Translated by the Bank of Lithuania

Consolidated version from 01/01/2015

Law published: Valstybės žinios (Official Gazette), 1999, No 55-1765, identification code 0991010ISTAIII-1212

The new version of the Law from 01 January 2013:

No XII-70, 20/12/2012, Valstybės žinios (Official Gazette), 2012, No 155-7980 (31/12/2012)

REPUBLIC OF LITHUANIA LAW

ON THE SUPPLEMENTARY VOLUNTARY ACCUMULATION OF PENSIONS

Name of the Law amended:

No IX-1692, 04/07/2003, Valstybės žinios (Official Gazette), 2003, No 75-3473 (30/07/2003)

3 June 1999 No VIII-1212
Vilnius

SECTION I

GENERAL PROVISIONS

Article 1. The Purpose and Scope of the Law

1. This Law sets out the conditions and the provisions for organization of the supplementary voluntary accumulation of pensions at the pension funds managed by the management undertaking. The purpose of this Law is to set the mandatory supervision standards and the regulations of the pension fund management, in order that the interests of the pension fund participants were protected.

2. This Law is applicable to all management undertakings that operate in the Republic of Lithuania, and that manage the funds of supplementary voluntary accumulation of pensions in accordance with the license issued by the Supervisory Authority. This Law is also applicable to the undertakings that manage the pension funds for the accumulation of a portion of the state social insurance contribution as per laws that regulate these relations.

3. This Law does not regulate the relations that are related to the citizen retirement support and occur on the basis of the insurance activity, except for the relations defined in the Article 37 of this Law.

4. The provisions of the Republic of Lithuania Law on Companies (hereinafter — “Law on Companies”) and of the Republic of Lithuania Enterprise Bankruptcy Law apply to such extent as this Law does not provide otherwise.

Article 2. Basic Definitions of this Law

1. Depository — a bank that is entitled to provide the investment services in the Republic of Lithuania or in another country of the European Economic Area, and which has the headquarters or a branch in the Republic of Lithuania.

2. Subsidiary — as defined in the Republic of Lithuania Law on Consolidated Accounts of Groups of Undertakings (hereinafter — "Law on Consolidated Accounts of Groups of Undertakings”).

3. Financial instruments — the financial instruments that are specified in Article 3(4)(1), (2), (3) and (4) of the Republic of Lithuania Law on Markets in Financial Instruments (hereinafter — "Law on Markets in Financial Instruments”) and the deposits as well.

4. Financial instrument portfolio — as defined in the Law on Markets in Financial Instruments.

5. Close links — as defined in the Law on Markets in Financial Instruments.

6. Net assets — shall mean the difference between the value of assets of the respective pension fund and long-term and short-term liabilities (except the liabilities to the pension fund participants).

7. Financial derivatives — financial instruments specified in Article 3(4)(1), (2), (3) and (4) of the Law on Markets in Financial Instruments, the value of which varies depending on the interest rate, the price of the reissued securities, the currency exchange rate or on the financial index.

8. Control — direct and (or) indirect decisive effect to the undertaking, as it is defined in the Law on Consolidated Accounts of Groups of Undertakings.

9. Persons of sufficiently good repute — as it is defined in the Law on Markets in Financial Instruments.

10. Activity of supplementary voluntary accumulation of pensions (hereinafter — “activity of accumulation of pensions”) — a financial activity, which consists of collection of the monetary assets in accordance with pension accumulation agreements, investment or re-investment of those assets into the diversified portfolio of the financial instruments and the payout of the pension benefits in accordance with the conditions specified in this Law and in the pension fund rules to the persons that participate in the accumulation, and other related operations.

11. Pension annuity (hereinafter — “annuity”) — a periodical pension benefit, which is paid to the former participant of the pension fund till the end of his/her natural life, and the full risk of its payout is borne by the benefit payer — the life insurance undertaking.

12. Pension fund — the pension assets belonging by the right of joint partial ownership to the natural persons who are voluntarily accumulate pensions and paying pension contributions, where their management has been transferred to a pension fund management undertaking and they are invested according to the rules of that pension fund.

13. Pension fund participant (hereinafter — “a participant”) — person with whom the pension accumulation agreement is concluded and in whose name the personal pension account is opened.

14. Rules of the pension fund — the document, which defines the pension contribution and benefit payout conditions and time limits, pension asset investment strategy and the other rights and liabilities of the pension contribution payers, pension fund participants and of the pension fund management undertaking.

15. Pension fund management undertaking (hereinafter — “management undertaking”) — the undertaking that has the license issued by the Supervisory Authority to conduct the activity of pension accumulation.

16. Pension fund unit — a relative measurement of the value of the pension assets that are owned by the participant of the pension fund.

17. The payer of the pension contributions — participant of the pension fund, his employer or a third person, who is paying the pension contributions or their part.

18. Pension accumulation agreement — an agreement concluded, between a pension fund management undertaking and the participant of the pension fund or the person who pays the pension contributions in his name on the accumulation of pension contributions in the certain pension fund in accordance with the requirements for the laws, other legislation and the rules of the pension fund.

19. Pension account — a personal account of a pension fund participant opened in accordance with the pension accumulation agreement, where the pension fund units that are due to him are entered on behalf of the participant.

20. Pension assets — the amount of the assets acquired in exchange for pension contributions (including the temporarily uninvested proportion of these funds) as well as investment income (expenses) received from these assets (funds).

21. Periodical report — a document, which contains the information to the fund participants and the public on the performance of the pension fund, its financial condition and other major events of a certain period.

22. Transferable securities:

1) undertaking shares and other securities that are equal to the undertaking shares;

2) bonds and non proprietary securities of other forms;

3) other transferable securities, that award the right to acquire the transferable securities specified in subparagraphs 1 and 2 of this paragraph by way of signing or exchange.

23. Money-market instruments — the instruments defined in the Law on Markets in Financial Instruments, the value of which can be precisely identified at all times.

24. Supervisory Authority — Central Bank of the Republic of Lithuania that performs the functions of the management undertaking licensing and activity supervision in accordance with the provisions for this and other laws.

25. Foreign Supervisory Authority — authority, which in the foreign country performs similar functions as Supervisory Authority in the area of the undertaking licensing and supervision of activity.

26. Member State shall mean a Member State of the European Union or a country of the European Economic Area.

SECTION II

LICENSING OF THE MANAGEMENT UNDERTAKING AND ITS OPERATION

Article 3. Right to Engage in the Pension Accumulation Activity

1. The right to engage in the pension accumulation activity is given to the private joint stock undertaking or a joint stock undertaking that has the license issued by the Supervisory Authority in accordance with this Law. Only private joint stock undertaking or joint stock undertaking that has such license can use in its title and in the advertisement words "pension fund management undertaking" or other combinations or derivatives of these words.

2. The right to engage in the pension accumulation activity, in accordance with the provisions set out in this Law, is also awarded to the management undertakings that are issued the license in accordance with the Republic of Lithuania Law on Collective Investment Undertakings (hereinafter — "Law on Collective Investment Undertakings"), to manage investment funds and investment undertakings with the variable capital, and that comply with all the requirements that are set by this Law.

3. Management undertaking can begin the activity of pension accumulation only when the Supervisory Authority approves the respective pension fund rules, in accordance with the procedure set by it.

4. The management undertakings specified in paragraphs 1 and 2 of this Article has also the right to manage the pension funds for the accumulation of a portion of the state social insurance contribution that are specified in the Republic of Lithuania Law on the Accumulation of Pensions (hereinafter — "Law on the Accumulation of Pensions"), if they satisfy the requirements for the Law on the Accumulation of Pensions.

5. The management undertakings that are specified in paragraph 1 of this Article cannot engage in other activity, which is not specified in this Article.

Article 4. License Issuing, its Validity Suspension and Termination Procedure

1. The management undertaking license, which allows engaging in the pension accumulation activity, is issued by the Supervisory Authority on the basis of the Law on Collective Investment Undertakings and in accordance with the provisions set by it.

2. The Supervisory Authority has the right to terminate or suspend the license issued to the management undertaking in cases and according to the provisions that are specified in the Law on Collective Investment Undertakings, also if such sanction is imposed in accordance with the provisions set out in this Law.

Article 5. The Management and Heads of the Management Undertaking

In addition to the mandatory management bodies that are set out in the Law on Companies, the board shall also be formed in the management undertaking. The definition of the heads of the management undertaking and the procedure of their candidacy coordination with the Supervisory Authority is set out in the Law on Collective Investment Undertakings.

Article 6. The Requirements for the Management Undertaking Activity

1. Management undertaking shall:

1) operate fairly, justly and professionally at the conditions that are the best for the pension fund and its participants, follow their interests and ensure the integrity of the market;

2) operate responsibly, professionally and carefully;

3) have and implement measures and procedures that are needed for the operations;

4) disclose all information related to the participant as well as the information that he or she requires;

5) avoid the conflicts of interests, and when they are unavoidable, ensure that the participants are treated fairly;

6) ensure, that its management procedures, accounting entries and accounting systems are reliable and that parties of all transactions, content, time and venue, could be identified from them, as well as to identify if the assets are being invested in accordance with provided conditions and legislation;

7) perform internal control, control the financial instrument transactions concluded by its heads and employees in accordance with the internal control implementation provisions set by the Supervisory Authority;

8) ensure, that the data, documents and information about the adopted investment decisions, performed transactions or on the other performed operations, would be stored for no less than 10 years from the date of: the adoption of the respective investment decision, the respective transaction conclusion or from the performance of the activity, if other legislation does not specify a longer period for the storage of the documents;

9) have such organizational structure, so that the conflicts of interests between the management undertaking and participants, and between the participants, would be avoided;

10) ensure, that the persons, who adopt the decisions on asset management, would have the qualification and work experience, which is required by the Supervisory Authority, and were of sufficiently good repute as well;

11) comply with the requirements specified in the laws and by the Supervisory Authority for the capital, risk limitation and other requirements for the operations;

12) approve and implement the employee salary policy (this requirement is also applicable to the persons, to whom the management undertaking has delegated the function of the investment decision adoption on pension fund asset management. In such case, the policy approved by such persons to whom the undertaking has delegated the function of the investment decision adoption on pension fund asset management shall not contradict the employee salary policy, which was approved by the management undertaking);

13) provide the information and (or) documents that are correct and necessary for the supervision to the Supervisory Authority, carry out the guidelines of the Supervisory Authority;

14) ensure, that the risk, which the pension fund managed by the management undertaking is or could be facing, was calculated and managed at all times.

2. During the performance of its obligation, defined in subparagraph 5 of paragraph 1 of this Article, the management undertaking shall implement and apply the effective organizational and administrative measures, dedicated to prevent the conflict of interests, which could affect the interests of the participants in an adverse way.

3. During the performance of the obligation specified in subparagraph 14 of paragraph 1 of this Article, the undertaking shall:

1) implement and apply effective measures, processes and methods for the risk calculation and management;

2) approve, implement and maintain proper and approved by documents risk management policy, which would identify the types of risk, which could be faced by the pension fund that is being managed by the management undertaking;

3) appoint (form) the person or division that performs the risk management function and that is hierarchically and functionally independent from the other divisions of the management undertaking as well as to ensure the proper performance of its functions and that it would be of proper competence, and the right to receive all information that is needed for its proper functioning;

4) immediately notify the Supervisory Authority in writing if there are essential changes in the risk management process.

