Consolidated version valid as of 15 June 2020
republic of lithuania
Law on Managers of Alternative Collective Investment Undertakings
18 December 2014 No XII-1467
(As last amended on 21 May 2020 – No XIII-2958)
Vilnius
CHAPTER I
GENERAL PROVISIONS
Article 1. Purpose of the Law
1. This Law shall regulate the activities of managers of alternative collective investment undertakings, namely, management companies of alternative collective investment undertakings and internally managed investment companies, and define the limits of the state supervision of such activities.
2. The purpose of this Law shall be to ensure the protection of interests of investors of alternative collective investment undertakings.
Article 2. Scope of the Law
1. This Law shall apply to the activities of managers of alternative collective investment undertaking. The requirements set out in this Law shall be binding on:
1) management companies of alternative collective investment undertakings licensed in the Republic of Lithuania and managing one or more alternative collective investment undertakings established in the Republic of Lithuania, another Member State or a third country;
2) management companies of alternative collective investment undertakings licensed in a third country and managing at least one alternative collective investment undertaking established in the Republic of Lithuania;
3) management companies of alternative collective investment undertakings licensed in a third country and marketing in the Republic of Lithuania units or shares of at least one alternative collective investment undertakings established in the Republic of Lithuania, another Member State or a third country;
4) investment companies that have been issued the licence of an internally managed investment company under this Law;
2. Provisions of this Law, excluding Article 12 thereof, shall not apply to:
1) leveraged management companies of collective investment undertakings that directly or indirectly, through another company with which the management company of collective investment undertakings is linked by common management or control, or by a direct or indirect holding constituting at least 1/10 of the company’s capital or by directly or indirectly held rights, manage collective investment undertakings whose assets under management, including the assets acquired through use of leverage, in total are equal to or exceed EUR 100 million, excluding the assets of the undertakings for collective investment in transferable securities (hereinafter: ‘UCITS’) they manage;
2) management companies of collective investment undertakings that either directly or through another company with which the management company of collective investment undertakings is linked by common management or control, or by a direct or indirect holding constituting at least 1/10 of the company’s capital or by directly or indirectly held rights, manage collective investment undertakings whose assets under management, excluding the assets of UCITS they manage, in total are equal to or exceed EUR 500 million, provided that the management company of collective investment undertakings manages only unleveraged collective investment undertakings that, during the period of at least five years from acquisition of a collective investment undertaking’s units or shares or making of a contribution by the first investor, do not grant investors the right to apply for the redemption of units or shares or the repayment of contributions;
3) investment companies that meet conditions of point 1 or 2 of this paragraph, provided that they are not UCITS and their management was not delegated to management companies of a collective investment undertaking;
4) companies that meet conditions of point 1 or 2 of this paragraph and manage companies and other undertakings that do not have the right granted in accordance with the procedure laid down by laws regulating collective investment undertakings to operate as a collective investment undertaking, but have the characteristics of a collective investment undertaking, such as raising capital from a number of investors with a view to investing that capital for the benefit of those investors in accordance with a defined investment policy; also companies that meet conditions of point 1 or 2 of this paragraph and have the mentioned characteristics of a collective investment undertaking, unless the management of such companies is delegated to another company;
3. Assets referred to in points 1 and 2 of paragraph 2 of this Article shall be calculated in accordance with Regulation (EU) No 231/2013.
4. Article 12 of this Law shall apply to the undertakings referred to in points 1 to 4 of paragraph 2 of this Article where the cumulative assets under management fall below a threshold specified respectively in points 1 and 2 of paragraph 2.
5. Provisions of the Law of the Republic of Lithuania on Companies and of the Law of the Republic of Lithuania on Partnerships shall apply to management companies of alternative collective investment undertakings to the extent this Law does not provide otherwise. Provisions of the Law of the Republic of Lithuania on Collective Investment Undertakings shall apply only in the cases specified in this Law. Provisions of the Law of the Republic of Lithuania on Financial Institutions shall apply to management companies of alternative collective investment undertakings operating under this Law only in the cases specified in this Law. Where an internally managed investment company is a general partnership or a limited partnership, the Law on Partnerships shall apply to the extent this Law does not provide otherwise, and the respective provisions shall apply to general partners of the general partnership or of the limited partnership.
6. Management companies licensed under the Law on Collective Investment Undertakings or authorised under the Law of the Republic of Lithuania on Collective Investment Undertakings for Informed Investors shall not be subject to provisions of this Law as long as the value of assets of collective investment undertakings managed by a management company (except for UCITS) is below the amounts specified in points 1 or 2 of paragraph 2 of this Article, unless the management company acting in accordance with point 5 of paragraph 2 of this Article seeks to operate under this Law. Where the value of assets of collective investment undertakings managed by the management company (except for UCITS) reaches the amounts specified in points 1 or 2 of paragraph 2 of this Article, the management company must, in accordance with the procedure laid down by this Law, apply to the supervisory authority for a licence of the management company of alternative collective investment undertakings. In such a case, the provisions of this Law shall apply to the management company of an alternative collective investment undertaking and to collective investment undertakings it manages (except for UCITS) from the issue of the licence of the management company of alternative collective investment undertakings.
7. Management companies licensed under the Law on Collective Investment Undertakings or authorised under the Law on Collective Investment Undertakings for Informed Investors and managing special collective investment undertakings and/or collective investment undertakings for informed investors, after being licensed under this Law, shall have the right to continue establishing and/or managing such collective investment undertakings and marketing units or shares of such special collective investment undertakings and/or collective investment undertakings for informed investors they manage, respectively, to retail investors and/or informed investors where the value of assets of collective investment undertakings (except for UCITS) managed by a management company equals to the amounts specified in points 1 or 2 of paragraph 2 of this Article or the management company opts to operate under this Law in the case referred to in point 5 of paragraph 2 of this Article.
8. Provisions of paragraphs 6 and 7 of this Article shall apply mutatis mutandis to internally managed investment companies that operate under the Law on Collective Investment Undertakings and the Law on Collective Investment Undertakings for Informed Investors.
9. Management companies of alternative collective investment undertakings must, when establishing and/or managing special collective investment undertakings or collective investment undertakings for informed investors and marketing units or shares of such special collective investment undertakings or collective investment undertakings for informed investors managed by them, fulfil the requirements set out respectively in the Law on Collective Investment Undertakings or the Law on Collective Investment Undertakings for Informed Investors for ensuring the protection of investors’ interests, except where the requirements of this Law ensure a higher level of protection of investors’ interests in the areas of information disclosure, custody of assets, valuation of assets, etc. In other cases, the Law on Collective Investment Undertakings or the Law on Collective Investment Undertakings for Informed Investors, respectively, shall apply to the extent this Law does not stipulate otherwise.
10. Provisions of this Law shall not apply to:
1) companies with shareholdings in one or more companies, the purpose of which is to carry out a business strategy or strategies through their subsidiaries and associated companies or participations in order to contribute to their long-term value, and which are either companies operating on their own account and whose shares are admitted to trading on a regulated market or not established for the main purpose of generating returns for their investors by means of divestment of their subsidiaries or associated companies, as evidenced in their annual report or other official documents (holding companies);
2) associations of participants of occupational pension funds and life assurance companies authorised to engage in occupational pension accumulation activities, unless they manage alternative collective investment undertakings;
3) the Bank of Lithuania, except in the cases where the Bank of Lithuania performs supervisory functions, central banks of other Member States;
6) the European Central Bank, the European Investment Bank, the European Investment Fund, the European Development Finance Institutions and bilateral development banks, the World Bank, the International Monetary Fund, and other similar international and supranational institutions, in the event that such institutions or organisations manage one or more alternative collective investment undertakings and in so far as those alternative collective investment undertakings act in the public interest;
11. This Law shall not apply to the activities of management companies of alternative collective investment undertakings in so far as such companies manage one or more collective investment undertakings (except for UCITS) whose only investors are management companies of alternative collective investment undertakings or their parent undertakings or subsidiaries or other subsidiaries of those parent undertakings, provided that none of those investors is itself an alternative collective investment undertaking.
12. The type or legal form of an alternative collective investment undertaking or the structure of the management company of an alternative collective investment undertaking shall not affect the application of this Law.
13. Provisions of this Law regulating requirements applicable to management companies, as well as their rights, obligations, activities and responsibility shall apply mutatis mutandis to an internally managed investment company that has been issued the licence of an internally managed investment company, unless this Law stipulates otherwise. Where an internally managed investment company is a general partnership or a limited partnership, the Law on Partnerships shall apply to the extent this Law does not provide otherwise, and the respective provisions shall apply to general partners of the general partnership or of the limited partnership.
Article 3. Definitions
1. ‘Home Member State of an alternative collective investment undertaking’ means a Member State in which an alternative collective investment undertaking is licensed to operate or established under this Law or respective legal acts of another Member State. Where the alternative collective investment undertaking is licensed or established in several Member States, the home Member State shall be the Member State in which the alternative collective investment undertaking has been licensed or established for the first time. Where the alternative collective investment undertaking is neither licensed nor established in a Member State, the home Member State shall be the Member State in which the alternative collective investment undertaking has its registered office and/or head office.
2. ‘Investor of an alternative collective investment undertaking’ means a person who has acquired units or shares of a collective investment undertaking, or who has made a contribution to a general partnership or to a limited partnership, such as the owner of an investment fund’s unit, a shareholder of a public limited liability company or of a private limited liability company, a general member or a limited member of a general partnership or of a limited partnership.
3. ‘Marketing of units or shares of an alternative collective investment undertaking’ means a direct or indirect offering of units or shares of an alternative collective investment undertaking managed by the management company of the alternative collective investment undertaking at the initiative or on behalf of the management company to investors domiciled or with a registered office in the European Union or the European Economic Area.
4. ‘Instruments of incorporation of an alternative collective investment undertaking’ (hereinafter: ‘instruments of incorporation’) means the articles of association of a public limited liability company or of a private limited liability company, rules of an investment fund, an activity agreement and, if applicable, a partnership agreement of a general partnership or of a limited partnership.
5. ‘Management of an alternative collective investment undertaking’ means performance of essential management functions of an alternative collective investment undertaking, such as management of an investment instrument portfolio, risk management and marketing of units or shares, and carrying out of other activities specified in the Law on Collective Investment Undertakings and attributed to the management of a collective investment undertaking.
6. ‘Management company of an alternative collective investment undertaking’ (hereinafter: a ‘management company’) means a public limited liability company or a private limited liability company whose ordinary activity is management of one or more alternative collective investment undertaking(s).
7. ‘Share of remuneration of a management company of an alternative collective investment undertaking’ means a share of remuneration allocated to a management company for the management of an alternative collective investment undertaking. This share of remuneration shall not include any return on investment by the management company into the alternative collective investment undertaking.
8. ‘Home Member State of the management company of an alternative collective investment undertaking’ means a Member State in which the management company has its registered office. In the case of a non-EU management company, its home Member State shall be the Member State of reference.
9. ‘Branch of the management company of an alternative collective investment undertaking’ means a management company’s structural unit which has no legal personality and is engaged in activities for which the management company has been licensed. For the purposes of this Law, all branches established by one management company in the Republic of Lithuania shall be regarded as a single branch.
10. ‘Qualifying holding of the management company of an alternative collective investment undertaking’ means a share of the authorised capital or of the voting rights directly or indirectly managed by the management company which represents at least 1/10 or more of the authorised capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the management company. When calculating whether the share of the authorised capital or of the voting rights of the management company represents at least 1/10 of the authorised capital, the obligation to notify of the acquisition or disposal of a shareholding, as set forth in the Law of the Republic of Lithuania on Securities, and the procedure of calculation of votes held by a person shall be taken into account.
