:

“6. Only a natural person may be elected a member of the board. The number of terms of office of a member of the board shall not be limited. The following persons may not be a member of the board:

1) a member of the supervisory board of the company;

2) a person who may not hold this office under legal acts;

3) the manager of the company in the cases when the supervisory board is not formed in the company and the articles of association of the company stipulate that the board performs the supervisory functions specified in Article 34(11) of this Law;

4) an auditor or an employee of an audit firm who is participating and/or has participated in carrying out the audit of a set of financial statements of the company, where less than two years have lapsed after the completion thereof, with whom a contract has been concluded with regard to the carrying out of the audit of the set of the company’s financial statements.”

3. Article 33(7) shall be amended to read as follows:

“7. Where the articles of association of a company in which the supervisory board is not formed stipulate that the board performs the supervisory functions specified in Article 34(11) of this Law, more than a half of members of the board must have no employment relationships with the company. At least 1/3 members of the board, performing the supervisory functions specified in Article 34(1) of this Law, of a public limited liability company whose shares are admitted to trading on a regulated market must have no family, kinship, marriage or partnership relations with the company, the company’s controlling shareholder and members of the bodies of the company; moreover, at least one year prior to his appointment a member of the board may not have or have had any business relations with this company either directly or as a shareholder or manager of the company having such relations. A natural or legal person who is the supplier of goods or provider of services (including financial, legal, advisory and consultancy services), a partner or a person who generates income from this public limited liability company, except for remuneration for the performance of the duties of a member of a collegial body or a member of a committee, shall be deemed to have business relations with the public limited liability company whose shares are admitted to trading on a regulated market. The company’s controlling shareholder shall be subject to the provisions of Article 5 of this Law which are applicable mutatis mutandis.”

Article 10. Amendment to Article 34

1. Article 34(1)(1) shall be repealed.

2. Article 34(5) shall be amended to read as follows:

“5. The articles of association may provide that the board must obtain the approval of the general meeting of shareholders or the supervisory board before adopting the decisions referred to in points 3, 4, 5 and 6 of paragraph 4 of this Article. The approval given by the general meeting of shareholders or the supervisory board shall not release the board from responsibility for the decisions adopted.”

3. Article 34(7)(1) shall be repealed.

4. Article 34 shall be supplemented with paragraph 8 as follows:

“8. The board of a company in which the supervisory board is formed shall analyse and evaluate the draft operating strategy presented by the manager of the company and information on the implementation of the operating strategy of the company and shall submit them to the supervisory board together with feedback and related proposals, and the board of a company in which the supervisory board is not formed shall perform the function stipulated in Article 32(1)(1) of this Law.”

5. Former paragraphs 8-15 of Article 34 shall be accordingly considered paragraphs 9-16.

6. Article 34(11) shall be amended to read as follows:

“11. The articles of association of the company in which the supervisory board is not formed may stipulate that the board shall perform all of the following supervisory functions:

1) take decisions on transactions with associated parties, as stipulated in Article 372 of this Law;

2) supervise the activities of the manager of the company, submit to the general meeting of shareholders feedback and proposals concerning the activities of the manager of the company;

3) consider the suitability of the manager of the company for his office if the company operates at a loss;

4) submit proposals to the manager of the company to revoke his decisions which are in conflict with laws and other legal acts, the articles of association of the company, decisions of the general meeting of shareholders or the board;

5) address other issues regarding the supervision of the activities of the company and the manager of the company assigned to the remit of the board by the articles of association of the company, also by decisions of the general meeting of shareholders.”

7. Article 34(14) shall be amended to read as follows:

“14. The board must submit to the supervisory board the documents, data and other information as requested by it and related to the activities of a company.”

Article 11. Amendment to Article 37

1. Article 37(10) shall be amended to read as follows:

“10. The manager of the company shall act on behalf of the company and shall be entitled to enter into transactions at his own discretion, except where the articles of association of the company provide for a quantitative representation of the company. The manager of the company may enter into the transactions referred to in points 3, 4, 5 and 6 of Article 34(4) of this Law, provided there is a decision of the board of the company (if the board is formed in the company) to enter into these transactions. If the board is not formed in the company, the manager of the company shall take the decisions and carry out the actions specified in Article 34(1), (3). (4), (5), (6), (9), (10), (12), (13) and (14) of this Law. The manager of the company in which neither the board not the supervisory board is formed shall take the decisions and carry out the actions specified in Article 32(1)(1) of this Law.”

2. Article 37(12) shall be supplemented with point 10 as follows:

“10) a report to the shareholders, the supervisory board and the board on significant events that affect the activities of the company;”.

3. Former points 10, 11 and 12 of Article 37(12) shall be accordingly considered points 11, 12 and 13.”

Article 12. Supplementation of the Law with Article 372

The Law shall be supplemented with Article 372 as follows:

“Article 372. Requirements for Transactions with an Associated Party of a Public Limited Liability Company whose Shares are Admitted to Trading on the Regulated Market

1. The provisions of this Article, except for paragraph 10 of this Article, shall apply to transactions with an associated party of a public limited liability company whose shares are admitted to trading on the regulated market if the transactions:

1) are concluded under extraordinary marker conditions; and/or

2) are not attributed to the normal economic activities of the company; and/or

3) have a significant influence on the company, its finances, assets and liabilities. Criteria for determining that a transaction has a significant influence on the company, its finances, assets and liabilities shall be set out in the articles of association of the company.