Article 7. The Guarantee Reserve

1. In case when the management undertaking takes the responsibility to guarantee certain yield to its participants, the guarantee reserve shall be formed. The formation, investment and usage provisions for such reserve shall be harmonized with the Supervisory Authority. The Supervisory Authority has the right to give guidelines to change and (or) append the provisions for the guarantee reserve formation, investment and usage.

2. The guarantee reserve is invested into the diversified financial instrument portfolio, which shall comply with the requirements specified in Articles 45, 47 and 49 of this Law.

Article 8. The Rights of the Supervisory Authority

The Supervisory Authority has the right to determine:

1) the provisions for confidential information storage;

2) the organization and performance procedure of the management undertaking activity internal control;

3) the contents and form of the periodical reports, other reports dedicated to supervision, public notifications and information that is submitted to the Supervisory Authority as well as other mandatory information, and also the submission procedure of such information and financial reports;

4) the capital, risk limitation and other requirements for the operations of the management undertaking;

5) the initial capital and net assets calculation provisions and principles;

6) the provisions for the transaction party risk calculation when inspecting if the requirements for the diversification are followed;

7) the provisions for the pension fund management transfer, pension fund liquidation and of the asset selling of the liquidated pension funds;

8) the requirements for the pension account opening, management and closing, as well as the requirements for the pension fund unit accounting management;

9) additional requirements for the pension contributions and for the conversion of monetary assets that are transferred to another pension fund into the pension fund units (and vice versa);

10) the provisions for pension fund regulation approval;

11) the provisions for the issuance of permits and licenses, that are provided in this Law;

12) the requirements that are applicable to the policy of the management undertaking employee salaries;

13) the requirements for the management undertaking function partial delegation to the other companies;

14) the requirements for the measures, dedicated to prevent the conflict of interest and to manage them;

15) standard conditions of the pension accumulation agreement;

16) the requirements for the pension fund benchmark selection and its usage;

17) the provisions for the participant notification about the essential changes of the pension fund rules and the model list of the essential changes;

18) the requirements for the management undertaking risk assessment and management.

Article 9. The Right of the Management Undertaking to Delegate Part of its Functions to Another Undertaking

1. When the management undertaking seeks the more efficient management it has the right to transfer part of its functions, which are related to the pension fund management, to the other persons, that have the right to provide respective services, the undertaking shall immediately notify the Supervisory Authority in writing about such. In the notification of assignment to perform part of the management functions shall be specified the title of the person (its delegate) and the list of the delegated functions.

2. When management undertaking assigns the performance of the part of its functions to another person, it has to take all the necessary measures in order to avoid the unjustified risk.

3. Part of the functions can be delegated only in case, if:

1) it will not impede the control of the management undertaking and will not undermine the interests of the participants;

2) it will not fundamentally impair the quality of the undertaking internal control;

3) the Supervisory Authority has executed the agreement on the exchange of information with the Supervisory Authority of the non-Member State, to which the licensed undertaking is assigned to perform part of the functions;

4) the heads of the management undertaking can supervise the activity of the delegate at all times;

5) the management undertaking may give the guidelines to the delegate or cancel the delegation at any time when it is needed for the interests of the participants,

6) the delegate is qualified and can perform the specified functions;

7) the rules of the management undertaking pension fund specify, the functions performance which could be assigned to another undertaking.

4. Management undertaking has no right to delegate to another undertaking such amount of its functions, related to the pension fund management, so it would essentially end up with none. It is prohibited to assign the performance of the functions of the pension asset investment strategy formation and the investment decision adoption to another undertaking. The prohibition to delegate the performance of the investment decision adoption function to another undertaking is not applicable in cases when the undertaking requires occupational (special) competency for the adoption of the investment decision, which would ensure the efficient management of the pension funds and in cases where the following conditions are met:

1) the other undertaking is commissioned to adopt only a part of the investment decisions, and the management undertaking adopts on its own the investment decisions on the management of the pension fund assets that are greater than 60 per cent of the fund assets. In that case, the management undertaking shall ensure that the proportion set in this subparagraph is maintained at all times, and

2) the undertaking, which is assigned to perform part of the investment decision adoption function, is not a depository, keeping the pension fund assets of that management undertaking, or other undertaking, the interests of which could interfere with the interests of the management undertaking or those of the participants.

5. The delegation to another undertaking to perform part of the functions does not release the management undertaking from the liability.

Article 10. The Transfer of the Management Undertaking Rights and Liabilities that Occur from the Pension Accumulation Agreements

1. Management undertaking is entitled to transfer the rights and liabilities, which occur from the pension accumulation agreements, to another management undertaking, only after receiving the permission from the Supervisory Authority.

2. Management undertaking shall transfer the rights and liabilities, which occur from the pension accumulation agreements, to another management undertaking in the following cases:

1) if the court adopts the decision to liquidate the management undertaking;

2) before initiating voluntary liquidation proceedings;

3) when the bankruptcy case is initiated against the management undertaking;

4) after the Supervisory Authority imposes the sanction on the management undertaking to transfer the rights and liabilities, that occur from the pension accumulation agreements, to another management undertaking;

5) when the license of the management undertaking activity is terminated;

6) when the license of the management undertaking activity is suspended.

3. The management undertaking shall inform the participants on the intention to transfer the rights and liabilities, which occur from the pension accumulation agreements, in accordance with the provisions and terms determined by the Supervisory Authority. The Supervisory Authority determines the provisions for the transfer of the rights and liabilities, which occur from the pension accumulation agreements. On its web page the pension accumulation undertaking has to publish the information specified in this paragraph on the respective decision.

4. During the transfer of the management undertaking rights and liabilities that occur from the pension accumulation agreements, the participant, until the transfer of such rights and liabilities is completed, is entitled to transfer on its own to another pension fund that he or she selects without making any deductions or to terminate the pension accumulation agreement and end his or her participation in the pension fund within 3 months from the date on which the information about the decision to transfer the rights and liabilities, that occur from the pension accumulation agreements, was sent to him.

Article 11. Acquisition and Transfer of the Qualifying Holding of the Management Undertaking

The requirements for the Law on Collective Investment Undertakings are applicable mutatis mutandis to the acquisition and transfer of the Qualifying Holding of the management undertaking.

Article 12. Licenses Issued by the Supervisory Authority

1. The Supervisory Authority issues the following preliminary permits:

1) for the selection or change of the depository;

2) to transfer management undertaking rights and liabilities, that occur from the pension accumulation agreements, to another management undertaking;

3) for the reorganizing, rearrangement or separation of the management undertaking;

4) for the merging of the pension funds;

5) for the liquidation of the pension fund.

2. The monitoring institution can withhold the permit only if such issuing would violate the legislation or the interests of the participants.

Article 13. Prohibitions to Transfer the Pension Assets

1. The assets of the pensions cannot be transferred to the management undertaking that manages it, to the head of such undertaking, to the members of the board or of the supervisory board or to the undertaking employees (and their spouses). Furthermore, it is forbidden to acquire asset from the persons listed in this paragraph by using the funds of the pension fund.

2. Pension assets cannot be loaned, mortgaged, used as a security, pledged or used to secure the liabilities of other persons in another way. It does not mean that it is forbidden to acquire partially paid up transferable securities, money market instruments or other investment objects specified in the Article 45 of this Law.

3. The transactions in the sale of transferable securities, money market instruments or other investment objects, which it does not have, cannot be executed with the assets of the pension fund.

4. The management undertaking cannot borrow on the account of the pension fund, except for the loans that are critical to sustain the liquidity and are smaller than 10 per cent of the net assets and for the period that is shorter than 3 months. It does not mean the prohibition to borrow in foreign currency, for which the transferable securities or money market instruments are acquired, if the repayment of the loan is secured by giving to the loan giver the equal amount of another currency.

Article 14. Marketing and Offering of the Services

1. Management undertaking, other authorized persons or persons related to it in any other way are prohibited from publishing the information, which is incorrect, vague or which can be misleading.

2. Management undertaking, other authorized persons or persons related to it in any other way can make representations by using the anticipated numbers only in accordance with the provisions set by the Supervisory Authority.

3. When providing the information on the potential pension benefits to the potential or current participant, the management undertaking, its representatives or persons related to it in any other way, has the right to use the pension calculator, which has to comply with these requirements:

1) the provided information shall be clear and not misleading;

2) it has to provide the premises, according to which the calculations are made;

3) it has to provide the explanations on how to interpret the calculation results;

4) it has to provide the description of the calculation methods that are used;

5) there has to be a warning at the side of the calculation results that the management undertaking does not guarantee them.

4. Management undertaking that takes the responsibility to guarantee the certain yield to the participants, without overstepping its authority has the right to make the representations by using the projected numbers, publish the information about the expected investment income and other forecasts that are related to that.

5. The advertisement of the pension accumulation activity can contain only the information from the pension fund rules and from the periodical reports. For the advertising purposes the management undertaking can prepare and distribute the abridged rules of the pension fund, which can only contain the information from the pension fund rules that were approved by the Supervisory Authority.

6. The results of the pension fund presented in the advertisement of the pension accumulation activity shall be compared with the benchmark of the pension fund in accordance with the provisions determined by the Supervisory Authority.

7. Management undertaking is responsible for the proper selection and training of the persons that provide the information on the pension accumulation activity and (or) concluding pension accumulation agreements, and also has to ensure that such persons have the necessary qualification. The Supervisory Authority has the right to set the qualification requirements for the persons that provide the information on the pension accumulation activity and (or) concluding pension accumulation agreements on behalf of the management undertaking.

8. Only persons of sufficiently good repute, who also understand the legislation regulating the pension accumulation activity can provide the information on the pension accumulation activity and (or) conclude pension accumulation agreements on behalf of the management undertaking.

9. Persons who perform and (or) distribute the research on the pension accumulation in the pension funds or other information, which contains the recommendations or suggestions to select the pension fund, to the public distribution or to the public, shall ensure in a manner set out by the Supervisory Authority that such information is not misleading, provided comprehensively and correctly, also have to disclose their interests and provide the conflicts of interests that are related to the pension funds and (or) their managers, to which the aforementioned information is related.

10. The Supervisory Authority has the right to elaborate the requirements for the pension accumulation activity marketing specified in this Article.

11. The Supervisory Authority shall forbid publishing any incorrect, misleading or vague advertisements and is obliged to deny, specify or supplement such published advertisements.

Article 15. Sanctions Applicable to the Management Undertakings

1. The Supervisory Authority has the right to impose the following sanctions on the management undertakings:

1) to warn about the defects and violations of the activity and set the time limits for the rectification of such;

2) to impose the fines that are specified in this Law;

3) to limit the right to conclude the agreements on the acquisition of the financial instruments at the account of the pension fund;

4) to appoint the temporary Supervisory Authority representative to supervise the activity;

5) to order to replace the manager of the management undertaking;

6) to order the management undertaking to transfer the rights and liabilities, that occur from the pension accumulation agreements, to another management undertaking;

7) to suspend the license to provide one, several or all services until the grounds for the license suspension exists; when the grounds for the license suspension disappear, the Supervisory Authority immediately, but no later than within 5 working days from the moment when it ascertained that the grounds disappeared, renews the validity of the license to provide one, several or all services;

8) to repeal the license to provide one, several or all services.

2. The Supervisory Authority has the right to impose the fines that are specified in the Code of the Administrative Offences of the Republic of Lithuania on the heads or employees of the management undertaking.

3. The Supervisory Authority has the right to impose sanctions on the depository specified in subparagraphs 1 and 2 of paragraph 1 of this Article.