11. ‘Host Member State of the management company of an alternative collective investment undertaking’ means a Member State in which alternative collective investment undertakings are managed, their units or shares are marketed or services referred to in Article 4(3)(1) to (4) of this Law are provided, but which is other than the home Member State of the management company, and in the case of a management company is established outside the European Union or the European Economic Area – a Member State other than the Member State of reference.
12. ‘Managers of the management company of an alternative collective investment undertaking’ means the manager of a management company or of an investment company, board members, supervisory board members and general partners of a general partnership or of a limited partnership.
13. ‘Alternative collective investment undertaking’ means a collective investment undertaking, such as an investment fund or an investment company, including sub-funds, which:
1) raises capital from a number of retail and/or informed investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors, and
14. ‘Supervisory authority of a depositary’ means:
1) a supervisory authority of the Republic of Lithuania or another Member State supervising credit institutions and/or financial brokerage firms;
15. ‘Control over the issuer’ means an impact upon the issuer exercised through the acquisition by an alternative collective investment undertaking independently or acting in concert with other persons of the issuer’s securities which confer the right to vote at the general meeting of shareholders of the issuer and which, together with the holding held by the alternative collective investment undertaking or with the holding of other persons acting in concert, confer more than 1/3 of votes at the general meeting of shareholders of the issuer.
16. ‘Financial instrument’ – as defined in the Law of the Republic of Lithuania on Markets in Financial Instruments.
17. ‘Leverage’ means any method by which the management company of an alternative collective investment undertaking increases the exposure of the alternative collective investment undertaking it manages whether through borrowing of cash or securities, or leverage embedded in derivative positions or by any other means used in financial markets.
18. ‘Master alternative collective investment undertaking’ means an alternative collective investment undertaking in which a feeder alternative collective investment undertaking invests or has an exposure.
19. ‘Feeder alternative collective investment undertaking’ means an alternative collective investment undertaking which:
1) invests at least 85 % of its assets in units or shares of another alternative collective investment undertaking (master alternative collective investment undertaking);
2) invests at least 85 % of its assets in more than one master alternative collective investment undertaking, where those master alternative collective investment undertakings have identical investment strategies, or
22. ‘Non-listed company’ means a company which has its registered office in a Member State and the shares of which are not admitted to trading on a regulated market.
23. ‘Control over a non-listed company’ means an impact upon a non-listed company exercised through the acquisition by an alternative collective investment undertaking independently or acting in concert with other persons of the non-listed company’s securities which confer the right to vote at the general meeting of shareholders of the company and which together with the holding held by the alternative collective investment undertaking or with the holding of other persons acting in concert confer more than 50 % of votes at the general meeting of shareholders of that company, including securities the voting right conferred by which is temporarily suspended. The securities conferring the right to vote shall include securities acquired by the alternative collective investment undertaking’s controlled undertaking and by a natural or legal person acting on own behalf but for the benefit of the alternative collective investment undertaking or its controlled undertaking.
24. ‘Control over an entity’ (hereinafter: ‘control’) means a direct and/or indirect dominant influence exercised over an entity within the meaning of the Law of the Republic of Lithuania on Consolidated Financial Reporting by Groups of Undertakings.
25. ‘Internally managed investment company’ means an alternative collective investment undertaking being an investment company which has formed management bodies and the management function of which has not been delegated to a management company.
28. ‘Alternative collective investment undertaking established in another Member State’ means an alternative collective investment undertaking having its registered office and/or head office in another Member State, also an alternative collective investment undertaking licensed in another Member State.
29. ‘Supervisory authority of another Member State’ means a competent authority of another Member State performing in accordance with provisions of legal acts effective in such other Member State the functions of licensing, authorising and supervising the activities of alternative collective investment undertakings and their management companies identical to the supervisory authority’s functions specified by this Law.
32. ‘Retail investor’ means a retail client as defined in the Law on Markets in Financial Instruments.
33. ‘Prime broker’ means a credit institution, a financial brokerage firm or another entity subject to prudential regulation and ongoing supervision offering one or more investment services to professional investors primarily to finance or execute transactions in financial instruments as counterparty and which may also provide the services of clearing and settlement of trades, custodial services, securities lending, customised technology and operational support facilities.
34. ‘Securitisation entity’ means a legal person the sole purpose of which is to carry on a securitisation within the meaning of Regulation (EC) No 24/2009 of the European Central Bank of 19 December 2008 concerning statistics on the assets and liabilities of financial vehicle corporations engaged in securitisation transactions (OJ 2009 L 15, p. 1).
35. ‘Subsidiary undertaking’ – as defined in the Law on Consolidated Financial Reporting by Groups of Undertakings.
36. ‘Parent undertaking’ – as defined in the Law on Consolidated Financial Reporting by Groups of Undertakings.
37. ‘Supervisory authority’ means the Bank of Lithuania performing the functions of licensing, authorisation and supervision of alternative collective investment undertakings and their management companies in the manner laid down by this Law, other laws and legal acts of the European Union.
38. ‘Professional investor’ means a professional client within the meaning of the Law on Markets in Financial Instruments.
39. ‘Member State of reference’ means a Member State that has issued a licence for management of alternative collective investment undertakings to a management company established in a third country intending to manage or market units or shares of alternative collective investment undertakings in that Member State. The Member State of reference shall be determined in accordance with Article 48 of this Law.
41. ‘Supervisory authority of a third country’ means a competent authority of a third country performing, in accordance with provisions of legal acts effective in such third country, the functions of licensing, authorisation and supervision of the activities of alternative collective investment undertakings and their management companies identical to the supervisory authority’s functions specified by this Law.
42. ‘Closed-ended alternative collective investment undertaking’ means an alternative collective investment undertaking whose units or shares are not redeemed, or an investor’s contribution to a general partnership or to a limited partnership is not repaid on request of the investor before the end of the period of activities specified in the instruments of incorporation or until expiry of any other time limit fixed in advance in the instruments of incorporation or until other circumstances established by laws occur giving rise to the obligation to redeem the units or shares or to repay the contribution.
43. ‘Member State’ means a Member State of the European Union, also a country of the European Economic Area.
44. Other terms used in this Law shall be interpreted as defined by the Law on Markets in Financial Instruments, the Law on Financial Institutions, the Law on Consolidated Financial Reporting by Groups of Undertakings, the Law on Companies, the Law on Partnerships, the Labour Code of the Republic of Lithuania, the Law on Collective Investment Undertakings, the Law on Collective Investment Undertakings for Informed Investors, the Law on Securities and Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market and repealing Directive 2003/71/EC (OJ 2017 L 168, p. 12) (hereinafter: ‘Regulation (EU) 2017/1129’).
Article 4. Activities of management companies
1. A management company must engage in core activities, that is, management of investment instrument portfolios and risks of alternative collective investment undertakings (hereinafter: ‘collective investment undertakings’) it manages. The management company may not engage in activities not specified in this Article.
2. A management company shall have the right to engage in the activities of management of UCITS if it has been licensed in accordance with the Law on Collective Investment Undertakings.
3. A management company may provide the following services if they are specified in the licence issued to it and if the management company complies with legal requirements regulating the provision of such services:
3) safe-keeping and administration in relation to units or shares of collective investment undertakings;
4. A management company shall have the right to perform other functions related to the management of a collective investment undertaking under management:
1) administration: accounting services, customer inquiries, calculation of the net asset value, regulatory compliance monitoring, maintenance of unit-/shareholder register, distribution of income, valuation and pricing, unit/shares issues and redemptions, contract settlements, operations record keeping;
3) other activities related to the assets of the collective investment undertaking, such as provision of the services necessary to meet the duties of the management company, facilities management, real estate administration activities, advice to undertakings on capital structure, industrial strategy and related matters, advice and services relating to mergers and the purchase of undertakings and other services connected to the collective investment undertaking and the management of companies and other assets in which it has invested as well as other similar activities.
41. A management company may perform the functions, as entrusted to it, of collective investment undertakings managed by other management companies, provided that the licence issued to the management company authorises it to manage that type of collective investment undertakings.
5. Requirements of Article 2(7), Articles 13, 16 and 28 to 31 of the Law on Markets in Financial Instruments and legal acts of the supervisory authority implementing them shall apply mutatis mutandis to a management company providing investment services referred to in points 1 to 4 of paragraph 3 of this Article.
6. A management company may provide services specified in points 2, 3 and 4 of paragraph 2 of this Article only if the licence issued to it gives it a mandate to provide the services referred to in point 1 of paragraph 3 of this Article.
7. An internally managed investment company shall have a right to engage only in the activities in relation to the management of an investment company as specified in paragraphs 1 and 4 of this Article.
8. Management companies providing services specified in points 1 to 4 of paragraph 3 of this Article must insure the related liabilities to investors in accordance with the procedure laid down in the Law of the Republic of Lithuania on Insurance of Deposits and Liabilities to Investors.
Article 5. Right to engage in the activities of a management company
1. Only a private limited liability company or a public limited liability company holding a licence issued by the supervisory authority shall have the right to engage in the activities of a management company operating under this Law. The licence shall be obtained subject to fulfilling the conditions specified in Article 2(2) of this Law, including the case specified in Article 2(7). The licence obtained by the management company under this Article shall grant the right to manage special collective investment undertakings and collective investment undertakings for informed investors as well as other collective investment undertakings in observance of requirements of this Law and, respectively, the Law on Collective Investment Undertakings and of the Law on Collective Investment Undertakings for Informed Investors, as applicable.
2. Collective investment undertakings established in the Republic of Lithuania may be managed by management companies established in other Member States under the law of those Member States.
3. Financial brokerage firms or credit institutions operating under a financial brokerage firm licence or a credit institution licence issued by the supervisory authority or the supervisory authority of another Member State, provided the credit institution licence authorises a credit institution to provide investment services, shall not be required to obtain a separate licence in order to provide the investment services such as portfolio management or unit marketing in respect of a collective investment undertaking. The financial brokerage firms or credit institutions licensed to provide investment services may, directly or indirectly, publicly or privately, offer units or shares of the collective investment undertaking to investors only in the case and to the extent that the units or shares can be marketed in accordance with this Law. Financial brokerage firms or credit institutions licensed to provide investment services may, directly or indirectly, publicly or privately, offer units or shares of the collective investment undertaking to investors only in the case and to the extent that the units or shares can be marketed in accordance with this Law.
Article 6. Procedure for licensing a management company
1. A legal person applying for a management company licence shall apply from the supervisory authority and submit the documents referred to in paragraph 2 of this Article.
2. A legal person applying for a management company licence shall submit together with the application:
1) a document (questionnaire) of the format specified by the supervisory authority completed and signed by each candidate for the position of the management company’s manager and the person taking investment decisions (where a collegial body taking investment decisions is formed – for each person constituting such collegiate body) and the documentary evidence of the information provided therein;
2) information about the identities of shareholders in the management company (forenames, surnames, personal number (where a person has no personal number – the date and place of birth), citizenship, permanent residence address, contact details) and on the amount of the holding held by each of the shareholders, including the total value of held shares and suitability of those persons taking into account the need to ensure the sound and prudential management of the management company. The data referred to in this point shall be provided about holders of the management company’s shareholdings. Where the holders of the management company’s shareholding are public limited liability companies or private limited liability companies, the data shall be disclosed on natural persons holding more than 10 % of the voting rights and/or of the authorised capital in such companies; where the holders of the management company’s shareholding are general partnerships or limited partnerships, the data shall be disclosed on their partners being natural persons (where partners of a general partnership or of a limited partnership holding of the management company’s shareholding are public limited liability companies or private limited liability companies, the data shall be disclosed on natural persons holding more than 10 % of their voting rights and/or of the authorised capital in such companies);
3) a programme of activity containing, inter alia, a description of intended areas of activities, the organisational structure of the legal person, as well as information on how compliance with Regulation (EU) No 231/2013, this Law and its implementing legislation will be ensured;
5) information on arrangements made for the delegation of a part of management functions to legal persons and, if applicable, to natural persons pursuant to Article 14 of this Law;
6) information about the investment strategies of the collective investment undertakings managed or intended to be managed, including the types of the main collective investment undertakings if the collective investment undertaking invests in other collective investment undertakings;
7) the policy of the collective investment undertakings managed or intended to be managed as regards the use of leverage;
8) information about the risk profile and other characteristics of the collective investment undertakings managed and/or intended to be managed, including information about the Member States or third countries in which such collective investment undertakings are established or are expected to be established;
9) information on where the master collective investment undertaking is established if the collective investment undertaking is a feeder collective investment undertaking;
10) the instruments of incorporation of each collective investment undertaking the management company intends to manage;
11) information on the collective investment undertaking’s future depositary, the account manager, the person intending to provide administration services and other service providers whose services will have an material impact on the performance of the management company, and any arrangements with them;
12) information about the seat of management bodies of the legal person and/or its registered office;
3. The documents referred to in points 1 and 2 of paragraph 2 of this Article do not need to be presented if they can be accessed in public registries or other state information systems.