2. A party associated with a public limited liability company whose shares are admitted to trading on the regulated market shall be interpreted as defined in the accounting standards applied by this company.

3. An associated party intending to enter into a transaction indicated in paragraph 1 of this Article with a public limited liability company whose shares are admitted to trading on the regulated market must inform the manager of the public limited liability company about the reasons for which it could be considered to be an associated party.

4. The manager of a public limited liability company whose shares are admitted to trading on the regulated market must, before entering into a transaction with an associated party on behalf of the public limited liability company, obtain the approval of the supervisory board or the board performing the supervisory functions specified in Article 34(11) of this Law.

5. The manager of a public limited liability company whose shares are admitted to trading on the regulated market shall apply to the audit committee of the public limited liability company regarding a transaction with an associated party and submit thereto the information related to such a transaction. The audit committee of the public limited liability company whose shares are admitted to trading on the regulated market shall, having regard to the information and assessment regarding the transaction as submitted by the manager of the public limited liability company, not later than within 20 working days from the submission of the information prepare and present in writing to the limited liability company whose shares are admitted to trading on the regulated market an opinion which must contain the following information:

1) an assessment of whether the transaction is entered into under market conditions;

2) an assessment of whether the transaction is fair and justified with regard to the public limited liability company whose shares are admitted to trading on the regulated market and its shareholders who are not a party to the transaction;

3) assumptions, criteria and arguments whereon the opinion is based.

6. The manager of a public limited liability company whose shares are admitted to the regulated market must immediately inform the shareholders, the members of the supervisory and management bodies and an associated party about the receipt of the written opinion indicated in paragraph 5 of this Article, they must also be granted assess to this opinion at the registered office of the public limited liability company. At a shareholder’s request, submitted in writing or by electronic means, the manager of the public limited liability company shall, not later than within three days from the receipt of the request, deliver a copy of the opinion to the shareholder against signature or shall send it by registered mail or transmit by electronic means, provided that the security of the transmitted information is ensured and it is possible to identify the shareholder.

7. The supervisory board or the board performing the supervisory functions specified in Article 34(11) of this Law of a public limited liability company whose shares are admitted to trading on the regulated market must take a decision on a transaction with an associated party not later than within seven days from the receipt by the public limited liability company of an opinion specified in paragraph 5 of this Article.

8. An associated party shall not participate in the drafting of an opinion regarding a transaction and shall not vote during the taking of a decision regarding the transaction.

9. Not later than during the entry into a transaction with an associated party, the following information shall be published on the website of a public limited liability company whose shares are admitted to trading on the regulated market:

1) how the public limited liability company is associated with the other party to the transaction;

2) data of the associated party (the name, legal form, registration number, registered office of a legal person, the register in which data about the person are accumulated and stored, the name, surname and correspondence address of a natural person);

3) the date and value of the transaction;

4) other information required to assess whether the transaction is fair and justified with regard to the public limited liability company and its shareholders who are not parties to the transaction.

10. The provisions of this Article, except for the requirement specified in paragraph 9 of this Article, shall not apply to the transactions with an associated party of a public limited liability company whose shares are admitted to trading on the regulated market that are entered into in the course of normal economic activities.

11. This Article shall apply mutatis mutandis to the transactions which comply with the criteria indicated in paragraph 1 of this Article and which are concluded between the party associated with a public limited liability company whose shares are admitted to trading on the regulated market and a subsidiary of this public limited liability company.”

Article 13. Entry into Force and Application of the Law

1. Article 3(1), Article 7 and Article 9(2) and (3) of this Law shall enter into force on 1 July 2018.

2. The operating strategies of public limited liability companies and private limited liability companies in which the supervisory board is formed must be approved by the supervisory boards within one year from the entry into force of this Law.

3. Provisions of Article 31(6) of the Law of the Republic of Lithuania on Companies stipulated in Article 7(1) of this Law and provisions of Article 33(6) of the Law of the Republic of Lithuania on Companies stipulated in Article 9(2) of this Law shall apply in public limited liability companies and private limited liability companies:

1) when after the entry into force of this Law a new supervisory board or a new board performing the supervisory functions specified in Article 34(11) of the Law on Companies is elected;

2) when after the entry into force of this Law individual members of the bodies indicated in point 1 of this paragraph are elected.

4. The bodies indicated in paragraph 3 of this Article and elected before the entry into force of this Law shall perform their functions until the expiry of the term of office for which they have been elected or until new bodies indicated in paragraph 3 of this Article are elected, except for the cases indicated in point 2 of paragraph 3 of this Article.

I promulgate this Law passed by the Seimas of the Republic of Lithuania.

PRESIDENT OF THE REPUBLIC	DALIA GRYBAUSKAITĖ