Article 16. Grounds for Imposition of Sanctions

1. Sanctions, specified in this Law, can be imposed when there is at least one of the following grounds:

1) management undertaking provided incorrect information to the Supervisory Authority;

2) the information and/ or documents that are necessary for the supervision are not provided to the Supervisory Authority;

3) the conditions, based on which the license was issued, are no longer met;

4) the laws or other legislation of the Republic of Lithuania are violated;

5) management undertaking is unable to fulfill its liabilities to the participants and there is information that it will not be able to do that in the future.

2. Supervisory Authority imposes sanctions in accordance with the provisions specified in the Law on Markets in Financial Instruments.

3. The decision to impose sanctions can be adopted if no more than 2 years have passed since the day of the violation, in the case of the continuing or ongoing violation, from the performance of the last actions of the continuous violation or from the day on which the ongoing violation became known.

Article 17. Temporary Representative for the Supervision of Activity

1. In the immediate cases, in order to avoid the depreciation of the pension assets or any other loss of it, the Supervisory Authority has the right to appoint its temporary representative for the supervision of the activity of the management undertaking.

2. The heads of the management undertaking, prior to taking the actions that are listed in the decision of the Supervisory Authority to appoint the temporary representative for the supervision of the activity , shall obtain the approval of the temporary representative for the supervision of the activity.

3. Temporary representative for the supervision of the activity is recalled, when:

1) it is established that the management undertaking can operate reliably;

2) the bankruptcy case is brought against the management undertaking;

3) the license of the management undertaking is terminated.

Article 18. The Peculiarities of the Management Undertaking’s Reorganization, Rearrangement and Separation Process

1. Before the decision to reorganize or rearrange management undertaking or to perform its separation is adopted, the permission of the Supervisory Authority shall be obtained.

2. In addition to other information that is required by the Civil Code of the Republic of Lithuania (hereinafter — Civil Code) and the Law on Companies, in the management undertaking’s reorganizing conditions shall also be specified the number of the pension funds and of their participants, also shall be provided the data on the pension funds that are being transferred and the ones accepted for management as well as data on their assets, data about the management undertaking own assets, data on depositary, also the conditions and time limits of the management undertaking liability transfer and acceptance, the proprietary and non-proprietary rights of the pension fund participants after the reorganization, the acquisition time limits for such rights and liabilities.

3. The management undertaking shall notify about the reorganization or rearrangement in accordance with the provisions set out in the laws. In this notification the management undertaking shall specify the proprietary and non-proprietary rights of its managed pension fund participants after the reorganization and the time limits for the acquisition and exercising of such rights.

4. The participants of the pension funds of the management undertaking, which is being reorganized or rearranged, are entitled to transfer to another pension fund that they selected without any deductions or to terminate the pension accumulation agreements and end the participation in the pension fund within 3 months from the day on which they were informed about the reorganization or rearrangement of the management undertaking.

5. The information on the progress of reorganization, rearrangement and time limits shall be provided to every shareholder, participant or Supervisory Authority of the management undertaking that requests such information.

6. After receiving the permission from the Supervisory Authority and by following the provisions set by that institution, the management undertaking that is being reorganized can without the approval of the participant transfer the rights and liabilities, that occur from the pension accumulation agreements, to another management undertaking if this undertaking accepts all the liabilities to the participants that are specified in the respective pension fund rules and pension accumulation agreements, and provide the conditions to properly exercise the participant rights specified in paragraph 4 of this Article before such acceptance occurs.

7. By the request of the management undertaking or on its own initiative, the Supervisory Authority terminates the license of the management undertaking, which ceases to exist after the reorganization.

8. If in the reorganizing process of the management undertaking a new undertaking is established, in accordance with the Law on Collective Investment Undertakings and with the provisions set by the Supervisory Authority, it shall obtain the management undertaking license.

9. A part of the management undertaking, that continues the activity, can be separated and on the basis of the assets, rights and liabilities one or several new management undertakings of the same legal form can be formed. The provisions for this Law that regulate the reorganization of the management undertaking and the provisions of the Civil Code that regulate the reorganization by the method of division are mutatis mutandis applied to the separation of the management undertaking.

Article 19. Peculiarities of the Management Undertaking Bankruptcy Proceedings

1. The bankruptcy proceedings of the management undertaking can be carried out only within judicial procedure.

2. The Supervisory Authority is entitled to file the request with the court to instigate the bankruptcy case against the management undertaking.

3. The court no later than within 15 days from the receipt of the request has to pass the judgment to instigate the bankruptcy case or to refuse to do so. When the judgment to instigate the bankruptcy case is passed, the court or the judge shall notify the Supervisory Authority about it immediately.

4. The administrator of the management undertaking organizes the transfer of the rights and liabilities, which occur from the pension accumulation agreements, to another management undertaking in accordance with the provisions set by the Supervisory Authority. The administrator of the management undertaking is entitled to transfer the rights and liabilities, which occur from the pension accumulation agreements, to another management undertaking without the approval of the participants, if the management undertaking that is accepting them, accepts all the liabilities to the participants as well. The administrator of the management undertaking shall notify the participants of the pension fund about the institution of the bankruptcy case and anticipated transfer of the rights and liabilities, which occur from the pension accumulation agreements, to another management undertaking. Until the transfer of such rights and liabilities, that occur from the pension accumulation agreements, is completed the participants have the right to transfer to the pension fund managed by another management undertaking without any deductions.

5. The participant requirements, that arise from the fund management relations, to the management undertaking shall be settled from the management undertaking own assets, firstly in accordance with the provisions set in the Law by compensating to the holder of the pledge, and at the same time beginning to settle the requirements with the other creditors of the undertaking.

Article 20. Peculiarities of the Management Undertaking Liquidation Process

1. The decision of the general shareholder meeting to liquidate the management undertaking may be adopted only in case if it has transferred the rights and liabilities, that occur from the pension accumulation agreements, to another management undertaking in accordance with the provisions set by the Supervisory Authority, or if it due to intention to liquidate the management undertaking with the permission of the Supervisory Authority and in accordance with the provisions set by it has liquidated all the pension funds and its license is terminated by the decision of the Supervisory Authority.

2. No later than within 3 days after the adoption of the decision of the general shareholder meeting to liquidate the management undertaking, the Supervisory Authority shall be informed of such in writing and the information of the assigned liquidator shall be provided as well.

3. The management undertaking shall announce the liquidation in accordance with the provisions set out by the Supervisory Authority. The information on the management undertaking liquidation progress and time limits shall be provided to every shareholder of the management undertaking, participant or Supervisory Authority that requests such information.

4. If the management undertaking is liquidated by the decision of other subject than the one that is specified in paragraph 1 of this Article, then the liquidator of the management undertaking that is being liquidated is responsible for the transfer of the non-transferred rights and liabilities, that occur from the pension accumulation agreements, to another management undertaking in accordance with the provisions set by the Supervisory Authority. Until the transfer of such rights and liabilities is completed, the participants are entitled to transfer to the pension fund managed by another undertaking without making any deductions.

5. Liquidated management undertaking may be removed from the Register of the Legal Entities only after the transfer of its rights and liabilities, that occur from the pension accumulation agreements, to another management undertaking is completed or only after the division of the managed pension funds is completed in accordance with the provisions set in Article 33(6) of this Law.

SECTION III

Pension fund and its participants

Article 21. Establishment of a Pension Fund and the Rules of a Pension Fund

1. Pension accumulation activity in the pension funds that are managed by the management undertaking is based on the rules of the pension fund.

2. The rules of the pension fund are approved by the decision of the board of the management undertaking. Management undertaking may begin to collect the participant contributions into the pension fund only after the rules of the pension fund are approved by the Supervisory Authority in accordance with the provisions set by it.

3. The following shall be specified in the rules of the pension fund:

1) title of the pension fund (title shall clearly indicate that this is the pension fund of the supplementary voluntary accumulation of pensions);

2) the procedure and the conditions of joining the pension fund and leaving it, as well as the conclusion, suspension and renewal of other participation in the pension fund;

3) the rights and liabilities of the participants;

4) the rights and liabilities of the management undertaking;

5) the pension benefit payout methods and the possibilities to select them, pension benefit payout procedure, age of participants, which entitles to receive the additional pension;

6) the pension fund net assets and the pension fund unit value calculation rules, and their publishing procedure;

7) the procedure of the pension contribution and monetary asset, that are owned by the participant and are transferred to another pension fund managed by the same undertaking or the fund managed by another management undertaking, conversion into the fund units, also the rules regulating the pension fund unit conversion into the money and the money payout to the persons that are entitled so;

8) the investment strategy of the pension fund;

9) the procedure of the opening, management and closing of the pension accounts, and of the pension fund unit record keeping;

10) management undertaking and depository remuneration calculation technique, size and payment procedure; the exhaustive list and calculation technique of other costs, that are covered from pension assets;

11) the procedure of the reports of the management undertaking pension fund management activity and of the pension accounts submission to the participants in cases laid down by this Law, also the forms of the other pension fund notifications and the procedure of their submission to the participants;

12) the procedure and conditions of the pension accumulation agreement conclusion, amending and termination;

13) the procedure of transfer to the pension fund managed by the same or by another management undertaking and the time limit specified in Article 34(5) of this Law, during which the management undertaking has to transfer the assets owned by the participant;

14) depository title, headquarters, rights and liabilities;

15) conditions and procedure of the depository replacement;

16) the procedure of the amendment of the pension fund rules;

17) the conditions and procedure of the pension fund liquidation, and the liquidated pension fund asset distribution procedure;

18) the procedure of the pension fund joining;

19) other conditions and information set out by the Supervisory Authority.

4. The rules of the pension fund may contain and other provisions that do not contradict this Law or the requirements that are set out by the Supervisory Authority.

5. Management undertaking shall provide the possibilities for all persons to familiarize themselves with the rules of the pension funds that were approved by the Supervisory Authority and their amendments.

6. The management undertaking shall notify in writing or via email each participant of the pension fund that it manages about the respective amendments of the pension fund rules no later than 20 days prior to the date when the amendments become effective. The participant himself has the right to choose the method of notification. The amendments of the rules of the pension fund become effective after 30 days passes from the date when they were approved by the Supervisory Authority.

7. The requirements, specified in paragraphs 5 and 6 of this Article, to obtain the confirmation from the Supervisory Authority and notify the participants in writing about the changes of the rules, are not applicable to the renewal of the information contained in the pension fund rules, however, the management undertaking shall immediately and no later than within 5 working days from the renewal of the information contained in the pension fund rules submit the updated pension fund rules to the Supervisory Authority. The Supervisory Authority sets out the cases that are considered as a renewal of the information which is provided in the rules of the pension fund.

8. Management undertaking shall inform in writing each participant of the pension fund that it manages about all essential pension fund rules changes that have influence to the interests of the participants and provide the participant with possibility to terminate the pension accumulation agreement within the sufficient amount of time, when such right is specified in the legislation, or to transfer to another pension fund of the same or another management undertaking, selected by the participant, without any deductions.

Article 22. The Investment Strategy of a Pension Fund

1. Pension fund investment strategy shall provide the pension asset investment provisions and scope, risk assessment methods, risk management principles, the methods and procedures used for the risk management, strategic pension asset distribution in accordance with the duration and nature of the undertaken liabilities that are related to the pension accumulation agreements.

2. Management undertaking shall at least once in 3 years review the investment strategy of the pension fund and change it if there is a need.

Article 23. Participant

Person becomes the participant after the pension accumulation agreement becomes effective.