4. The supervisory authority shall specify in the licensing rules the data, documents and other information to be provided to the supervisory authority by a legal person applying for a management company licence so that the supervisory authority can make sure that the company complies with the licensed activity requirements set out in this Law. In order to make sure that the legal person complies with all requirements set out in this Law and Regulation (EU) No 231/2013, the supervisory authority shall have the right to request additional documents and/or information related to the activities planned to be pursued by the management company.
5. Where a legal person that has obtained a management company licence under the Law on Collective Investment Undertakings or a management company authorisation under the Law on Collective Investment Undertakings Intended for Informed Investors applies for a management company licence under this Law, it shall not be required to provide to the supervisory authority for the second time the documents and/or the information already provided when applying for the licence under the Law on Collective Investment Undertakings or for the authorisation under the Law on Collective Investment Undertakings Intended for Informed Investors, provided that the legal person informs the supervisory authority in writing that the content of such documents and/or information remain up-to-date.
6. The licence issued to a management company shall be valid throughout the European Union or the European Economic Area.
Article 7. Issue of a management company licence and refusal of issue by the supervisory authority
1. The supervisory authority shall refuse the issue of a management company licence if:
1) not all documents and/or information requested by the supervisory authority and specified in Article 6(2) of this Law, or additional documents and/or information requested by the supervisory authority under Article 6(4) of this Law have been submitted and the requirement to correct the deficiencies has not been fulfilled within the time limit set by the supervisory authority;
2) the management company’s initial capital is below the minimum amount specified in this Law and/or the requirements set out in this Law for own funds of the management company and other prudential requirements are not fulfilled;
3) the documents and/or the information provided by the legal person applying for the management company licence do not fulfil the requirements of this Law and its implementing legislation;
4) the candidates for the management company’s managers, persons taking investment decisions do not comply with the repute, qualification and work experience requirements set out in Article 13(2) of this Law;
5) there are grounds for believing that the selected depositary will not be able to properly carry out the duties in accordance with this Law;
6) the supervisory authority has reasonable doubts regarding the compliance of a collective investment undertaking and the legal person applying for the management company licence with this Law or the legal acts regulating activities of collective investment undertakings or their management companies;
7) there are grounds for believing that close links between the legal person applying for the management company licence and other natural or legal persons will prevent the effective exercise of supervisory functions;
8) the shareholders of the management company are not suitable taking into account the need to ensure the sound and prudential management of the management company;
9) there are grounds for believing that the legal regulation of natural or legal persons registered or established in a third country with whom the legal person applying for the management company licence has close links and its implementation will prevent the effective exercise of supervisory functions;
2. The supervisory authority must, within three months after provision of complete information, notify a legal person in writing whether or not a management company licence is issued thereto. The information shall be considered to be complete if the legal person provides at least the information referred to in points 1 to 4 and 6 to 9 of Article 6(2) of this Law in line with requirements of the legal acts regulating activities of collective investment undertakings or their management companies. Where necessary, the supervisory authority shall have the right to extend this time limit for not more than three months and must inform thereof in writing the legal person that has applied for the management company licence. The management company licence shall be issued if the supervisory authority is satisfied that the management company will be able to ensure compliance with provisions of Regulation (EU) No 231/2013, this Law and its implementing legislation and their proper implementation and if there are no circumstances referred to in paragraph 1 of this Article.
3. A management company shall acquire the right of management of a collective investment undertaking from the receipt by the management company of the supervisory authority’s notification referred to in paragraph 2 of this Article about the issue of a management company licence, but not earlier than 30 calendar days after the provision of the information referred to in points 5, 10, 11 and 12 of Article 6(2) of this Law, where such information has not been provided or has been provided separately from the application for the issue of the management company licence.
4. Before issuing a management company licence, the supervisory authority shall consult the supervisory authority of another Member State on the issue of the management company licence if:
1) the management company licence is issued to a subsidiary undertaking of another management company, of a UCITS management company, of a financial brokerage firm, of a credit institution or of an insurance undertaking licensed in another Member State, or
2) the management company licence is issued to a subsidiary undertaking of the parent undertaking of another management company, of a UCITS management company, of a financial brokerage firm, of an credit institution or of an insurance undertaking licensed in another Member State, or
Article 8. Suspension and withdrawal of a management company licence
1. Where the grounds specified in Article 61 of this Law exist, the supervisory authority shall have the right to suspend the licence issued to a management company.
2. The supervisory authority shall have the right to withdraw the licence issued to a management company where:
1) the licence holder has not commenced the exercise of the rights granted by the licence within 12 months of its issue or has ceased the activity for more than the preceding six months;
2) the licence holder no longer fulfils the requirements for the issue of a management company licence;
3. The supervisory authority shall withdraw the licence issued to a management company in the following cases:
2) the period of activities fixed in the instruments of incorporation of the licence holder expires and the latter does not apply in writing for the withdrawal of the licence;
3) it transpires that the licence holder has obtained the licence by providing false data or information or committed other infringements of laws or other legal acts of the Republic of Lithuania in order to obtain the licence;
4) the licence holder has seriously and/or repeatedly infringed this Law and/or other legal acts regulating activities of management companies or collective investment undertakings within one year after imposition of a sanction;
4. A decision on the withdrawal of a licence must be reasoned. The supervisory authority must immediately notify the management company in writing about the taken decision and its reasons.
5. For the purposes of point 4 of paragraph 3 of this Article, the acts of a member of a management company’s management body or any natural person who is considered to be a responsible person which infringe the provisions of this Law and legal acts regulating activities of collective investment undertakings and due to which the person who committed the infringement has avoided significant pecuniary damage or gained significant pecuniary advantage for his own or other persons’ benefit or caused significant pecuniary damage to third parties or posed a substantial risk to the stability or integrity of the financial system shall be considered to be a serious infringement.
Article 9. Specificities of activities of an internally managed investment company
1. An internally managed investment company shall be issued an internally managed investment company licence.
Article 10. Requirements for initial capital and own funds of a management company and an internally managed investment company
1. A management company must have an initial capital of at least EUR 125 000. An internally managed investment company must have an initial capital of at least EUR 300 000.
2. The initial capital of a management company shall consist of the sum of one or more elements of own funds specified in points (a) to (e) of Article 26(1) of Regulation (EU) No 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ 2013 L 176, p. 1) (hereinafter: ‘Regulation (EU) No 575/2013’).
3. Own funds of a management company within the meaning of Article 4(1)(118) of Regulation (EU) No 575/2013 at all times must be not smaller than the larger of the below specified amounts:
2) the own funds requirement calculated according to the methods set out in legal acts adopted by the supervisory authority. Requirements of this point shall not apply to internally managed investment companies;
4. The rules for the calculation of the amount of own funds of a management company shall be established by the supervisory authority.
5. Where the value of the investment instrument portfolios of collective investment undertakings managed by a management company exceeds EUR 250 million, the management company must provide an additional amount of own funds. This additional amount of own funds must be not less than 0.02 % of the amount by which the value of the investment instrument portfolios of the collective investment undertaking exceeds EUR 250 million; however, the required total of the initial capital and the additional amount of own funds may not exceed EUR 10 million.
6. A management company may be allowed not to provide up to 50 % of the additional amount of own funds referred to in paragraph 5 of this Article if it benefits from a guarantee of the same amount given by a credit institution which is established in a Member State or a surety provided by an insurance undertaking. The management company must submit a document of such guarantee or surety to the supervisory authority. The guarantee or surety may also be issued by a credit institution or an insurance undertaking which is established in a third country as long as it is subject to effective prudential regulation considered by the competent authority as having the same effect as those laid down in Union law.
7. When determining the value of investment instrument portfolios of collective investment undertakings managed by a management company as referred to in paragraph 5 of this Article, the value of investment instrument portfolios of all collective investment undertakings managed by the management company shall be taken into account, including collective investment undertakings one or more management functions of which have been delegated by the management company to another natural person or company. The value of investment instrument portfolios of the collective investment undertakings whereto the management company provides services as the company that has accepted an order in accordance with the procedure laid down in Article 14 of this Law shall not be taken into account when determining the value of the investment instrument portfolios.
8. In observance of requirements of Regulation (EU) No 231/2013, a management company must have additional own funds for management of potential professional liability risks or obtain professional indemnity insurance.
9. A management company may invest own funds, including additional own funds, only in liquid assets and may not invest them in speculative exposures.
Article 11. Notification of material changes
1. Before implementing any material changes to the conditions for licensing (compliance with requirements), in particular changes to the information provided in accordance with Article 6 of this Law, a management company must notify the supervisory authority about the planned changes in advance, within a reasonable period of time but not later than one month before implementing the planned changes.
2. Where the supervisory authority decides to impose restrictions or reject the changes planned by a management company, the supervisory authority shall inform the management company in writing within one month of receipt of the notification under paragraph 1 of this Article. The period for the provision of the notification of the supervisory authority may be prolonged for up to one month after having notified the management company accordingly.
3. Where the supervisory authority does not submit any notification about a planned restriction or rejection under paragraph 2 of this Article, a management company may implement the planned changes.
Article 12. Duty to register with the supervisory authority and apply for a licence
1. The undertakings referred to in Article 2(4) of this Law shall be under the duty:
2) to provide, when registering, the supervisory authority with information about themselves and about collective investment undertakings that they manage and their investment strategies;
3) at least once in twelve months as well as in the cases of material changes or within five working days of receipt from the supervisory authority of a request for information, to provide the supervisory authority with the information about marketed units or shares, the principal exposures and risk concentrations of collective investment undertakings that they manage in order to enable the competent authority to monitor systemic risk effectively.
2. Where assets of collective investment undertakings managed by the undertaking referred to in Article 2(4) of this Law correspond to the thresholds specified in Article 2(2)(1) or (2) of this Law and calculated in accordance with Regulation (EU) No 231/2013, the undertaking must immediately, but not later than within five working days from exceeding the thresholds, notify the supervisory authority thereof and no later than within 30 calendar days from exceeding the thresholds submit an application for a management company licence in accordance with this Law.
3. The requirement to register with the supervisory authority set out in this Article shall not apply when the undertaking referred to in Article 2(4) of this Law is licensed by the supervisory authority according to the Law on Collective Investment Undertakings or authorised according to the Law on Collective Investment Undertakings for Informed Investors.
4. The requirement set out in point 3 of paragraph 1 of this Article to provide information to the supervisory authority shall not apply when the undertaking referred to in Article 2(4) of this Law has provided such information in accordance with the procedure laid down by other legal acts and confirms to the supervisory authority in writing that the content of the previously provided information remains up-to-date.