Article 24. Rights of the Participant

1. Participant is entitled to:

1) terminate the pension accumulation agreement on the grounds that are specified in this agreement;

2) get the information specified in the laws, which is related to the activity of the management undertaking;

3) receive the information about the pension fund units that are entered into his pension account and their value, asset investment strategy and the investment return that was received under that strategy, also the information of management undertaking, findings of the pension fund auditor and other information specified by this Law;

4) receive the pension benefits set out by this Law with respect to the size of the pension assets that were accumulated in his name;

5) postpone the beginning of the pension benefit payout in accordance with the provisions laid down in this Law;

6) bequeath the part of the pension assets that he owns;

7) to other rights specified in the laws, rules of the pension fund and pension accumulation agreement.

2. The participant of the pension fund has the rights, specified in paragraph 1 of this Article, even if he does not pay the contributions by himself or when the contributions for him are not paid.

Article 25. The Pension Accumulation Agreement

1. Before the person concludes the pension accumulation agreement, he shall be familiarized with the rules of the pension fund, the participant of which the person will become after the pension accumulation agreement will become effective. Rules of the pension fund are an integral part of the pension accumulation agreement.

2. The pension accumulation agreement shall be concluded in writing.

3. The pension accumulation agreement shall provide the right for the participant of the pension fund to unilaterally terminate the pension accumulation agreement.

4. The management undertaking has no right to terminate the pension accumulation agreement without the approval of the participant of the pension fund, except for the cases specified in this Law.

5. The management undertaking manages the lists of the pension fund participants and of the persons who receive pension benefits. The information off these lists is confidential. The lists of each pension fund are managed separately. List management rules and their contents are set out by the management undertaking. The board of the management undertaking shall approve the rules of the list management and the content of the lists.

6. The pension accumulation agreement becomes effective after the first contribution is made into the pension account.

7. After the pension accumulation agreement is concluded, the management undertaking opens a personal pension account for each of the participants of the pension fund.

Article 26. The Contents of the Pension Accumulation Agreement

1. The following shall be specified in the pension accumulation agreement:

1) the agreement number, conclusion date and venue;

2) parties of the agreement (management undertaking title, code, headquarters address, number of the license issued by the Supervisory Authority, name and last name of the representative; name, last name, personal code, date of birth, residence address);

3) the subject matter of the agreement;

4) the title of the pension fund and the registration number of the rules of the pension fund approved by the Supervisory Authority as well as the date of approval;

5) the rights and liabilities of the parties, amongst them – the liabilities of each party to inform the other one of the changes in the personal data (residential or headquarters address, name, last name or title, number of money bank account etc.), specified in the agreement;

6) the pension contribution size, payment method, procedure and time limits;

7) the pension benefit payout conditions;

8) the liability of the management undertaking for defaulting on its liabilities;

9) the procedure and conditions of the agreement amendment;

10) the procedure and conditions of the agreement termination, amongst them – the participants’ right to terminate the pension accumulation agreement unilaterally;

11) parties dispute resolution procedure;

12) duration of the agreement and the grounds for expiration;

13) reference that the rules of the pension fund, in accordance with which the pension accumulation agreement is concluded, is the integral part of this agreement;

14) agreement parties personal data.

2. Besides the provisions specified in paragraph 1 of this Article the pension accumulation agreement may contain and other provisions that do not contradict with the Civil Code, this Law, other laws and legislation of the Republic of Lithuania, requirements set out by the Supervisory Authority, the specified standard conditions of the pension accumulation agreement, management undertaking articles of association and the rules of the pension fund, in accordance with the pension accumulation agreement that is being concluded (is concluded).

3. The parties cannot agree in the pension accumulation agreement to such conditions, which would impair the position of the pension fund participant, in comparison to that, which is set out by this and other Republic of Lithuania laws.

Article 27. Pension Contributions

1. Pension contributions are paid in money.

2. The employer may pay the full contribution or a part of it for the benefit of the employee.

3. The discontinuing to pay the contributions or other payment violations cannot be the grounds to terminate the pension accumulation agreement or to limit the participants’ ownership right of the pension assets. In such case the participant has all the rights specified in Article 24(1) of this Law.

4. In cases when the contributions are paid not by the participant, the contributions become the property of the participant from the moment when the contributions that are converted into the pension fund units are entered into participant's pension account.

5. Pension contributions cannot be paid in the name of the participant, who concluded the pension benefit agreement. Pension assets, formed from the assets, transferred in the participant's name to the pension fund after the conclusion of the pension benefit agreement with the participant, has to be paid out to the participant in accordance with the provisions set out in the pension benefit agreement (if pension benefits are already paid) no later than within 5 working days from the acquisition of those assets or is added to the payable pension benefits (if they are not paid yet).

Article 28. Pension Accounts

1. Management undertaking shall open a pension account for each participant. Information about the pension accounts is confidential.

2. Pension accounts are opened, managed and closed, and the pension fund units are entered into them in accordance with the provisions laid down in the rules of the pension fund. The Supervisory Authority sets out the principles of the opening, management and closing of the pension accounts, and of the pension fund unit record keeping.

Article 29. Pension Assets

1. Pension assets are the joint partial ownership of the participants. Participants share in the joint partial ownership is determined with respect to the number of pension fund units that is entered into his personal pension account.

2. The management undertaking manages, uses and disposes of the pension assets on the basis of the right of trust.

3. The assets of every pension fund are included in the records, separately from the management undertaking own assets and from the assets of the other pension fund, which is managed by the same management undertaking.

4. The collection from the pension assets on the basis of the liabilities of the management undertaking and participants is prohibited.

5. After participant's death the pension fund share that he owned is inherited in accordance with the provisions set out by the laws. When the pension asset share that was owned by the dead participant is inherited by another participant of the same pension fund and if the participant does not request otherwise, the pension fund units that fall within the inherited share, which is entered into the pension account, are not converted into money.

6. Pension assets may only be the subject of the transactions that are specified in this Law.

7. The value of each pension fund net assets shall be calculated in order to be able to estimate the value of the pension fund units.

8. The value of the pension fund net assets is calculated and the value of the pension fund units is determined every working day in accordance with the provisions set out in the rules of the pension fund. Once per month the average value of the pension fund unit of the previous month is calculated. Supervisory Authority is entitled to set the principles and calculation procedure of the pension fund net assets.

Article 30. Termination of the Participation in a Pension Fund

1. The participation in the pension fund is terminated when:

1) the management undertaking fulfills its liabilities to the participant of the pension fund;

2) the participant terminates the pension accumulation agreement, without transfer to another pension fund;

3) the participant transfers to another pension fund;

4) the participant dies;

5) the pension fund is liquidated;

6) the pension fund is joined to another one or merged with another one.

2. The pension fund rules may specify the prohibition to terminate the pension accumulation agreement without the transfer to another pension fund, until the retirement age is reached, also the minimum time of participation in the pension fund may be specified, and until it passes the person cannot terminate the pension accumulation agreement without transferring to another pension fund.

3. The participant who terminates the pension accumulation agreement, but does not transfer to another pension fund has to be paid the sum, which is obtained after the conversion of the pension fund units, entered into his pension account, into the money. The undertaking is entitled to take a fee of 1 per cent that does not exceed the withdrawn amount for the termination of the pension accumulation agreement without transferring from the pension fund to another pension fund, if such is specified in the rules of the pension fund.

4. The management undertaking, management undertaking shareholders and the payer of the pension contributions are prohibited to limit directly or indirectly the participant's right to terminate the pension accumulation agreement, except in the case provided in paragraph 2 of this Article.

Article 31. Participant's Transfer to Another Pension Fund

1. The participant is entitled to transfer to another pension fund that is managed by the same or by another management undertaking in accordance with the provisions set out in this Law.

2. Participant's transfer from one pension fund to another shall happen in accordance with the conditions set out in the rules of the pension fund from which the participant transfers and in accordance with the rules of the accepting fund. The costs of the participant's transfer to another pension fund are comprised of the actual costs incurred by the management undertaking that are related to the account closing and asset transfer. These costs may be covered from the participants account, from the monetary assets that are owned by the participant, that are transferred to another pension fund, however, it cannot exceed the 0.5 per cent of the transferred sum, if such is specified in the rules of the pension fund. The fee can be deducted from the monetary assets, that belong to the participant and are transferred to another pension fund, or is collected in the other ways specified in the rules of the pension fund. The participant is entitled to transfer to another pension fund managed by the same management undertaking once per calendar year free of charge (without any deductions), and is entitled to transfer to the pension fund, managed by another management undertaking, by covering the costs, related to the person's transfer to another pension fund, which are incurred by the management undertaking from which pension fund the participant transfers.

3. The management undertaking, the participant of which expressed the will to transfer to another pension fund, the shareholders of that management undertaking and the payers of the pension contributions are prohibited to limit directly or indirectly such right of the participant.

4. The management undertaking of the pension fund, from which the participant transfers to the pension fund managed by another management undertaking, transfers the sum obtained after the conversion of the pension fund units, entered into the participant's pension account, into the money is made and after the fee for the transfer to another pension fund specified in the pension fund rules is deducted from the aforementioned fee.. The sum obtained after the deduction of the respective fees of the pension fund, the participant of which transfers, that are specified in the rules, is converted to the fund units of that pension fund. Money is converted to the fund units no later than on the other working day, after the reception of the money into the pension fund account of the accepting management undertaking. In this case, the money is converted to the fund units using the value of the units that is set in the pension fund to which the participant transfers on the day of reception of the money at the accepting management undertaking. The management undertaking of the pension fund, from which the participant transfers to the pension fund managed by another management undertaking, transfers all the assets that are owned by that participant to the accepting management undertaking only after the participant presents the pension accumulation agreement, which is concluded with the accepting management undertaking, to the management undertaking of the pension fund from which the participant transfers.

5. If the participant transfers to another pension fund managed by the same management undertaking, the assets that he owns are transferred to that pension fund, to which the participant transfers in accordance with the provisions set out in paragraph 2 of this Article. If the participant transfers to another pension fund, which is managed by the same management undertaking, the new pension accumulation agreement is concluded. The funds that are transferred to the pension fund to which the participant transfers have to be converted in accordance with the provisions set out in Article 34 of this Law.

Article 32. Merging of the Pension Funds

1. The management undertaking has the right to perform the merging (by the methods of joining or adding) of the pension funds that it manages only after it receives the permit from the Supervisory Authority.

2. It is prohibited to merge the fund of supplementary voluntary accumulation of pensions (funds) with the pension fund (funds) for the accumulation of a portion of the state social insurance contribution.

3. The management undertaking, that desires to obtain the permit for the merging of the pension funds, shall submit to the Supervisory Authority:

1) the general merging condition project, which is approved by the management undertaking;

2) the rules of the pension fund, which will operate after the merging;

3) the confirmation, which is prepared in accordance with paragraph 10 of this Article by the depository of the pension funds that are being merged;

4) the information about the merging, that the management undertaking intends to give to the participants of the pension funds that are being merged.

4. If the Supervisory Authority determines that not all of the documents and information, specified in paragraph 3 of this Article, were provided, within 10 working days after the part of the documents and information were received it is entitled to demand that the management undertaking would provide all the missing documents and information.

5. The Supervisory Authority has the right to demand in writing, that the management undertaking would supplement and (or) change the information or the documents, which it intends to give to the participants of the pension funds. This right may be exercised by the Supervisory Authority no later than within 15 working days after the day when all the documents and information, specified in paragraph 3 of this Article, is received.