5. Where the supervisory authority, acting in accordance with Regulation (EU) No 345/2013 or Regulation (EU) No 346/2013, refuses to register the manager of a collective investment undertaking or a collective investment undertaking, the supervisory authority shall provide a reasoned reply to the manager of the collective investment undertaking within two months of receipt of all documents specified in the applicable Regulation by the supervisory authority.
Article 13. Requirements for activities of management companies and prudential requirements
1. A management company must:
1) act fairly, with due skill, in observance of the obligations assumed to the investor and in accordance with the instruments of incorporation of a collective investment undertaking and a management company, Regulation (EU) No 231/2013, this Law, its implementing legislation and other legal acts;
2) act under the best conditions and in the best interests of a collective investment undertaking and of its investors, treat all investors fairly and ensure the integrity of the market;
4) ensure that all investors of a collective investment undertaking comply with the requirements for investors set by laws, where applicable; prepare and, if necessary, immediately update the list of investors of the collective investment undertaking;
5) disclose to an investor the information related to its investments and other information specified in this Law;
6) have in place an organisational structure that allows the identification, prevention, management and monitoring of conflicts of interest in order to segregate the tasks and responsibilities of the management company which may be regarded as incompatible and to avoid conflicts of interest between the management company and the collective investment undertaking it manages or investors of the collective investment undertaking; between the collective investment undertaking managed by the management company or its investors and another collective investment undertaking or its investors; between the collective investment undertaking or investors of the collective investment undertaking and another customer of the management company; between the collective investment undertaking managed by the management company or investors of that collective investment undertaking and a UCITS managed by the same management company or its investors; between two customers of the management company. In the event of a conflict of interest, all the structural organisational conditions must be in place to identify such conflicts, prevent their spreading and create appropriate conditions for the management and monitoring of such conflicts of interest and informing of investors about them;
7) ensure that human resources of the management company are adequate for the performance of its activities and that its managers and persons taking investment decisions comply with the repute, qualification and work experience requirements set out in paragraph 2 of this Article. The qualification and work experience of the management company’s managers and persons taking investment decisions shall be assessed taking account of the level and nature of the person’s education, improvement of qualification, nature and duration of professional activities or work experience, as well as other factors that might be relevant for the person’s qualification and work experience. Requirements for the repute, qualification and work experience of the management company’s managers and the persons taking investment decisions shall be assessed in accordance with the procedure laid down by legal acts of the supervisory authority;
8) continuously control the performance of management functions of the management company and a collective investment undertaking;
9) comply with the risk identification, management and assessment policy defined by the supervisory authority of a collective investment undertaking and revise the related internal regulations at least once a year;
10) when assessing the credit risk of assets of a collective investment undertaking, avoid trusting only credit ratings assigned by credit rating agencies according to Regulation (EC) No 1060/2009 (hereinafter: ‘credit ratings’) and relying on them automatically;
11) functionally and hierarchically separate the risk management function from other functions of the management company and revise at least once a year whether the risk profile of a collective investment undertaking matches the size of the collective investment undertaking, the investment instrument portfolio structure, investment strategies and the objectives set in the instruments of incorporation, the prospects and other documents defining activities;
12) for a collective investment undertaking which is an unleveraged closed-ended collective investment undertaking, employ an appropriate system and adopt procedures which enable to monitor the liquidity risk of the collective investment undertaking and to ensure that the liquidity profile of the investments complies with its obligations;
13) ensure that the investment strategy, the liquidity profile and the redemption policy of a collective investment undertaking are consistent;
14) regularly, but not less frequently than once in 12 months, conduct stress tests which enable to assess the liquidity of a collective investment undertaking and to ensure the proper compliance with liquidity requirements and submit the results to the supervisory authority;
15) ensure that administrative and accounting procedures, control and safeguard arrangements for electronic data processing are sound and allow identifying all parties to transactions, their nature, time and place at which they were effected and determine whether assets are invested in accordance with the conditions specified in the instruments of incorporation and legal acts;
16) ensure that documents of effected transactions and investors’ applications for acquisition or redemption of units, shares or for making or repayment of contributions are retained during the period of activities of a collective investment undertaking and not less than five years after termination of such activities;
17) ensure that appropriate and consistent procedures are established for each collective investment undertaking that it manages in order to carry out a proper and independent valuation of assets of the collective investment undertaking according to this Law and the instruments of incorporation of the collective investment undertaking and to calculate and communicate to investors the value of net assets of the collective investment undertaking and the proportion of the net asset value per unit or share in accordance with provisions of this Law and requirements of the instruments of incorporation of the collective investment undertaking;
18) provide to the supervisory authority any information requested by it and necessary for supervision of a collective investment undertaking and of the management company;
19) fulfil all the requirements stipulated by this Law, other legal acts and the instruments of incorporation;
2. Managers of a management company and of an internally managed investment company and persons taking investment decisions must be of good repute, have the qualifications and work experience necessary for the proper performance of their duties. At least two of them must have work experience in the area of investment strategies to be implemented by collective investment undertakings that they manage. Provisions of Article 3(41) of the Law on Markets in Financial Instruments shall apply mutatis mutandis when assessing the good repute of the managers and the persons taking investment decisions. The qualifications and work experience of the managers and the persons taking investment decisions shall be assessed taking into account the level and nature of their education, improvement of qualifications, the nature and duration of their professional activity or work experience and other factors that are likely to affect a person’s qualification and work experience. Requirements for the repute, qualifications and work experience of the managers and the persons taking investment decisions shall be assessed in accordance with the procedure laid down by legal acts of the supervisory authority.
3. A management company may not grant any preferential treatment to any investors, unless such preferential treatment is provided for in the instruments of incorporation of a specific collective investment undertaking.
4. A management company must ensure that a collective investment undertaking complies with Regulation (EU) No 231/2013, this Law and its implementing legislation. The management company shall be responsible for the compliance of its own activities and of the activities of the collective investment undertaking it manages, as well as of the information, documents and data provided to investors and to the supervisory authority with requirements of legal acts and the alignment, correctness and proper presentation of such information, documents and data.
5. The supervisory authority shall:
1) having regard to the nature, scale and complexity of the business of a collective investment undertaking, supervise the separation of a management company’s risk management function from other functions of the management company, the appropriateness of credit risk assessment processes, as well as the assessment of the use of references to credit ratings in the investment policy of the collective investment undertaking according to requirements of point 10 of paragraph 1 of this Article. If necessary, the supervisory authority shall encourage to reduce the impact of such references with a view to reducing automatic reliance upon such credit ratings;
2) assess the functional and hierarchical separation of the functions of risk management in accordance with point 11 of paragraph 1 of this Article. Such assessment by the supervisory authority shall be based on the understanding that a management company must be able to demonstrate that specific safeguards against conflicts of interest allow for the independent performance of risk management activities and that the risk management process satisfies the requirements of this Article and is effective at all times.
6. A management company that manages pension funds and/or financial instrument portfolios of other persons may invest all or part of funds of the financial instrument portfolio of the customer in the units or shares of the collective investment undertaking that it manages only in observance of the requirements set out in a law regulating respective activities and having obtained the prior consent of the customer.
7. Where organisational arrangements made by a management company to identify, prevent, manage and monitor conflicts of interest are not sufficient to ensure, with reasonable confidence, that risks of damage to investor interests will be prevented, the management company must clearly disclose the general nature or sources of conflicts of interest to the investors before undertaking business on their behalf, and develop appropriate policies and procedures.
8. Where a management company cannot ensure that a collective investment undertaking it manages or another entity acting on behalf of the collective investment undertaking complies with requirements of this Law and its implementing legislation, the management company shall without delay, but not later than within three working days, notify in writing about the existing circumstances the supervisory authority and, where the collective investment undertaking is registered in another Member State, the supervisory authority of that Member State. The supervisory authority shall require the management company to take necessary actions to remedy the existing situation.
9. If a management company’s duties specified in paragraph 8 of this Article are not carried out or despite the actions taken by the management company to remedy the situation the non-compliance with requirements of this Law and its implementing legislation persists, the supervisory authority shall require the management company to delegate the management of such a collective investment undertaking to another management company which would take the necessary actions to remedy the existing situation or, where the management of the collective investment undertaking is not delegated, to suspend the management of such collective investment undertaking. If the management company fails to comply with the requirement of the supervisory authority, the latter shall suspend or withdraw the licence of the management company or prohibit the activities of the management company established in another Member State or a third country in the Republic of Lithuania. The supervisory authority must, not later than within three working days, notify the supervisory authority of the host Member State of the management company about its requirement, the suspension or withdrawal of the licence of the management company or prohibition of activities in the Republic of Lithuania of the management company established in another Member State or in the third country.
10. A management company must notify the depositary of receipt of a decision to suspend the management of a collective investment undertaking on the day of receipt thereof. In such a case, the management of the collective investment undertaking shall be temporarily taken over by the depositary having all rights and duties of the management company, unless laws or instruments of incorporation establish otherwise. The depositary must delegate the management to another management company within six months of the takeover of the management. Where the management of an investment fund or of an investment company the management whereof must be delegated to a management company is not delegated to the management company within six months of suspension of the management of the undertaking, such an investment fund shall be dissolved and the investment company shall be liquidated.
11. Where the suspension of a management company’s right to manage a collective investment undertaking is lifted, the depositary shall delegate the management of the collective investment undertaking to that management company, excluding the cases where this is not possible.
12. In observance of provisions of paragraph 9 of this Article, when the supervisory authority requests to delegate the management of a certain collective investment undertaking to another management company or to suspend the management of the collective investment undertaking, the marketing of units or shares of such a collective investment undertaking shall be prohibited. Where units or shares of the collective investment undertaking are marketed in another Member State, the supervisory authority shall, not later than within three working days, notify the supervisory authority of the host Member State of the management company about the prohibition to market the units or shares of the collective investment undertaking that does not meet the requirements.
13. Where the management company of an alternative collective investment undertaking is exposed to a securitisation that no longer meets the requirements provided for in Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (OJ 2017 L 347, p. 35), it shall, in the best interest of the investors, act and take corrective action, if appropriate.
Article 14. Right of a management company to delegate a part of management functions to another natural or legal person
1. A management company shall have the right to delegate the performance of a part of its functions to another natural or legal person authorised to provide the respective services. The performance of core management functions, namely investment instrument portfolio management, risk management and marketing of units or shares, may be delegated only to another company. The management company which intends to delegate the task of carrying out of a part of its core management functions to another company must notify the supervisory authority in writing before the delegation arrangements become effective. The notification must indicate the natural or legal person who will accept the delegation and the list of the core management functions to be delegated.
2. The performance of a part of core management functions may be delegated only if the following conditions are met:
1) the management company must be able to justify the delegation of its functions on objective reasons;
2) the delegate disposes of sufficient resources to perform the respective tasks, and the employees who effectively conduct the business of the delegate must be of sufficiently good repute and sufficiently experienced in the area in which the delegated functions will be performed;
3) where the delegation concerns investment instrument portfolio management or risk management, it must be conferred only on undertakings which are authorised or registered for the purpose of asset management and subject to equivalent activity requirements. Where the conditions as specified above cannot be met, the functions related to portfolio management or risk management may be delegated only subject to prior approval by the supervisory authority of the management company. Such delegation shall be possible only provided the supervisory authority of the management company and the supervisory authority of the delegate established in a third country have entered into agreements regarding cooperation and exchange of information;
4) the delegation of a part of the functions does not or should not prevent the effectiveness of supervision of the management company, the activities of the management company and the management of the collective investment undertaking;
5) the management company must be able to demonstrate that the delegate is qualified and capable of undertaking the functions in question, that it was selected with all due care and that the management company is in a position to monitor effectively at any time the delegated activity, to give at any time further instructions to the delegate and to withdraw the delegation with immediate effect when this is in the interest of investors;
3. The performance of a part of management functions may be delegated only if the following conditions are met:
1) the delegation must not prevent the effectiveness of supervision of the management company and must not prevent from acting in the best interests of investors;
2) the management company’s managers must be able to effectively monitor at any time the activities of the natural person or the entity carrying out the delegated part of the management functions;
3) the management company must be able to give further instructions to the natural person or the entity and to withdraw the delegation at any time when this is in the interest of investors of a collective investment undertaking;
4) managers of the natural person or the entity and persons who will perform management functions must be of good repute and sufficiently qualified and experienced for the proper performance of their duties;
5. No delegation of investment instrument portfolio management or risk management shall be conferred on:
2) any other entity whose interests may conflict with those of the management company or the investors of the collective investment undertaking, unless such natural person or entity has functionally and hierarchically separated the performance of its investment instrument portfolio management or risk management tasks from its other tasks that may be potentially conflicting with interests of the management company or of the investors of the collective investment undertaking, and the potential conflicts of interest are properly identified, managed, monitored and disclosed to the investors of the collective investment undertaking.