6. The Supervisory Authority issues the permit to merge the pension funds, if:

1) the merging will not violate the interests of the participants of the pension funds that are being merged;

2) the rates of deductions and other costs covered from the assets comprising the assets of the pension fund applicable to the participants of the pension fund that will operate after the merging shall be no higher than before the merging took place;

3) the Supervisory Authority has no objections to the information, which is intended to be given to the participants of the pension funds that are being merged;

4) the planned merging meets all the requirements specified in this Article and in other legislation.

7. The Supervisory Authority shall inform the management undertaking about the issuing of the permit to merge the pension funds or about the refusal to issue one within 20 working days from the day on which all documents and information, specified in paragraph 3 of this Article, were received.

8. The provisions for non-performance of the temporary investment rules, defined in Article 50(2) of this Law, are applicable mutatis mutandis to the financial instrument portfolio of the pension fund that will operate after the merging. The counting of the period of non-performance of the temporary investment rules begins from the day on which the merging of the pension funds was completed.

9. The detailed content requirements for the general merging conditions' project of the pension funds that are being merged, which is prepared by the management undertakings, are set by the Supervisory Authority.

10. The depository of the pension funds that are being merged shall confirm that it checked if the merging method, which is specified in the project of the general merging conditions, pension funds that are being merged, anticipated merging completion date and the rules that are intended for application to the asset transferring and pension fund unit conversion complies with the requirements for the legislation of the Republic of Lithuania and with the requirements for the rules of the respective pension fund, and that it did not find any non-performance.

11. The auditor of the pension fund, which ends after the merging, shall confirm:

1) the evaluation criteria for the assets and liabilities, that will occur on the day, specified in paragraph 21 of this Article, of the pension fund unit conversion ratio calculation;

2) pension fund unit conversion ratio calculation method and the factual pension fund unit conversion ratio, calculated on the day, specified in paragraph 21 of this Article, of the pension fund unit conversion ratio calculation.

12. The management undertaking of the pension funds that are being merged shall ensure that the copies of the auditor’s report would be submitted to the Supervisory Authority and also provided free of charge at the request of the participants of the pension funds that are being merged.

13. The management undertaking of the pension funds that are being merged has to provide sufficient and accurate information about the merging to the participants, which is necessary to properly assess the effect of such merging to the participant rights, liabilities and pension assets, and provide the participants with the possibility to make justified decisions to exercise the right, specified in paragraph 17 of this Article. The information about the merging, which is provided to the participants of the pension funds that are being merged, shall contain:

1) the grounds for merging;

2) the anticipated effect of the merging to the participants of the pension funds that are being merged, including, but not limited to, the information about all significant changes, that are related to the investment policy and strategy, costs, anticipated consequences, periodical reports, and possible operations changes;

3) the period, after which the pension fund units of the pension fund, which will end after the merging, will not be issued and converted;

4) all the rights related to the merging, which are awarded to the pension fund participants during the merging, including, but not limited to, the right to receive the additional information, right to receive the copy of the auditor’s report and the right to exercise the right, which is specified in paragraph 17 of this Article, together specifying the period, during which this right can be exercised;

5) the other important aspects of the merging procedures and expected merging completion date, including, but not limited to, how the participants will be informed about the completion of the merging, and also the information about the intention to stop the issuing and (or) conversion of the pension fund units in order to achieve the successful completion of the merging.

14. The information about the merging to the participants of the pension funds that are being merged shall be provided after the Supervisory Authority gives the permission for the merging, but no later than 3 months until the final day of the period during which the participants are entitled to exercise the right, specified in paragraph 17 of this Article.

15. During the time from the submission of the information about the merging to the participants of the pension funds and until the merging completion day the management undertaking shall provide the information, which is specified in paragraph 13 of this Article, to all the persons, who intend to become the participants of any of the funds that are being merged.

16. The Supervisory Authority sets the detailed contents, form and submission procedure requirements for the information that is provided to the participants of the pension funds that are being merged.

17. The participants of the fund, which will end after the merging, have the right to transfer to another fund managed by the same undertaking or to the fund managed by another undertaking at their discretion without any deductions. The participants can exercise this right from the moment, when they are informed about the merging. This right expires 5 working days till the day, specified in paragraph 21 of this Article, of the pension fund unit conversion ratio calculation.

18. The Supervisory Authority, without prejudice to the requirements that are specified in paragraph 17 of this Article, has the right to demand from the management undertaking or to allow it to temporary suspend the issuing and/ or conversion of the pension fund units, if it is necessary in order to protect the interests of the owners of the pension fund units.

19. It is prohibited to cover any costs (including legal, consultation, administrative and other), related to the preparation, execution or completion of the merging, from the assets of the funds that are being merged or from the accounts of their participants.

20. The merging of the pension funds is considered complete, when the final entries are made in the participants' personal pension accounts, after the conversion of the fund units of the pension fund, which will end after the merging, into the fund units of the pension fund that will operate after the merging, is done.

21. The ratio of the conversion of the fund units of the pension fund, which will end after the merging, into the fund units of the pension fund that will operate after the merging, shall be calculated on the day of the merging completion, specified in paragraph 20 of this Article.

22. The management undertaking shall immediately, but no later than within 5 working days, notify about the completion of the merging:

1) the Supervisory Authority in writing and submit to it the rules of the pension fund that ended after the merging and a request to declare them repealed;

2) and announce on the web page (web pages) that are specified in the rules of the pension fund that will operate after the merging.

23. All assets and liabilities of the pension fund, which will end after the merging, are transferred to the pension fund that will operate after the merging. The participants of the pension fund that will end after the merging become the participants of the pension fund that will operate after the merging.

24. The management undertaking, in accordance with the provisions set out by the Supervisory Authority, shall confirm to the depository of the pension fund, which will operate after the merging, that the assets and liabilities are transferred.

Article 33. Liquidation of a Pension Fund

1. A pension fund can be liquidated by the decision of the management undertaking board or the court decision.

2. The pension fund may be liquidated by the decision of the management undertaking board, if at least one of the following conditions is present:

1) the management undertaking has fulfilled all its liabilities to the participants of the pension fund that it manages;

2) all participants of the pension fund that it manages transfer to another pension fund;

3) the management undertaking is liquidated or reorganized.

3. When the court recognizes that the management undertaking went bankrupt and passes the judgment to liquidate the management undertaking due to the bankruptcy, the pension funds, of which arises rights and liabilities of the management undertaking, that arises from the pension accumulation agreements, were not transferred to another management undertaking until the passing of the judgment to liquidate the management undertaking, by the decision of the court are declared liquidated.

4. If the participant, within 3 months after the day on which the information about the decision of the management undertaking to liquidate the pension fund was sent to the participant, expresses the desire to transfer to a pension fund managed by another management undertaking, the participant shall be transferred without any deductions.

5. The management undertaking shall inform the participants, contribution payers and Supervisory Authority about the decision to liquidate the pension fund within 5 working days from the day on which such decision was adopted. The management undertaking shall publish the information about the respective decision, which is specified in this paragraph, on its web page as well.

6. If the pension fund is liquidated and the rights and liabilities are not transferred to another management undertaking in accordance with the pension accumulation agreements, the assets of the liquidated pension fund is distributed amongst the participants, in proportion to the amount of pension fund units that are entered into their accounts, and according to the condition of the assets on the date when the decision to liquidate the pension fund is adopted or according to its condition on the date of the court decision to liquidate the bankrupt management undertaking. All the assets of the liquidated pension fund shall be realized and settlement with the participants of the pension fund shall be effected using the proceeds from the sale of those assets. The assets of the liquidated pension fund shall be sold on the regulated market or auction in accordance with the rules set out by the Supervisory Authority.

7. The pension fund is deemed as liquidated when the Supervisory Authority declares the rules of the pension fund repealed, and in the case specified in paragraph 3 of this Article on the day on which the decision of the court goes into effect.

Article 34. Pension Fund Units and Their Conversion

1. The pension fund units represent the share of the pension fund assets, which belongs to the participant.

2. The pension contributions that are paid, also the assets, which were transferred to another pension fund into which the participant transfers, shall be converted into the pension fund units, and the pension fund units are entered into the pension account. The money are converted into the pension fund units no later than on the next day after the day that monetary assets were received in the pension fund. The money shall be converted into the pension fund units at the value of the respective pension fund units, which is on the day when money are received in the pension fund.

3. Each pension fund shall have its pension fund units.

4. Pension fund units (their parts) have no nominal value. The value of the pension fund unit (of its part) is expressed in Euros. The value of each pension fund unit shall be determined by dividing the value of the pension fund net assets from the total number of the pension fund units. The total value of all pension fund units is always equal to the value of the net assets of that pension fund. The value of the pension fund unit (of its parts) shall be expressed in the accuracy of the ten thousands and rounded up according to the mathematical rules of rounding.

Amendments to the paragraph of the Article:

No XII-1113, 23/09/2014, published in TAR 02/10/2014, identification code 2014-13422

5. If in the cases that are specified in this or other Republic of Lithuania laws the assets accumulated by the participant or a part thereof shall be paid out or transferred, the management undertaking upon the receipt of the respective document (or if the specified legal fact occurs) no later than on the next working day converts the pension fund units, that are entered into the participant's pension account, into the money, at the pension fund unit value of that day, and no later than within 7 working days pays them out or transfers.

6. Pension fund units may be divided into parts and the value of the sums in the participant's pension account as well as the value of the pension fund net assets may be expressed in the parts of the pension fund units.

7. The conversion procedure of the pension contributions and participant owned assets, which are being transferred to another pension fund, into the pension fund units, and the rules of the pension fund unit conversion into money and the money payout to the owners are specified in the rules of the pension fund. When converting the monetary assets into the pension fund units, the number of the pension fund units may be expressed in full and fractional parts in accordance with the rules of the pension fund. The Supervisory Authority is entitled to set additional requirements for the pension contributions and for the conversion of the money, which are transferred into another pension fund and are owned by the pension fund participant, into the pension fund units, and for the conversion of the pension fund units into the money.

Article 35. Pension Benefits

1. The right to the pension benefits is acquired, when the participant becomes of the retirement age, which is set by the rules of the pension fund. The retirement age cannot be more than 5 years lower than the retirement age set to receive the state social insurance old age pension.

2. A participant who is declared incapacitated or partially able-bodied by the disability and working capacity assessment office under the Ministry of Social Security and Labour (until 01 July 2005 declared as a disabled person of 1st or 2nd group by the State Medical and Social Expert Examination Commission) is entitled to the pension benefits from the employment assessment date (or from disability certification date).

3. The participant, who gained the right to the pension benefit, is entitled to postpone the beginning of the pension benefit payout. During the postponement of this period, such person remains the participant of the pension accumulation. If the participant does not contact the management undertaking in writing for the payout of the pension benefit, it is deemed that the participant exercised the right to postpone the beginning of the benefit payout.

4. The payout of the pension benefits shall commence no later than within 30 days from the day of the participant's application and the submission of the documents, which confirm the pension fund participant’s right to pension benefits, to the management undertaking.

5. Any payouts that are not specified by this Law cannot be made from the pension account.

Article 36. Payout Methods of Pension Benefits

1. By the choice of the participant, pension benefits can be paid in the following way:

1) by paying out a lump sum at once (single pension benefit);

2) regularly in parts by converting the pension fund units entered in the pension account into the money and paying them out, if such method of the pension benefit payout is specified in the rules of the pension fund;

3) by purchasing the annuity in the life insurance undertaking.

2. The benefits specified in paragraph 1 of this Article are paid when the participant and the management undertaking conclude the pension benefit agreement on the pension benefit payout method and time limits.