6. An entity may sub-delegate any of the functions delegated to it provided that the following conditions are met:
2) the management company notified the supervisory authority before the sub-delegation arrangements become effective;
7. The delegate to which core management functions have been delegated shall review the services provided by each sub-delegate on an ongoing basis.
8. Where the delegate to which the essential management functions have been delegated further delegates such functions, the conditions set out in paragraphs 6 and 7 of this Article shall apply mutatis mutandis.
9. The liability of a management company for the proper performance of management functions shall not be affected by the fact that the management company has delegated a part of its functions to another natural person or entity. The management company may not delegate its functions to an extent that exceeds by a substantial margin the functions performed by the management company itself. The compliance with this requirement shall be assessed in observance of the criteria set out in Article 82 of Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (OJ 2013 L 83, p. 1).
Article 15. Remuneration policy
1. A management company must establish remuneration policies for senior management, employees whose professional activities and/or decisions may have a material impact on the profile and extent of risks taken on by a collective investment undertaking, also for control functions.
2. A management company must establish the salary of the employees receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities and/or decisions may have a material impact on the profile and extent of risks of a collective investment undertaking and the remuneration policy for employees whose professional activities have a material impact on the risk profile of the management company or collective investment undertakings that it manages.
4. The remuneration policy may not encourage additional risk-taking which is inconsistent with the objectives and instruments of incorporation of a collective investment undertaking.
Article 16. Determination of the net asset value and the proportion of the net asset value per unit or share
1. The net asset value of a collective investment undertaking and the proportion of the net asset value per unit or share shall be determined at least once a year having regard to the market price of the assets of the collective investment undertaking and in observance of Regulation (EU) No 231/2013, the asset and net asset value determination rules specified in the instruments of incorporation as well as the asset valuation principles and methods recommended by associated structures recognised on the market.
2. If a collective investment undertaking is of the open-ended type, the net asset value and the proportion of the net asset value per unit or share shall be determined at a frequency which is both appropriate to the assets held by the collective investment undertaking and the frequency of the issuance and redemption of its units or shares.
3. If a collective investment undertaking is of the closed-ended type, the net asset value and the proportion of the net asset value per unit or share must be determined, namely valued and calculated, at a frequency of the issuance or redemption of units or shares of the collective investment undertaking.
Article 17. Valuation of assets of a collective investment undertaking
1. A valuer of assets of a collective investment undertaking may be:
1) an independent (external) valuer – a natural or legal person authorised to carry out the valuation of such assets or business and not related with the collective investment undertaking or the management company or with other persons closely related with the collective investment undertaking or the management company to which the management company delegates such asset valuation functions;
2) the management company itself, provided that it applies measures which ensure that conflicts of interest are mitigated and that undue influence on the employees performing the valuation is prevented, and ensures that the persons performing the valuation are functionally independent from the persons performing investment instrument portfolio management and establishing the remuneration policy.
2. A depositary may also be a valuer of assets, however, provided that the functional and organisational structure of the depositary allows separating the functions of the depositary of a collective investment undertaking from the tasks as valuer of assets of the collective investment undertaking and that potential conflicts of interest arising therefrom are identified, managed, monitored and disclosed in advance to investors of the collective investment undertaking in writing or an equivalent form.
3. In all cases, a management company shall be responsible to a collective investment undertaking and its investors for the proper valuation of the assets of the collective investment undertaking, calculation of the net asset value and its publication. The persons referred to in point 1 of paragraph 1 of this Article shall be liable to the management company for losses incurred through the fault of the asset valuer.
4. The persons referred to in point 1 of paragraph 1 of this Article may not delegate the valuation function in relation to a collective investment undertaking’s assets to a third party.
5. A management company must notify the appointment of an asset valuer pursuant to point 1 of paragraph 1 of this Article to the supervisory authority in writing. The supervisory authority may require that a different asset valuer, as provided for in point 1 of paragraph 1 of this Article, is appointed if, in the opinion of the supervisory authority, the asset valuer intended to be appointed does not have sufficient expertise, skill, experience or fails to comply with other requirements set out in this Law.
6. Before conducting the valuation of assets, the person specified in point 1 of paragraph 1 of this Article shall submit to a management company the information about his experience demonstrating that the person concerned is able to effectively perform the valuation function.
7. The provisions of Article 14(1), (2), (3) and (4) of this Law shall apply mutatis mutandis to delegation of the valuation function to the person specified in point 1 of paragraph 1 of this Article.
8. Where the valuation of a collective investment undertaking’s assets is carried out by a person who is not an external valuer, the supervisory authority shall have the right to require from the management company that the valuation of assets is verified by an external valuer and/or an auditor for the account of the management company.
Article 18. Procedure for providing information to investors of a collective investment undertaking
1. Before starting to invest and subsequently, when material changes occur, a management company must submit to investors of a collective investment undertaking:
1) a description of the investment strategy and objectives of the collective investment undertaking;
3) if the collective investment undertaking invests in other collective investment undertakings, a description of the types of assets in which the collective investment undertaking may invest, the techniques it may employ and all associated risks, any applicable investment restrictions, the circumstances in which the collective investment undertaking may use leverage, the types and sources of leverage permitted and the associated risks, any restrictions on the use of leverage, and any collateral and asset reuse arrangements, and the maximum level of leverage that the management company is entitled to employ on behalf of the collective investment undertaking;
4) a description of the procedures by which the collective investment undertaking may change its investment strategy and/or investment policy;
5) a description of the main legal implications of the contractual relationship entered into for the purpose of investment, including information on the applicable law and on the existence or not of any legal instruments providing for the recognition and enforcement of judgments in the territory where the collective investment undertaking is established;
6) the name, head office of the management company, the depositary of the collective investment undertaking, the name, head office of the auditor and all other service providers where they are legal persons or, where they are natural persons, their names, surnames, business addresses, a description of their duties and the investors’ rights;
7) a description of how the management company is complying with the requirements of additional own funds and/or professional indemnity insurance;
8) a description of any management functions delegated by the management company to other natural persons or entities and of any safe-keeping functions delegated by the depositary to another natural person or entity, the name and head office of the entity to which a part of the management company’s functions is delegated and the information about any conflicts of interest that may arise from such delegations;
9) a description of the collective investment undertaking’s net asset valuation procedure and of the pricing methodology for valuing assets;
10) a description of the collective investment undertaking’s liquidity risk management, including the redemption rights both in normal and in exceptional circumstances, and the existing redemption arrangements with investors;
11) a description of all fees, charges and expenses which are directly or indirectly borne by investors and of the maximum amounts thereof;
12) a description of how the management company ensures a fair treatment of investors and, whenever an investor obtains preferential treatment or the right to obtain preferential treatment, a description of that preferential treatment, the type of investors who obtain such preferential treatment and, where relevant, their legal or economic links with the collective investment undertaking or the management company;
13) the collective investment undertaking’s report of the last financial year referred to in Article 22(6) of this Law;
15) the latest net asset value of the collective investment undertaking or the latest market price of the unit or share of the collective investment undertaking calculated in accordance with requirements of Regulation (EU) No 231/2013 and Article 16 of this Law;
17) the identity of the prime broker, a description of any material arrangements of the collective investment undertaking with prime brokers and of the way the conflicts of interest in relation thereto are managed and, where applicable, the provision in the contract with the depositary on the possibility of transfer and reuse of the collective investment undertaking’s assets and the information about any transfer of liability to the prime broker that may exist;
2. A management company must inform the investors before they acquire units or shares of a collective investment undertaking of any arrangements made with the depositary to contractually discharge the depositary of liability, and of any other changes in such arrangements without delay.
3. Where, in observance of provisions of the Law on Securities and Regulation (EU) 2017/1129, a collective investment undertaking must prepare a prospectus, the information, as referred to in paragraphs 1 and 2 of this Article, which is not required to be contained in the prospectus shall be published separately or as additional information in the prospectus.
Article 19. Periodically disclosed information on a collective investment undertaking
1. A management company must, on a regular basis, update and make available to investors and the supervisory authority the following information:
1) the percentage of the collective investment undertaking’s assets which are subject to special arrangements arising from their illiquid nature;
2. The supervisory authority shall be provided with the following additional information about:
1) the management arrangements employed by a management company to manage the market risk, liquidity risk, counterparty risk and other risks, including operational risk;
2) the main types of assets in which the assets of a collective investment undertaking were invested;
3. For the end of each quarter, a management company shall, on request of the supervisory authority, provide to it a detailed list of collective investment undertakings which it manages.
4. The information referred to in paragraph 1 of this Article shall be prepared and disclosed in observance of requirements set out in Regulation (EU) No 231/2013.
Article 20. Other information periodically disclosed by a management company
A management company that manages collective investment undertakings established in the Republic of Lithuania or in another Member State and employing leverage, or marketing the units or shares of collective investment undertakings established in the Republic of Lithuania or in another Member State and employing leverage shall, in observance of requirements set out in Regulation (EU) No 231/2013, update and make available to investors the following information:
1) any changes to the maximum level of leverage which the management company may employ on behalf of the collective investment undertaking as well as any right to reuse collateral or guarantee granted under leveraging arrangements;
Article 21. Other information provided to the supervisory authority by a management company
The supervisory authority may require from a management company additional information necessary for the effective monitoring of systemic risks. The supervisory authority shall inform the European Securities and Markets Authority about the additional information requirements.
REQUIREMENTS FOR THE ANNUAL ACTIVITY REPORT OF A MANAGEMENT COMPANY AND COLLECTIVE INVESTMENT UNDERTAKINGS AND AUDIT
Article 22. Annual activity report of a management company and of collective investment undertakings which it manages
1. A management company shall, for each collective investment undertaking which it manages and which is established in a Member State and of each collective investment undertaking whose units or shares it markets in the European Union or the European Economic Area, make available an activity report for the last financial year not later than within six months following the end of the financial year. The annual activity report shall be made available to supervisory authorities of the home Member State of the management company and, on request, to supervisory authorities of the home Member State of the collective investment undertaking.
2. An annual activity report shall be provided to investors on request. Where, in accordance with the provisions of the Law on Securities, a collective investment undertaking is required to make public annual information, only additional information referred to in paragraph 6 of this Article, which is usually not made available as annual information, must be made available to the investors separately on request. The additional information may be also made available as an additional part of the set of annual financial statements. In the latter case, it shall be made public not later than within four months following the end of the financial year.
3. The accounts of a management company shall be kept and its set of financial statements shall be drawn up in accordance with laws and other legal acts of the Republic of Lithuania regulating accounting and preparation of sets of financial statements and the International Accounting Standards.
4. The accounts of a collective investment undertaking shall be kept and its set of financial statements shall be drawn up in accordance with the procedure laid down by laws and other legal acts of the Republic of Lithuania regulating accounting and preparation of sets of financial statements.