3. The method of pension benefit payout is selected by the participant. No later than before the conclusion of the pension benefit agreement the management undertaking shall inform the participant about the necessity to select the pension benefit payout method.

Article 37. Annuity

1. The annuity is bought at the insurance undertaking selected by the pension fund participant, which conducts the life insurance activity, for the sums that are calculated in the participant's pension account.

2. The pension annuity is obtained when the pension fund participant signs the insurance agreement with the payer of the pension annuity. Only the insurance undertaking that provides the life insurance can be the payer of the pension annuities.

Article 38. Settlements from the Pension Assets

1. The remuneration to the management undertaking for the management of the pension fund and to the depository for its services are paid from the pension assets, it also covers the other costs that are related to the pension fund management.

2. Pension assets can only be used to cover the costs, which are related to the pension fund management and are specified in the rules of the pension fund. The sum of these costs cannot exceed the expense limits set by the rules of the pension fund. All other costs that are not specified in the rules of the pension fund or the costs that exceed the set limits shall be covered from the management undertaking assets.

Article 39. Confidential Information and Its Protection

1. The information on the participant's contributions, benefits, amount of the pension fund units in his account and other information related to the participant is deemed as confidential information. The employees of the management undertaking and depository and other persons who are entitled to learn this information, can disclose it only in cases that are specified by this Law.

2. The confidential information may be disclosed only to the participant himself, his representative or state institutions, to which it is required for the performance of the duties and the laws that regulate the activity of such institutions provide for the right to obtain such information.

SECTION IV

Depository

Article 40. Duty to Transfer Pension Assets to the Depository

Pension assets shall be entrusted to one depository for safe-keeping

Article 41. The Rights and Liabilities of the Depository

The requirements applicable to the depository, its rights and liabilities are specified in the Law on Collective Investment Undertakings.

Article 42. The Transfer of the Pension Asset Management to the Depository

1. If the license of the management undertaking is terminated or suspended the management undertaking loses the right to manage the pension fund, the rights and liabilities, that occur from the pension accumulation agreements, are not transferred to another management undertaking, and the management undertaking shall inform the depository about the suspension or termination of its license. In such case, the rights and liabilities that occur from the pension accumulation agreements are temporarily overtaken by the pension fund depository, which has all the rights and liabilities of the management undertaking, if the laws or rules of the pension fund do not provide otherwise.

2. The depository takes over the rights and liabilities, which occur from the pension accumulation agreements, for the period for which the management undertaking license is suspended. In case when the license of the management undertaking is terminated, the depository shall transfer the management of the pension fund assets to another management undertaking within 3 months from the day on which the rights and liabilities that occur from the pension accumulation agreements, were accepted. If during within 3 months the rights and liabilities, that occur from the pension accumulation agreements, are not transferred to another management undertaking, by the decision of the depository board the pension fund has to be liquidated and its assets distributed to its participants in accordance with the provisions set out by Article 33 of this Law and by the Supervisory Authority. In cases specified in this paragraph, the participant has the rights specified in Article 10(4) and Article 33(4) of this Law respectively.

Article 43. The Separation of the Management Undertaking from the Depository

1. The depository cannot conduct the activity of the management undertaking at the same time, except in the case specified in Article 42 of this Law.

2. The requirements set out by the Law on Collective Investment Undertakings are applicable to the separation of the management undertaking from the depository.

Article 44. Changing of the Depository

1. The management undertaking may change the depository only if the Supervisory Authority issued the permit for that.

2. If the depository is not following the requirements for the legislation, is not fulfilling its liabilities or fulfilling them improperly, the Supervisory Authority, in order to ensure the rights of the participants, has the right to instruct the management undertaking to terminate the agreement, concluded with the depository, and to conclude a new agreement with another depository.

SECTION V

INVESTMENT RULES

Article 45. Objects of Investments

1. Pension assets can only be comprised of:

1) transferable securities and money-market instruments that are included in the trade on the market, which, according to the Law on Markets in Financial Instruments, is considered as regulated and operating in the Republic of Lithuania or other Member State, and (or)

2) transferable securities and money-market instruments, that are included into the trade on the active, recognized, supervised and publicly accessible market, that is operating in accordance with the set rules in another country (except for the Member States), if such market is specified in the rules of the pension fund and (or)

3) newly issued transferable securities, if the conditions of the issue provide that these securities shall be included into the trade on the regulated marked and if they will be included into the trade no later that within one year after the issue (if such market exists in the country specified in subparagraph 2 of this paragraph, it shall be specified in the rules of the pension fund), and (or)

4) the deposits that are deposited for no longer than 12 month term, may be withdrawn on demand, and located in the credit institution, the headquarters of which are located in the Member State or in another country, in which the risk limiting supervision is as strict as in the European Union, and (or)

5) money-market instruments specified in paragraph 2 of this Article and(or)

6) investment units and shares of the collective investment undertakings that are specified in Article 49(1) of this Law.

2. It is permitted to invest into the money-market instruments that are not included into the trade on the regulated market, only if the emission or the issuer of such instruments is regulated in order to protect the investors and their savings, and those instruments:

1) are issued or guaranteed by the Member State government, regional authority, municipality or Central Bank, European Central Bank, European Union or European Investment Bank, non-Member State or by one of the subjects that comprises the federal country or by an international organization, to which at least one Member State belongs, or

2) are issued by the subject, whose securities are included into the trade on the controlled markets that are specified in subparagraphs 1 and 2 of the paragraph 1 of this Article, or

3) are issued or ensured by the subject, whose activity risk is supervised in accordance with the requirements for the European Union law or such requirements, that are as strict as the ones that are set in the European Union, or

4) are issued by the undertaking that meets the criteria approved by the Supervisory Authority, the capital and reserves of which are at least 10 000 000 EUR, which prepares the consolidated financial reports and performs the function of the financing of the undertaking group, when the transferable securities of at least one undertaking, which belongs to its group, are included into the trade in the regulated market, or, which is used to issue the securities that are financed by the bank loans, and the investments into such money-market instruments are as protected as specified in subparagraphs 1, 2, 3 of this paragraph .

3. Pension assets cannot be invested into the precious metals or into the transferable securities and immovable property that award the right to thereof.

4. Pension assets may be invested into the financial derivatives only for the purposes of risk management. The management undertaking is entitled to use the financial derivatives only in case if the rules of the pension fund specify which financial derivatives and for what purposes are intended for use by the management undertaking. Each financial derivative shall be justified by the specific investment transaction (investment position). Such transaction and the financial derivative used for its risk management shall be specified in the periodical reports of the management undertaking.

5. Supervisory Authority sets out the procedure, which is followed by the management undertaking in order to efficiently manage the financial instrument portfolio; it also has the right to use the methods and financial instruments, related to the transferable securities or money-market instruments. The use of such methods or financial instruments does not mean, that it is allowed to deviate from the investment objectives specified in the rules of the pension fund.

6. The pension assets may be invested in the risk capital markets, only if the subject, including the collective investment undertakings, through which the investments are made, meets the following conditions:

1) the supervision of the subject and (or) his manager is performed, or the other instruments, that ensure the adequate control of the subject and are acceptable to the Supervisory Authority, are implemented;

2) losses, that may be incurred by the pension fund when having the financial instruments of the subject, are no greater than the monetary amount that was paid for them;

3) if the subject is supervised by the Supervisory Authority, the Supervisory Authority on the basis of the bilateral agreement cooperates with the respective Supervisory Authority of the foreign country, when this country is not a Member State or a member of the Organization for Economic Co-activity and Development.

Article 46. The Duty of the Management Undertaking to Execute the Investment Decisions at the Conditions that are the Best for the Pension Fund

1. When the management undertaking executes the investment decision on the account of a pension fund or when transferring it to another subject for execution shall act in the best interests of the participants.

2. The management undertaking shall ensure at all times, that:

1) pension assets would be invested in order to ensure the safety, profitability and liquidity of the whole financial instrument portfolio of the pension fund;

2) the best possible result for the pension fund would be achieved when executing the investment decision or when transferring its execution to another subject, with respect to the investment object price, investment decision execution costs, speed, the possibility of the investment decision execution and settlement, the extent of the investment decision, contents and other important circumstances;

3) pension assets would not be invested into the financial instruments or other products of the undertaking group in order to solve the management undertaking, another undertaking, belonging to the group, or fund's liquidity, solvency or the legislation requirements compliance difficulties.

3. The Supervisory Authority has the right to demand from the management undertaking to prove at any time that it properly fulfils the liabilities specified in paragraph 2 of this Article, and the management undertaking in such case shall prove that it complies with the specified requirements.

4. The management undertaking shall approve and implement effective measures, including the investment decision execution policy, which allows achieving the best possible result for the pension fund when executing the investment decision on the account of this fund, also shall have and use the effective measures, dedicated to the implementation of the investment decision execution policy.

5. The subjects, to whom the investment decisions on the respective financial instruments may be transferred for execution, shall be specified by the each class of the financial instruments in the investment decision execution policy. The management undertaking may transfer investment decisions for execution only by following all the requirements specified in this Article.

6. When performing the liabilities specified in paragraph 4 of this Article the management undertaking shall:

1) ensure, that the investment decision execution policy and its essential amendments would be accessible to the participants of the pension fund;

2) constantly observe, if used instruments and investment decision execution policy are effective, also the investment decision execution quality of other subjects specified in this policy that execute the investment decisions, and if the defects of the used instruments and (or) investment decision execution policy are identified, they shall be immediately rectified;

3) review the investment decision execution policy no less than once per year and every time, when the essential change, which may have the effect to the ability of the management undertaking to achieve the best result for the pension fund, occurs;

4) operate in such way, that at any time could justify that the investment decision on the account of the pension fund was executed or transferred to another subject for execution in accordance with the investment decision execution policy.

Article 47. The Diversification of the Financial Instrument Portfolio

1. No more than 5 per cent of the net assets that comprise the pension assets may be invested into the transferable securities or money-market instruments of the single issuer, except for the cases specified in paragraphs 2, 5 and 6 of this Article.

2. Into the transferable securities or money-market instruments of the single issuer may be invested more than 5 per cent but no more than 10 per cent of the net assets, provided that the total sum of such investments will not be larger than 40 per cent of the net assets (this restriction is not applicable to the deposits).

3. The investments into the deposits, located in one credit institution, cannot exceed 20 per cent of the net assets that comprise the pension assets.

4. The total investment sum into the transferable securities issued by a single person, money-market instruments or deposits cannot be larger than 20 per cent of the net assets that comprise the pension assets.

5. Investments into the transferable securities or money-market instruments that are issued or guaranteed by the country, the credit rating of which is no lower than the one of the Republic of Lithuania, cannot be larger than 35 per cent of the value of the net assets that comprise the assets of the pension. The Supervisory Authority may allow to invest and larger share of the net assets into the transferable securities or money-market instruments that are specified in this paragraph, if the interests of the participants were sufficiently protected in such case, and would be invested into the transferable securities or money-market instruments of no less than 6 emissions, and the share, invested into the single emission transferable securities or money-market instruments, is no larger than 30 per cent of the net assets. The restrictions specified in paragraphs 1 and 2 of this Article are applicable to the financial instruments that do not meet the requirements specified in this paragraph.