5. A management company with the head office registered in the Republic of Lithuania shall, in the manner and to an extent set forth by the supervisory authority, submit to the supervisory authority the reports indicating, inter alia, the principal markets of which it is a member or where it actively trades on behalf of the collective investment undertakings which it manages and the principal exposures and concentrations of each collective investment undertaking it manages.
6. The annual activity report of a collective investment undertaking must contain:
1) where the collective investment undertaking acts as an investment fund – a statement of net assets, a statement of changes in net assets and explanatory notes, and where the collective investment undertaking acts as an investment company – a set of financial statements (a balance sheet, a profit and loss statement, a statement of changes in equity, a cash flow statement and explanatory notes);
3) the information on any material changes in the information provided to investors in observance of Article 18 of this Law;
4) the total amount of remuneration for the financial year, split into fixed and variable remuneration, paid by the management company to its staff, the number of beneficiaries and, where relevant, carried interest paid by the management company;
5) the aggregate amount of remuneration broken down by senior management and other members of staff whose actions have a material impact upon the risk profile of the collective investment undertaking;
6) where, in accordance with Article 35(1) of this Law, the collective investment undertaking controls non-listed companies – an review of the development of such companies’ business specifying all corporate events that have occurred since the end of the last financial year, the company’s likely future development and the information concerning acquisitions of own shares prescribed by the Law of the Republic of Lithuania on Financial Reporting by Undertakings;
Article 23. Audit of a management company and collective investment undertakings which it manages
1. An audit of a set of financial statements and consolidated financial statements of a management company shall be subject to the requirements set out in the Law of the Republic of Lithuania on Audit of Financial Statements, the Law on Financial Institutions and this Article.
2. A set of annual financial statements of a collective investment undertaking must be subject to an audit. Having performed an audit of the set of annual financial statements of the collective investment undertaking, an audit firm must issue an auditor’s report regarding those financial statements, and a report on audit of financial statements. In the report on audit of financial statements, the auditor must provide the information whether the net asset value is calculated correctly, whether the assets have been invested in accordance with the instruments of incorporation, whether the effectiveness of the arrangements for control over the performance of essential functions and investment risk management as approved by a management company or an internally managed investment company and related to the collective investment undertaking has been assessed, also list all identified infringements of this Law and other legal acts regulating activities of collective investment undertakings of the respective category and type and of their management companies.
Article 24. Obligation to transfer assets to a depositary and activities of the depositary
1. The management company of a collective investment undertaking must ensure that assets of the collective investment undertaking which it manages shall be held in custody by a single depositary, the fact of whose appointment shall be evidenced by written contract. The contract must, inter alia, regulate the flow of information deemed necessary to allow the depositary to perform the functions assigned to thereto.
2. A depositary of a collective investment undertaking may be:
1) a licensed credit institution authorised to provide investment services in the Republic of Lithuania or another Member State or a branch thereof established in the Republic of Lithuania;
2) a licensed financial brokerage firm authorised to provide in the Republic of Lithuania or another Member State the ancillary services of safe-keeping and administration of financial instruments for the account of clients and having own funds and initial capital of not less than EUR 730 000 or a branch thereof established in the Republic of Lithuania.
3. The depositary of a collective investment undertaking that meets the conditions set out in paragraph 4 of this Article may also be a legal person included, in accordance with the procedure laid down in Article 25 of this Law, in the List of Depositaries of Collective Investment Undertakings Investing in Assets Other than Financial Instruments (hereinafter: the ‘List’) and authorised to engage in the depositary’s activities (hereinafter: a ‘depositary of collective investment undertakings investing in assets other than financial instruments’). Provisions of this Law regulating the requirements applicable to depositaries, their rights, responsibilities, activities and liability shall apply mutatis mutandis to depositaries of collective investment undertakings investing in assets other than financial instruments.
4. Paragraph 3 of this Article shall apply where a collective investment undertaking meets the following two conditions:
1) investors of the collective investment undertaking have no right to apply for the redemption of units or shares acquired by them or for the repayment of their contribution for at least five years after the establishment of the collective investment undertaking;
6. The depositary of a collective investment undertaking established in the Republic of Lithuania or in another Member State must be established in the same Member State as the collective investment undertaking.
7. The depositary of a collective investment undertaking established in a third country may be established:
2) in the Republic of Lithuania, where the collective investment undertaking established in the third country is managed by a management company licensed in the Republic of Lithuania;
8. The depositary of a collective investment undertaking established in a third country may be established in the third country, provided that all of the following conditions are met:
1) the location of establishment of the depositary complies with the requirements of paragraph 7 of this Article.
3) the supervision exercised by the supervisory authority of the depositary and sanctions have the same effect or are even more stringent than established in the Republic of Lithuania and are effectively enforced;
4) the supervisory authority has signed with the supervisory authority of the depositary cooperation and exchange of information arrangements;
5) the Republic of Lithuania, where the management company of a collective investment undertaking established in a third country is registered and other Member States in which units or shares of the collective investment undertaking established in the third country are intended to be marketed have signed an agreement with the third country in which the depositary is established which fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital and ensures an effective exchange of information in tax matters (including any multilateral tax agreements);
6) the third country where the depositary is established is not listed as a Non-Cooperative Country and Territory by FATF (Financial Action Task Force).
7) the conditions for the application of liability of the depositary of the collective investment undertaking established in the third country are not less stringent than indicated in Article 31 of this Law and the depositary expressly agrees to comply with the requirements set out in Article 29 of this Law for the delegation of depositary functions.
9. In addition to other functions referred to in this Article, the depositary shall:
1) ensure that the sale, issue, re-purchase, redemption and cancellation of units or shares of a collective investment undertaking are carried out in accordance with the applicable national law and the instruments of incorporation of the collective investment undertaking;
2) ensure that the net asset value per unit or share of the collective investment undertaking is calculated in accordance with Regulation (EU) No 231/2013, the applicable national law and the instruments of incorporation, as well as the procedure laid down in Articles 16 and 17 of this Law;
3) carry out the instructions of the management company, unless they conflict with Regulation (EU) No 231/2013, the applicable national law or the instruments of incorporation;
4) ensure that in transactions involving the collective investment undertaking’s assets any amount due to the collective investment undertaking is remitted to the collective investment undertaking in a timely manner, as specified in an agreement signed with the depositary or in legal acts;
10. In performing the delegated functions, the depositary shall act honestly, fairly and in the best interests of a collective investment undertaking and the investors thereof, must avoid conflicts of interest and, if their threat arises, notify the management company thereof without delay. The depositary may not reuse financial instruments of the collective investment undertaking held in custody without the prior consent of the collective investment undertaking or its management company.
11. A depositary shall not carry out activities with regard to a collective investment undertaking or its management company that may create conflicts of interest between the collective investment undertaking, the investors in the collective investment undertaking, the management company and itself, unless the depositary has functionally and hierarchically separated the performance of its depositary tasks from its other potentially conflicting tasks, and the potential conflicts of interest are properly identified, managed, monitored and disclosed to the investors of the collective investment undertaking.
12. Where the supervisory authority disagrees with the assessments of the supervisory authority of another Member State regarding the location of establishment of the depositary of the collective investment undertaking, the supervisory authority may, according to Regulation (EU) No 1095/2010 of 24 November 2010 of the European Parliament and of the Council establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ 2010 L 331, p. 84) (hereinafter: ‘Regulation (EU) No 1095/2010’), refer the matter to the European Securities and Markets Authority which may act in accordance with the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010.
13. The depositary shall ensure that cash flows of a collective investment undertaking are properly monitored, and shall in particular ensure that all payments made by or on behalf of investors upon the acquisition of units or shares of the collective investment undertaking have been received and that all funds of the collective investment undertaking have been booked on the accounts opened in the name of the collective investment undertaking or in the name of the management company acting on behalf of the collective investment undertaking or in the name of the depositary acting on behalf of the collective investment undertaking at an entity or another entity of the same nature, in the relevant market where accounts are required provided such entity is subject to effective prudential regulation and supervision which have the same effect as Union law and are effectively enforced. No cash of the entity and none of the depositary’s own cash shall be booked on accounts opened at the entity in the name of the depositary acting on behalf of the collective investment undertaking.
Article 25. Right to engage in activities of a depositary of collective investment undertakings investing in assets other than financial instruments
1. A person shall acquire the right to engage in activities of a depositary of collective investment undertakings investing in assets other than financial instruments, where such a right is acquired under Article 24(3) of this Law, from the day on which the supervisory authority takes a decision to include the person in the List.
2. In order to be included in the List, a person shall apply to the supervisory authority and submit to it:
2) the documents, data and/or information confirming that the person’s investors and managers meet the requirements set out in points 1, 2 and 3 of Article 26(1), unless such documents, data and/or information can be accessed in state registers or other state information systems;
3) the documents, data and information demonstrating that the person can properly perform the depositary’s duties and obligations arising from such activity, including compliance with the requirements set out in paragraph 3 of this Article;
3. A person who engages in activities of a depositary of collective investment undertakings investing in assets other than financial instruments must comply with the following requirements:
1) the performance of depositary functions must be part of the ordinary business of the person or natural persons who will actually perform depositary functions in the course of the ordinary business pursued by such a person must have the qualification and work experience enabling to properly perform depositary functions;
2) the person and/or natural persons who will actually perform depositary functions must carry out professional activities having obtained a decision (authorisation) of the supervisory authority supervising their professional activities;
3) the compliance of the person and/or natural persons who will actually perform depositary functions and of the professional activities carried out by them with statutory requirements must be supervised by the authority referred to in point 2 of this paragraph;
4) the person’s investors and managers must comply with the requirements set out in Article 26 of this Law;
5) the person must have in place the measures and arrangements necessary for the proper performance of depositary functions, including segregation of assets held in custody from its own assets and from assets of other clients so that they can at any time be clearly identified as belonging to clients of a particular depositary;
6) the person must have in place the measures and arrangements ensuring that in the event of its insolvency the collective investment undertaking’s assets held in custody will not be distributed or realised for the benefit of the person’s creditors;
7) the person’s professional liability must be covered by professional indemnity insurance or the person must have additional own funds within the meaning of Article 27 of this Law;
4. The supervisory authority shall, not later than within 40 working days of receipt of an application and all documents, data and information relevant for an assessment, perform the assessment and take a decision regarding the inclusion of the person in the List and shall notify thereof the person who has submitted the application for inclusion in the List. Where the supervisory authority requests additional documents, data and/or information relevant for the assessment or they are submitted on the initiative of the person who has submitted the application for inclusion in the List, the decision regarding the person’s inclusion in the List shall be taken and the person shall be notified thereof not later than within 40 working days of receipt of the additional documents, data and information relevant for the assessment.
5. During the assessment period, the supervisory authority may, not later than within 30 working days of receipt of the last documents, data and/or information relevant for the assessment, instruct in writing a person who has submitted an application for inclusion in the List to address deficiencies and/or to submit the additional documents, data and/or information necessary for the completion of the assessment. The deficiencies must be addressed and the additional documents, data and/or information must be submitted within the time limit set by the supervisory authority.
6. The supervisory authority shall refuse to include a person in the List where:
1) the person’s investors, managers and natural persons who will actually perform depositary functions do not meet the requirements set out in this Article;
2) the person, on a written request of the supervisory authority to address deficiencies and/or to submit additional documents, data and/or information within the time limit set by the supervisory authority, fails to submit all documents, data and/or information or provides documents, data and/or information the content whereof does not meet the requirements set out in this Article;
7. A depositary of collective investment undertakings investing in assets other than financial instruments must without delay, not later than within ten working days, provide to the supervisory authority the information about changes in the circumstances which existed at the time of inclusion in the List or changes in the documents, data and/or information as soon as such changes take place.