6. Investments into the bonds, which are issued by the credit institution that has registered headquarters in the Member State, and which, in order to protect the interests of the bond holders, in accordance with the legislation is specially supervised by that country, and the sum, received from the emission of bonds, for the whole term of the bonds is invested into such property, which would suffice to cover the requirements for the bond owners and from which, in case of the issuer insolvency, the bond owner requirements to pay out the main sum and the interest would be settled preemptively, cannot be larger than 25 per cent of the net assets. When more than 5 per cent but no more than 25 per cent of the net assets are invested into such bonds of the single issuer, the total amount of such investments cannot be higher than 80 per cent of the net assets.

7. The total value of the investments into the bonds or other form non-proprietary securities of the undertakings, that are not assigned the credit rating or of the undertakings with the rating lower than the investment rating, cannot exceed the 20 per cent of the net assets of the pension fund.

8. The transferable securities and money market instruments, specified in paragraphs 5 and 6 of this Article, are not included when calculating the investments to which, according to paragraph 2 of this Article, the maximum allowed limit of 40 per cent is applied. The limits specified in paragraphs 1 to 7 of this Article cannot be combined, therefore the investment sum into the transferable securities issued by a single person, money-market instruments or deposits cannot be larger than 35 per cent of the net assets that comprise the pension fund.

9. The total investments into the financial instruments and deposits of the undertakings that belong to the group, which has to form the consolidated financial reports, cannot exceed 20 per cent of the net assets of the pension fund.

10. The total investments into the risk capital markets through the subjects specified in Article 45(6) of this Law, cannot exceed 30 per cent of the net assets of the pension fund. The subjects, through which the pension assets are invested into the risk capital markets and which are not considered as the collective investment subjects, are considered as issuers for the purposes of the requirements, applicable to the financial instrument portfolio diversification.

11. The total investments in the risk capital markets through the subjects, specified in Article 45(6) of this Law, and collective investment subjects, specified in Article 49(3), cannot exceed 30 per cent of the net assets of the pension fund.

Article 48. Prohibition to Obtain the Critical Influence on the Person, which Issues the Securities or the Money-market Instruments

1. The shares of any share issuing person, that are held by the management undertaking, together with the shares of that person, that are held by the managed pension funds, cannot award more than 1/10 if all voting rights in the general shareholder meeting of the share issuing person.

2. The pension fund assets may be used to acquire no more than:

1) 10 per cent of all shares, that do not award the voting rights, of the share issuing person;

2) 10 per cent of all issuing person's bonds and non-proprietary securities of other forms;

3) 10 per cent of all the issued money-market instruments of a single money-market instrument issuing person;

4) 10 per cent of investment units or shares of another collective investment subject.

3. The restrictions specified in subparagraphs 2 and 4 of paragraph 2 of this Article are not applicable to the transferable securities and money-market instruments, that are issued or guaranteed by the state or municipalities.

4. The restrictions specified in subparagraphs 2, 3 and 4 of paragraph 2 of this Article can be ignored during the moment of acquisition, if the total value of those transferable securities or money-market instruments cannot be determined.

Article 49. Investment into the Collective Investment Undertakings

1. It is only allowed to invest into the investment units and shares of such collective investment undertakings, which meet the following conditions:

1) are licensed in the Member State, or in the member of the Organization for Economic Co-operation and Development, or in such country, in which the supervision is as strict as specified according to the rules set out in Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ 2009 L. 302, p.32) (new version) (last amended by Directive 2010/78/EU of the European Parliament and of the Council of 24 November 2010 (OJ 2010 L. 331, p. 120) (hereinafter — Directive 2009/65/EC), and the Supervisory Authority cooperates with the respective foreign Supervisory Authority. In case, when the country in which the collective investment undertaking is licensed, is not a Member State or a member of the Organization for Economic Co-operation and Development, the co-operation between the Supervisory Authority and the Supervisory Authority of the respective country on the basis of the bilateral agreements is necessary.

2) the undertaking participant rights protection, including the regulation of the asset separation, borrowing, lending and selling of the assets that the undertaking does not have, is as strict as granted in accordance with the rules specified in Directive 2009/65/EC;

3) the undertakings submit their interim and annual reports, that allow to assess their assets and liabilities, profit and activity during the reference period;

4) no more than 10 per cent of their net assets may be invested into the investment units or shares of other collective investment undertakings.

2. No more than 20 per cent of pension fund net assets may be invested into each of the undertakings, specified in paragraph 1 of this Article.

3. Up to 30 per cent of the pension fund net assets may be invested into the investment units or shares of the collective investment undertakings that do not meet the conditions specified in paragraph 1 of this Article, if such collective investment undertakings meet the following conditions:

1) collective investment undertaking and (or) its manager are authorized (licensed, was given the permit to conduct operations or the action of the identical nature is performed in his favor), and its supervision is performed by the Supervisory Authority of the respective country, the supervision shall be as strict as the supervision of the special collective investment undertakings performed by the Supervisory Authority;

2) the Supervisory Authority on the basis of the bilateral agreement cooperates with the respective Supervisory Authority of the foreign country, if this country is not a Member State, or not a member of the Organization for Economic Co-operation and Development.

4. No more than 5 per cent of pension fund net assets may be invested into each of the undertakings, specified in paragraph 3 of this Article.

5. Such collective investment undertakings that are managed by the same management undertaking or by such management undertakings, more than half of the managing bodies members of which are the same persons or which are controlled by the same person or if one of them has more than 10 per cent votes in the general shareholder meeting of the other management undertaking, are considered related. If at least one of the undertakings is a pension fund management undertaking, the assets of that pension fund may be invested into the investment units and shares of the related collective investment undertakings only in the amount of their net assets.

6. If the pension fund assets are invested into the collective investment undertaking managed by the same management undertaking, the management fee from the invested assets of the pension fund cannot be deducted. This provision is applicable and to those collective investment undertakings of the same management undertaking, which the management function, or a part of it, is delegated to the other persons.

7. The deductions, related to the investment into the collective investment undertaking that are returned by the collective investment undertaking into which the pension fund assets are invested, or by its management undertaking, in all cases shall be incorporated into the assets of the respective pension fund.

8. The requirements specified in subparagraphs 1 and 2 of paragraph 3 of this Article are not applicable to the collective investment undertakings that invest in the markets of the risk capital.

Article 50. Temporary Derogation from the Investment Rules

1. The pension fund may ignore the investment limits set out in this section, if it exercises the pre-emptive right awarded to it by the held transferable securities or instruments of the money-market. In this case, and also when the requirements for the rules of investment are violated due to the reasons, that are independent of management undertaking, the non-conformity shall be rectified as soon as possible but no later than within 6 months.

2. The financial instrument portfolio of the newly created pension fund within 6 months after the approval of the rules of the pension fund may ignore the diversification requirements specified in Articles 47, 48 and 49 of this Law.

3. The management undertaking that violated the requirements specified in this section shall immediately inform in writing the Supervisory Authority about the violation, and provide the reasons for the violation, the means that it intends to take in order to rectify the situation and the anticipated date of the violation rectification.

Article 51. Benchmark of a Pension Fund

1. The pension fund shall have a benchmark. The pension fund benchmark shall provide the public with possibility to properly assess the financial results of the pension fund. The pension fund benchmark shall be selected with respect to the investment strategy of that pension fund.

2. When announcing the financial results of the fund, the management undertaking shall compare them with the benchmark of that pension fund according to the provisions set out by the Supervisory Authority.

3. The management undertaking shall approve the rules in which the pension fund benchmark selection and changing criteria and procedure are specified, and submit these rules to the Supervisory Authority.

4. The pension fund benchmark shall be also specified in the management undertaking reports and the financial reports too.

5. The Supervisory Authority has the right to set the requirements for the selection and use of the pension fund benchmark.

SECTION VI

DISCLOSURE OF INFORMATION

Article 52. Information Provided to Participants of a Pension Fund

1. The management undertaking shall no less than once per calendar year, in accordance with the provisions specified in the rules of the pension fund, in writing or in any other form (if the participant so requests) inform each participant of the pension fund that it manages about the amount of the pension contributions that were paid (also specifying the payer or payers of the contributions), the amount of the pension assets, which is calculated in his personal pension account (the number and value of the pension fund units that are entered into his pension account), annual return of the pension fund investments, the amount of the deducted fees. In the annual yearly report that is dedicated to the participant, the management undertaking shall specify the venues, where the participant can familiarize himself with the periodical reports of the management undertaking and of the pension fund, in which he accumulates the pension contributions.

2. The management undertaking shall ensure that the participant on his request shall always have access to the periodical reports, rules of the pension fund (on the request of the participant the management undertaking shall make copies of the rules and reports, and the charge for those cannot exceed the manufacturing expenses), also shall ensure the provision of the correct and comprehensive information on: the amount of assets that are accumulated in the participant's personal pension account and payment of the contributions, as well as findings of the management undertaking and pension fund auditor, the selection of the investment possibilities, current financial instrument portfolio, the investment related risks and costs, and other information specified in paragraph 1 of this Article.

3. When the participant reaches the retirement age or becomes entitled to the benefits in other cases specified by the Republic of Lithuania laws, the management undertaking shall provide to him the detailed information about the possibilities of the benefit selection.

Article 53. Announcement of the Value of the Pension Fund Unit

The management undertaking shall announce the value of each pension fund unit in accordance with the provisions set out by the Supervisory Authority.

Article 54. Information Provided to the Public and to the Supervisory Authority

1. The management undertaking shall prepare and submit to the public and to the Supervisory Authority the following periodical reports of the pension fund activity:

1) the report of each fiscal year – within 4 months from the end of the reference fiscal year;

2) the report of the first 6 months (interim) of each fiscal year – within 2 months from the end of the reference interim.

2. The Supervisory Authority sets out the requirements for the contents of the periodical reports and the provisions for the report submission to the public and to the Supervisory Authority, it also has the right to specify in the rules other reports and documents, the submission of which is mandatory, as well as specify the provisions for the submission of other information.

Article 55. Accounting and Audit

1. The management undertaking and the pension fund records are kept and the financial reports are formed in accordance with the provisions set out by the Republic of Lithuania laws and other legislation. The requirements for the Law on Collective Investment Undertakings are also applied to the management undertaking's record keeping and audit as well.

2. The depository, with which the management undertaking has concluded the pension asset keeping the agreement, shall submit to the management undertaking all the documents that are required for the formation of the financial reports.

3. The information about the pension fund annual financial reports shall be audited in accordance with the provisions set out by the Republic of Lithuania Law on Audit and by the other legislation. After the audit undertaking has completed the audit of the pension fund annual financial reports, it has to submit the findings of the auditor on these reports and the audit report as well. The auditor shall provide in the audit report the information if the value of the net assets is calculated correctly, if the assets are invested in accordance with the rules of the pension fund, if the efficiency of the management undertaking internal control and risk management systems and measures that are related to the pension fund management is assessed, and also specify all identified violations of this Law and of other legislation.

4. By the request of the Supervisory Authority the management undertaking shall provide the explanations about the pension fund financial reports, and the auditor - the explanations about the audit report and the identified violations of this and (or) other laws.

5. The auditor, during the performance of the management undertaking audit, shall immediately notify the Supervisory Authority in writing about the circumstances or facts, which may:

1) fundamentally violate the laws and other legislation, which determine the conditions that regulate the license issuing, or which specifically regulate the activity of the management undertakings, or

2) prevent the management undertaking to continuously perform its functions, or

3) create the grounds to decline the expression of opinion on the financial reports or to form the partial opinion.

6. The auditor shall also notify the Supervisory Authority about the circumstances or facts, which are specified in subparagraphs 1, 2 and 3 of paragraph 5 of this Article, and also about the circumstances or facts that become known during the performance of the audit of the undertaking, which is closely linked to the management undertaking.