8. A person shall be removed from the List on its request or on the supervisory authority’s initiative.
9. A depositary of collective investment undertakings that invest in assets other than financial instruments shall have the right to apply to the supervisory authority for removal from the List and must submit to the supervisory authority:
2) a document attesting that each asset of a collective investment undertaking held in the person’s custody has been transferred for safe-keeping to another person referred to in Article 24(2) and (3) of this Law and meeting the requirements set out by this Law, as specified in paragraph 11 of this Article.
10. A depositary of collective investment undertakings investing in assets other than financial instruments shall be removed from the List by a decision of the supervisory authority where:
1) the application of the depositary of collective investment undertakings investing in assets other than financial instruments has been received as specified in paragraph 9 of this Article;
2) the person is the subject of bankruptcy proceedings or extra-judicial bankruptcy proceedings, is under liquidation or ceases to exist on other statutory grounds;
3) the person no longer complies with the requirements applicable to persons pursuing the business of a depositary of collective investment undertakings investing in assets other than financial instruments;
11. Before the supervisory authority takes a decision referred to in paragraph 10 of this Article, assets of each collective investment undertaking held in the custody of the person to be removed from the List must be transferred for safe-keeping to another person that meets the requirements set out by this Law. The responsibility for the fulfilment of this requirement shall rest upon the management company of the collective investment undertaking.
12. A person removed from the List by a decision of the supervisory authority on the grounds specified in points 1 and 3 of paragraph 10 of this Article may be restored to the List in accordance with the procedure laid down by this Law. The person removed from the List on the grounds specified in point 4 of paragraph 10 of this Article may be restored to the List not earlier than after the lapse of one year from the issue of a decision on the person’s removal from the List.
13. A decision of the supervisory authority to remove a person from the List shall, within three working days of the taking thereof, be sent by registered mail or delivered against signature to the person with regard to whom the decision has been taken.
14. The List shall be managed by the supervisory authority according to its established procedure. The supervisory authority shall make the List public on its website.
Article 26. Requirements for investors and managers of a depositary of collective investment undertakings investing in assets other than financial instruments
1. A person who meets at least one of the following conditions may not be a member of a management body or a member of a supervisory body or an investor – a natural person or a legal person – of a depositary of collective investment undertakings investing in assets other than financial instruments or a person acting in concert who holds, directly or indirectly, 20 % or more of the voting rights or of the capital or who can exercise a direct and/or indirect dominant influence within the meaning of the Law on Consolidated Financial Reporting by Groups of Undertakings on the depositary of collective investment undertaking investing in assets other than financial instruments:
1) the natural person has been convicted of a serious or grave crime or a crime or a misdemeanour against property, property rights and property interests, the economy and business practice, the financial system, public security, the civil service and public interests or of corresponding criminal acts under criminal laws of other states, where the person’s conviction for the above crimes has not expired or has not been expunged or where less than three years have elapsed from the coming into effect of a court judgment whereby the natural person was convicted of the misdemeanours referred to in this point;
2) the legal person is subject to an effective judgment of conviction for the criminal acts referred to in point 1 of this paragraph, and less than three years have elapsed from the coming into effect of the judgment;
3) the person has been subject to an administrative penalty or any other statutory sanction for a serious infringement of a law or any other legal act regulating the provision of financial services or activities of financial institutions, an infringement of the Law of the Republic of Lithuania on the Prevention of Money Laundering and Terrorist Financing, where less than three years have elapsed from the coming into effect of a decision to impose the administrative penalty or any other statutory sanction;
4) the person directly or indirectly holds or held a qualifying holding of the authorised capital and/or of the voting rights or a holding which makes it possible to exercise a direct and/or indirect dominant influence over the legal person, or is or was the manager of a legal person whose right to engage in the provision of financial services was withdrawn or which was subject to any other sanction for a serious infringement of a law or any other legal act regulating the provision of financial services or activities of financial institutions where less than three years have elapsed from the coming into effect of a decision to impose the sanction, or where that legal person is subject to an effective court judgment of conviction for the criminal acts referred to in point 1 of this paragraph and less than three years have elapsed from the coming into effect of the court judgment.
2. Where a member of a supervisory body or an investor of a depositary of collective investment undertakings investing in assets other than financial instruments is a legal person, the requirements set out in point 1 of this paragraph shall additionally apply to such legal person’s management body members as well as to the investors who hold 20 per cent or more of the voting rights and/or of the capital or can exercise a direct and/or indirect dominant influence on that legal person.
3. For the purposes of this Article, persons acting in concert shall be two or more persons who, in reliance upon an explicit or implicit verbal or written agreement, exercise or seek to exercise their rights conferred by their holding of the capital and/or of the voting rights referred to in this Article.
4. A natural or legal person or persons acting in concert, having decided to acquire 20 per cent or more of the voting rights and/or of the capital of a depositary of collective investment undertakings investing in assets other than financial instruments or who can exercise a direct and/or indirect dominant influence on activities of the depositary of collective investment undertakings investing in assets other than financial instruments, must provide to the supervisory authority the information necessary for assessing the compliance of such persons with the requirements set out in paragraph 1 of this Article. The natural or legal person or persons acting in concert may acquire the holding of the voting rights and/or of the capital of the depositary of collective investment undertakings investing in assets other than financial instruments specified in paragraph 1 of this Article if they meet the requirements set out in paragraph 1 of this Article and subject to approval of the acquisition transaction by the supervisory authority.
5. A depositary of collective investment undertakings investing in assets other than financial instruments must notify the supervisory authority about any pending change of a member of the management body or of the supervisory body and provide the information necessary to assess such person’s compliance with the requirements set out in paragraph 1 of this Article. The member of the management body or of the supervisory body of the depositary of collective investment undertakings investing in assets other than financial instruments may start performing his duties if he meets the requirements set out in paragraph 1 of this Article and only subject to approval of the candidate by the supervisory authority.
6. The supervisory authority shall refuse to approve the candidates planned to be elected as members of the management body or of the supervisory body of a depositary of collective investment undertakings investing in assets other than financial instruments or the acquisition transaction where the persons referred to in paragraphs 1 and/or 2 of this Article do not meet the requirements set out in paragraph 1 of this Article or where the documents submitted to the supervisory authority do not meet the requirements of this Law or legal acts of the supervisory authority, not all data specified by legal acts or additionally requested have been submitted or are incorrect.
7. The time limits fixed in Article 25(4) of this Law shall apply mutatis mutandis when taking decisions of the supervisory authority referred to in paragraphs 4, 5 and 6 of this Article. If the supervisory authority fails to take a decision within the fixed time limit, it shall be considered that the supervisory authority does not object to the candidate planned to be elected as a member of the management body or of the supervisory body of a depositary of collective investment undertakings investing in assets other than financial instruments or to the acquisition transaction.
8. Requirements of this Article shall not apply to credit institutions licensed in the Republic of Lithuania or in another Member State or to investment service providers holding licences to provide services of mediation for specific financing transactions and members of their management bodies or of their supervisory bodies and/or persons acquiring a holding of the voting rights and/or of the capital are assessed according to legal acts regulating activities of such market participants and setting out requirements not lower than those set out in this Law.
Article 27. Prudential requirements for a depositary of collective investment undertakings investing in assets other than financial instruments
1. In the case specified in Article 24(3) of this Law, a person authorised to engage in the business of a depositary of collective investment undertakings investing in assets other than financial instruments must hold a professional indemnity insurance against civil liability or have additional own funds.
2. Where a person chooses to cover his civil liability by professional indemnity insurance, the amount of cover must not be smaller than 0.7 per cent of the value of the assets of a collective investment undertaking held in custody by the depositary per insured event and 0.9 per cent of the value of the assets of the collective investment undertaking held in custody by the depositary for all insured events during the year. The object of professional indemnity insurance shall be the person’s civil liability for potential damage made to the collective investment undertaking and/or its management company when the person engages in the business of the depositary.
3. Where a person chooses to have additional own funds, their amount must not be smaller than 0.01 per cent of the value of the assets of a collective investment undertaking held in custody by the depositary. The supervisory authority shall define in detail the procedure for applying the requirement to have additional own funds and shall establish a procedure for submitting to it the information about the compliance with this requirement.
Article 28. Legal regime of assets held in custody by a depositary
1. As regards the safe-keeping of financial instruments that may be registered in financial instruments accounts opened in a depositary’s books, the depositary shall ensure that all those financial instruments are registered within segregated financial instruments accounts opened in the depositary’s books in the name of a collective investment undertaking or of a management company operating on behalf of the collective investment undertaking in accordance with the principles set out in Article 16 of Commission Directive 2006/73 of 10 August 2006 implementing Directive 2004/39 of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive (OJ 2006 L 241, p. 26), so that they can be clearly identified as belonging to the collective investment undertaking in accordance with the applicable law at all times.
2. For other assets, including the financial instruments that are physically delivered to a depositary, the depositary shall verify the ownership of a collective investment undertaking or a management company acting on behalf of the collective investment undertaking with respect to such assets and the financial instruments concerned and shall maintain a record of those assets. The assessment whether the collective investment undertaking or investors of the collective investment undertaking hold the ownership shall be based on information and documents provided by the collective investment undertaking or the management company and, if possible and necessary, on other evidence. All this information must be updated on a regular basis.
Article 29. Right of a depositary to delegate a part of its functions to another entity
1. A depositary may delegate the safe-keeping of financial instruments and other assets of a collective investment undertaking or of a management company acting on behalf of the collective investment undertaking to other entities. The depositary may not delegate to another entity any other functions specified in this Law.
2. The asset safe-keeping function of a depositary may not be delegated with the intention of avoiding the requirements of this Law or its implementing legislation.
3. A depositary may delegate asset safe-keeping functions to another entity only where the delegation is objectively justified.
4. A depositary must exercise all due skill, care and diligence in the selection of another entity, delegation to such entity of the asset safe-keeping function, the periodic review of the delegation of the asset safe-keeping function and monitoring of the entity to whom it has delegated the asset safe-keeping function and of the arrangements in respect of the delegated matters.
5. A depositary must ensure that an entity to which the asset safe-keeping function has been delegated meets the following conditions during the performance of the tasks delegated to it:
1) the entity has the structures and the expertise that are adequate and proportionate to the nature and complexity of the assets of a management company or a collective investment undertaking which have been entrusted to it;
2) in the case of delegation of the safe-keeping of financial instruments, the entity is subject to prudential regulation, including capital requirements, ongoing supervision and audit to ensure that the financial instruments are in the entity’s possession;
3) the entity segregates the assets of the depositary’s clients the safe-keeping of whose assets has been transferred to the depositary from its own assets and from the assets of the depositary in such a way that they can at any time be clearly identified as belonging to clients of the particular depositary;
4) the entity may not use the assets transferred for safe-keeping without the prior consent of the collective investment undertaking, the management company or the depositary;
6. Where the law of a third country requires that certain financial instruments be held in custody by a local entity and no local entities satisfy the delegation requirements set out in point 2 of paragraph 5 of this Article, a depositary may delegate its functions to that local entity only to the extent required by the law of the third country and only for as long as there are no local entities that satisfy the delegation requirements. The delegation shall be possible only where investors of a collective investment undertaking are in advance and duly informed of the delegation and the circumstances justifying the delegation and that such delegation is required due to applicable legal constraints of the third country and when the collective investment undertaking or a management company instructs the depositary in writing to delegate the safe-keeping of such financial instruments to the designated local entity.
7. An entity to which a depositary has delegated the asset safe-keeping function may sub-delegate the function to other entities, provided that such entities comply with all the requirements for the delegation of depositary functions specified in this Law, and subject to consent of the depositary. In that case, the provisions of this Article shall apply mutatis mutandis.
Article 30. Separation of the prime broker from a depositary
1. A management company must exercise due skill, care and diligence in the selection and appointment of the prime broker and inform a depositary about that.