7. The notification of the Supervisory Authority, in cases specified in paragraphs 5 and 6 of this Article, is not considered as the violation of the prohibition, defined in the agreement or legislation, to disclose the confidential information.

SECTION VII

THE NATIONAL SUPERVISION OF THE ACTIVITY OF THE MANAGEMENT UNDERTAKINGS AND DEPOSITORIES

Article 56. Supervisory Authority

1. The Supervisory Authority supervises the activity of the management undertakings and depositories.

2. The Supervisory Authority performs the supervisory functions in accordance with this Law, Law on Markets in Financial Instruments and the Law on Collective Investment Undertakings, and has the rights and liabilities specified by this and other laws.

3. The Supervisory Authority’s actions or failure to act are appealed in accordance with the provisions specified in the Republic of Lithuania Law on Administrative Proceedings.

Article 57. Functions of the Supervisory Authority During the Supervision of the Activity of the Management Undertakings and Depositories

1. Supervisory Authority performs the following functions:

1) creates, approves, changes and repeals the legislation, which is specified in this Law;

2) imposes sanctions on the management undertakings and other persons;

3) imposes the administrative penalties on the persons;

4) provides the official interpretations and recommendations on the issues of the management undertakings, as well as the consultations and other methodical support on the issues that fall in the scope of its competence;

5) issues the licenses to the management undertakings and terminates the issued ones;

6) approves the rules of the pension funds and their amendments;

7) observes, analyzes, checks and supervises the activity of the management undertakings and depositories in other ways;

8) gives the mandatory guidelines to the management undertakings and depositories on the rectification of the legislation violations;

9) in accordance with the provisions set out by the laws, has the right to obtain the information about the persons, who, according to this Law shall be of sufficiently good repute;

10) communicates with the foreign Supervisory Authorities and exchanges the required information with them;

11) performs other functions specified in this and other laws.

2. When representing the interests of the pension fund participants, the Supervisory Authority has the right to apply to the court for the protection of the public interest.

Article 58. The Rights of the Supervisory Authority when Examining the Violations of the Legislation that Regulates the Pension Accumulation Activity

1. In order to ascertain how this Law and other legislation that is adopted on its basis are followed, the Supervisory Authority has the right to organize and perform the assurances.

2. When performing the assurance, the employees of the institution have the rights specified in Article 81(2) of the Law on Markets in Financial Instruments. In order to exercise these rights the Supervisory Authority may employ the officers of the police.

3. If the Supervisory Authority has the grounds to suspect that the actions performed by the management undertaking, depository or other persons, violate the provisions of this Law or of the legal acts that were adopted by the Supervisory Authority on the basis of this Law, and if trying to prevent the critical damage or irreparable effects to the pension accumulation participants, it has the right to give the order to stop such activity, until the investigation will be performed and the Supervisory Authority’s decision on the suspected violation will be adopted. The decision of the Supervisory Authority to order the termination of activity may only be adopted after the permission of the Vilnius County Administrative Court is received.

4. The decision of the Supervisory Authority to order the termination of activity may be appealed to the Vilnius County Administrative Court within one month from the acceptance of the decision. The lodging of the complaint does not suspend the implementation of the decision.

5. If the Supervisory Authority identifies the violations of the legislation that regulates the risk limiting requirements, or if the activity of the management undertaking poses a threat to the stability and reliability of the undertaking's activity, the Supervisory Authority has the right to impose on the undertaking the individual rates of the norms that limit the activity risk or to impose the additional requirements for the limiting of activity risk.

6. The Supervisory Authority has the right to obtain the information, documents or their copies from the national and municipal institutions and establishments or other persons, which are required for the supervision of the activity of the management undertakings.

Article 59. Financial Fines for Violation of this Law

1. The Supervisory Authority, in accordance with the provisions laid down in the Law on Markets in Financial Instruments, has the right to impose fines on:

1) the legal persons, which act as the management undertakings, but do not have the license defined in this Law – up to 57 924 EUR;

2) the legal persons, which violated the pension fund asset investment provisions – up to 86 886 EUR;

3) the legal persons, which violated the requirements specified in the section four of this Law – up to 57 924 EUR;

4) the legal persons, which do not fulfill or fulfill improperly the liabilities defined in Article 6 of this Law – up to 57 924 EUR;

5) the legal persons, which conclude the pension accumulation agreements without having the approved rules of the pension fund – up to 28 962 EUR;

6) the legal persons, which violated the legislation requirements for the proposal and marketing of services – up to 28 962 EUR;

7) the legal persons, which do not comply with the Supervisory Authority guidelines, which do not provide the information, specified in this and other laws, to the Supervisory Authority or which prevent the Supervisory Authority or its representatives from the performance of the investigations or assurances – up to 28 962 EUR;

8) the legal persons, that violated other requirements specified in this Law and in the legal acts that implement it – up to 28 962 EUR.

Amendments to the paragraph of the Article:

No XII-1113, 23/09/2014, published in TAR 02/10/2014, identification code 2014-13422

2. If due to the performance of the violations, specified in subparagraphs 1-6 of paragraph 1 of this Article, the income or other material benefits was illegally acquired, the losses were avoided or the damage was done, and the amount of such income, other material benefits, avoided losses or of the damage done exceeded the sizes of the fines, specified in the aforementioned subparagraphs, the Supervisory Authority has the right to impose the fine up to a double amount of illegally obtained income, other material benefits, avoided losses or of the damage done.

3. The imposition of the sanctions, specified in paragraph 1 of this Article, on the legal persons does not release their heads or employees from the civil, administrative and criminal liability set out by the laws, it also does not prevent the Supervisory Authority from considering the suspension or termination of the licenses that it has issued.

Article 60. The Implementation Procedure of the Decisions of the Supervisory Authority

1. Pecuniary penalties are paid into the national budget within one month from the day on which the person received the decision of the Supervisory Authority to impose a penalty.

2. The Supervisory Authority’s decision, which is not implemented voluntarily, is enforced in accordance with the provisions of the Civil Procedure Code of the Republic of Lithuania.

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

PRESIDENT OF THE REPUBLIC	VALDAS ADAMKUS

Amendments:

1.

Seimas of the Republic of Lithuania, Law

No IX-195, 01/03/2001, Valstybės žinios (Official Gazette), 2001, No 25-825 (23/03/2001)

LAW AMENDING AND SUPPLEMENTING ARTICLES 2, 4, 5, 6, 7, 8, 9, 10, 15, 16, 17, 18, 19, 20, 21, 22, 23, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 36, 37, 39, 40, 41 AND 42 OF THE LAW ON PENSION FUNDS, AMENDING THE TITLE OF THE SECTION FIVE, AND SUPPLEMENTING THE LAW WITH ARTICLE 23(1)

2.

Seimas of the Republic of Lithuania, Law

No IX-1427, 03/04/2003, Valstybės žinios (Official Gazette), 2003, No 38-1672 (24/04/2003)

LAW AMENDING ARTICLE 12 OF THE LAW ON PENSION FUNDS

This Law is in force together with the Criminal Code of the Republic of Lithuania (Valstybės žinios (Official Gazette), 2000, No 89-2741) and the Code of Criminal Procedure of the Republic of Lithuania (Valstybės žinios (Official Gazette), 2002, No 37-1341), i.e. since 01 May 2003.

3.

Seimas of the Republic of Lithuania, Law

No IX-1692, 04/07/2003, Valstybės žinios (Official Gazette), 2003, No 75-3473 (30/07/2003)

LAW AMENDING THE LAW ON PENSION FUNDS

The new version of the Law

The title of the Law was amended

The correction of this Law published in: Valstybės žinios (Official Gazette), 2003, No 106 (12/11/2003)

4.

Seimas of the Republic of Lithuania, Law

No IX-2270, 10/06/2004, Valstybės žinios (Official Gazette), 2004, No 98-3627 (24/06/2004)

LAW AMENDING AND SUPPLEMENTING ARTICLES 15, 50 AND 53 OF THE LAW ON THE SUPPLEMENTARY VOLUNTARY ACCUMULATION OF PENSIONS

5.

Seimas of the Republic of Lithuania, Law

No IX-2541, 04/11/2004, Valstybės žinios (Official Gazette), 2004, No 171-6301 (26/11/2004)

LAW AMENDING THE LAW ON REFORM OF THE PENSION SYSTEM, THE LAW ON THE SUPPLEMENTARY VOLUNTARY ACCUMULATION OF PENSIONS, AND THE LAW ON THE ACCUMULATION OF PENSIONS

The Law is in force since 1 January 2015.

6.

Seimas of the Republic of Lithuania, Law

No X-622, 25/05/2006, Valstybės žinios (Official Gazette), 2006, No 65-2386 (10/06/2006)

LAW AMENDING AND SUPPLEMENTING ARTICLES 2, 10, 15, 16, 23, 27, 28, 29, 30, 32, 35, 36, 37, 42, 44, 46, 48, 49, 51, 53, 54 AND 59 OF THE LAW ON THE SUPPLEMENTARY VOLUNTARY ACCUMULATION OF PENSIONS

7.

Seimas of the Republic of Lithuania, Law

No X-1587, 05/06/2008, Valstybės žinios (Official Gazette), 2008, No 71-2713 (21/06/2008)

LAW AMENDING ARTICLES 2, 3, 4, 6, 7, 8, 10, 11, 14, 34, 46, 47, 48, 49, 50, 51, 56 AND 59 OF THE LAW ON THE SUPPLEMENTARY VOLUNTARY ACCUMULATION OF PENSIONS

8.

Seimas of the Republic of Lithuania, Law

No XI-874, 03/06/2010, Valstybės žinios (Official Gazette), 2010, No 72-3610 (22/06/2010)

LAW AMENDING AND SUPPLEMENTING ARTICLES 10, 11, 16, 17, 43, 58 AND 59 OF THE LAW ON THE SUPPLEMENTARY VOLUNTARY ACCUMULATION OF PENSIONS

9.

Seimas of the Republic of Lithuania, Law

No XI-1677, 17/11/2011, Valstybės žinios (Official Gazette), 2011, No 146-6823 (01/12/2011)

LAW AMENDING THE LAW ON THE SUPPLEMENTARY VOLUNTARY ACCUMULATION OF PENSIONS

The new version of the Law

The Law is in force since 1 January 2012.

10.

Seimas of the Republic of Lithuania, Law

No XI-2124, 26/06/2012, Valstybės žinios (Official Gazette), 2012, No 77-3979 (01/07/2012)

LAW AMENDING THE ARTICLES 10, 12, 48 AND 49 OF THE LAW ON THE SUPPLEMENTARY VOLUNTARY ACCUMULATION OF PENSIONS AND SUPPLEMENTING THE LAW WITH THE ARTICLE 60

11.

Seimas of the Republic of Lithuania, Law

No XII-70, 20/12/2012, Valstybės žinios (Official Gazette), 2012, No 155-7980 (31/12/2012)

LAW AMENDING THE LAW ON THE SUPPLEMENTARY VOLUNTARY ACCUMULATION OF PENSIONS

The new version of the Law

The Law is in force since 1 January 2013, except paragraphs 2 and 3 of this Article.

Amendments:

1.

Seimas of the Republic of Lithuania, Law

No XII-1113, 23/09/2014, published in TAR 02/10/2014, identification code 2014-13422

Republic of Lithuania Law amending Articles 34 and 59 of the Law on the Supplementary Voluntary Accumulation of Pensions No VIII-1212