2. Where a management company uses the services of the prime broker, the terms of the provision of such services must be set out in a written contract. Such a contract must at least provide for the possibility of transfer and reuse of assets of a collective investment undertaking that is available according to the instruments of incorporation of the collective investment undertaking. The contract must also provide that the depositary be informed of the contract.
3. Managers and employees of the prime broker must not act as managers or employees of a depositary that holds in custody the assets of a collective investment undertaking whose functions are directly related with the depositary’s activities.
4. The prime broker may act as depositary only where the functional organisational structure of the prime broker allows separating the depositary functions of a collective investment undertaking from the tasks and functions carried out by the prime broker of the collective investment undertaking, where investors of the collective investment undertaking have been duly notified of the selection of the depositary and of the potential conflicts of interest arising in relation thereto and where such potential conflicts are properly identified, managed and monitored.
Article 31. Liability of a depositary
1. A depositary shall be liable to a collective investment undertaking or to investors of the collective investment undertaking for the financial instruments which are held in their custody or whose safe-keeping has been delegated to other entities.
2. In the case of a loss of financial instruments held in custody, a depositary must, without undue delay but in any case not later than within 20 working days of transpiration of the loss, return the financial instruments of identical type or the corresponding amount determined according to the market price of a financial instrument at the time of the loss. The amount or the financial instruments shall be returned to a collective investment undertaking or to a management company acting on behalf of the collective investment undertaking.
3. Where a depositary has been fulfilled its obligations under this Law negligently or has intentionally failed to fulfil them, the depositary shall compensate a collective investment undertaking and/or a management company for all other losses suffered thereby due to such failure to properly fulfil the obligations.
4. The depositary’s liability shall not be affected by any delegation of the asset safe-keeping function to other entities.
5. Having transferred the financial instruments of a collective investment undertaking or of a management company acting on behalf of the collective investment undertaking to another entity, a depositary may discharge itself of liability if it can prove that the following conditions are met:
1) the depositary complied with all requirements for the transfer of the assets set out in this Law and other legal acts regulating activities of the collective investment undertakings and depositaries of the respective category and type;
2) there is a written contract between the depositary and the entity to which the safe-keeping of assets has been delegated which transfers the liability of the depositary to the entity to which the asset safe-keeping function has been delegated and makes it possible for the collective investment undertaking, the management company acting on its behalf or the depositary to make claims against the entity to which the safe-keeping of the collective investment undertaking’s assets has been delegated in respect of the loss of the financial instruments;
6. Where the law of a third country requires that certain financial instruments are held in custody by an entity established in that third country and there are no local entities that satisfy the task delegation requirements laid down in Article 29(5)(2) of this Law, the depositary can discharge itself of liability provided that all of the following conditions are met:
1) the instruments of incorporation of a collective investment undertaking expressly allow for a discharge of the depositary’s liability under the conditions set out in this paragraph;
2) the investors of the collective investment undertaking have been duly informed about the possibility of a discharge of the depositary’s liability and of the circumstances justifying the discharge prior to their investment;
3) the collective investment undertaking or the management company operating on its behalf has instructed the depositary to delegate the custody of such financial instruments to the entity established in the third country;
4) there is a written contract between the depositary and the collective investment undertaking or the management company operating on its behalf which allows a discharge of the depositary’s liability;
5) there is a written contract between the depositary and the entity established in the third country that expressly transfers the liability of the depositary to the entity established in the third country and makes it possible for the collective investment undertaking, the management company operating on its behalf or the depositary to make claims against the entity established in the third country in respect of the loss of financial instruments held in custody.
7. A depositary shall not be liable for incurred losses if it can prove that losses have been caused by an external event beyond its reasonable control, the consequences of which would have unavoidable despite any reasonable efforts to the contrary (force majeure).
Article 32. Change of a depositary
1. A collective investment undertaking or a management company acting on behalf of the collective investment undertaking may change a depositary only subject to prior approval by the supervisory authority.
2. If a depositary fails to comply with requirements of legal acts, fails to fulfil or improperly fulfils its obligations, the supervisory authority shall have the right to order a management company to change the depositary with a view to ensuring the rights of investors of a collective investment undertaking.
Article 33. Requirements for management companies managing leveraged collective investment undertakings
1. A management company shall set a maximum level of leverage which it may employ on behalf of each collective investment undertaking it manages as well as the extent of the right to reuse collateral or guarantee that could be granted under the leveraging arrangement.
2. When calculating the level of leverage, a management company must take into account:
4) any other linkage or relevant relationships with other financial institutions which could pose systemic risk;
3. Management companies shall demonstrate to the supervisory authority that the leverage limits set by them for each collective investment undertaking they manage are reasonable and that they comply with those limits at all times.
4. A management company managing a leveraged collective investment undertaking must make available to the supervisory authority information regarding the overall level of leverage employed by each collective investment undertaking it manages, leverage arising from borrowing of cash or securities and leverage embedded in financial derivatives and the extent to which the assets of the collective investment undertaking have been reused under leveraging arrangements.
5. The information provided pursuant to paragraph 4 of this Article shall include the identity of the five largest sources of borrowed cash or securities for each of the collective investment undertakings managed by a management company, and the amounts of leverage received from each of those five sources for each of those collective investment undertakings.
6. The provisions of paragraphs 4 and 5 of this Article shall apply to management companies established in third countries only in respect of those collective investment undertakings that are established in the Republic of Lithuania or that are established in third countries but their units or shares are marketed in the Republic of Lithuania.
Article 34. Functions of the supervisory authority in monitoring actions of management companies established in the Republic of Lithuania for the purpose of employing leverage
1. The supervisory authority shall collect data on the activities of management companies established in the Republic of Lithuania and use the data for the purposes of identifying the extent to which the use of leverage contributes to the build-up of systemic risk in the financial system, to the risk of disorderly markets and to risks for the long-term growth of the economy.
2. For the purpose of assessing the risk referred to in paragraph 1 of this Article, the supervisory authority shall cooperate with supervisory authorities of other Member States, third countries or financial markets of the European Union and exchange with them the information required for supervisory purposes.
3. The supervisory authority shall assess the potential risks to which a management company established in the Republic of Lithuania might be exposed when employing leverage with respect to a collective investment undertaking it manages.
4. With a view to ensuring the stability and integrity of the financial system, the supervisory authority may impose limits to the level of leverage that a management company is entitled to employ or any other restrictions on the management of a collective investment undertaking with respect to the collective investment undertakings under its management to limit the extent to which the use of leverage contributes to the build-up of systemic risk in the financial system or risks of disorderly markets.
5. The supervisory authority must inform of the intended measures, as referred to in paragraph 4 of this Article, the European Securities and Markets Authority, the European Systemic Risk Board and the supervisory authorities of a collective investment undertaking managed by a management company no later than within ten working days before a decision regarding the application of a measure is intended to take effect. The notification shall include details of the proposed measure, the reasons for the application of the measure, and when the relevant decision regarding its application is intended to take effect.
6. In exceptional circumstances that could pose actual risks of damage to investors’ interests, the supervisory authority may decide that a decision regarding the application of the proposed measure takes effect within the period of ten working days referred to in paragraph 5 of this Article.
7. Where within ten working days after the submission of the relevant notification to the European Securities and Markets Authority the supervisory authority does not receive any opinion of the European Securities and Markets Authority regarding the appropriateness of the measure proposed under paragraph 4 of this Article, the supervisory authority may commence the application of the measure.
8. In an event that the measures referred to in paragraph 4 of this Article have already been taken and the subsequently received opinion of the European Securities and Markets Authority states that the conditions for taking the measures have not been met and/or that the measures are not appropriate and/or that the period of validity of the measures is not appropriate, the supervisory authority must suspend the application of the measures or submit to the European Securities and Markets Authority an explanation why the measures concerned are applied disregarding the advice of the European Securities and Markets Authority.
MANAGEMENT OF MANAGEMENT COMPANIES MANAGING COLLECTIVE INVESTMENT UNDERTAKING THAT ACQUIRE CONTROL OVER NON-LISTED COMPANIES OR ISSUERS
Article 35. Acquisition and loss of control over non-listed companies
1. Where a management company manages one or more collective investment undertakings which individually or jointly on the basis of an agreement aimed at acquiring control acquire control over a non-listed company, or where the management company has entered into agreement with another management company on the basis of which collective investment undertakings managed jointly by such management companies acquire such control, the management company must notify the following of the acquisition of control:
2) the shareholders of the acquired company of which the identities and addresses are available to the management company or may be made available by the non-listed company or through a register to which the management company has or can obtain access;
2. The notifications must contain:
2) the information about the applicable policy for managing conflicts of interest, in particular those that arise between management companies, the collective investment undertaking and the acquired company, including information about the specific safeguards established to ensure that any agreement between the management company and/or the collective investment undertaking and the acquired company is concluded at arm’s length;
3. The notifications must also contain information about the new distribution of voting rights, the conditions subject to which control was acquired (including the identities of the different shareholders involved, any natural or legal persons entitled to vote on their behalf and, where the voting rights have been sub-delegated, the chain of undertakings through which the voting rights are effectively held), and the date on which control was acquired.
4. A management company shall disclose (in case the management company operates on behalf of a collective investment undertaking) or ensure that the collective investment discloses its intentions with regard to the future business of a non-listed company and the likely repercussions on employment, including any material change in the conditions of employment to the non-listed company and/or the shareholders of the non-listed company of which the identities and addresses are available to the management company or can be made available by the non-listed company or through a register to which the management company has or can obtain access. The management company must ensure that the management bodies of the company make available the information set out in this paragraph regarding the acquisition of the company’s control to the employees’ representatives or, where there are none, the employees themselves.
5. A management company must submit to the supervisory authority information about the funds used to acquire the securities of a non-listed company.
6. The notifications referred to in this Article shall be communicated as soon as possible, but not later than within ten working days after the date on which the proportion of voting rights of a collective investment undertaking has reached the control acquisition threshold or has fallen below the relevant threshold, or the date on which the collective investment undertaking has acquired control over a non-listed company.
7. The provisions of this Article shall not apply when non-listed companies are small or medium-sized companies within the meaning of the Law of the Republic of Lithuania on Small and Medium-Sized Business Development or when the non-listed companies are real estate companies with the purpose of purchasing, managing or administrating real estate.
Article 36. Restrictions on disposal of assets of controlled non-listed companies or issuers
1. Upon acquisition of control according to Article 35(1) of this Law, a management company shall, for a period of 24 months following the actual acquisition of control over a company, be prohibited from:
1) distributing the company’s assets under more favourable terms, reducing capital, redeeming shares and/or acquiring own shares of the company, or supporting similar activities, or instructing to take such actions as specified in paragraph 3 of this Article;
2) voting in favour of distribution of assets, reduction of capital, share redemption and/or acquisition of own shares by the company as specified in paragraph 3 of this Article, where the management company is authorised to vote on behalf of a collective investment undertaking at the meetings of the bodies of the company;
2. The provisions of this Article on capital reduction shall not apply on a capital reduction, the purpose of which is to offset losses incurred or to include sums of money in a non-distributable reserve provided that, following that operation, the amount of such reserve is not more than 10 % of the reduced capital.
3. The requirements set out in paragraph 1 of this Article shall apply in the following cases:
1) the distribution of assets to shareholders (including but not limited to the payment of dividends and share-related interest) made when on the closing date of the last financial year the equity capital as set out in a company’s set of annual financial statements is, or following the distribution of such assets would become, lower than the amount of the subscribed capital plus those reserves which may be not distributed under the Law on Companies or the articles of association of the company, on the understanding that where the uncalled part of the subscribed capital is not included in the assets shown in the balance sheet, the amount of subscribed capital shall be reduced by the amount corresponding to such part;
2) the distribution to shareholders of assets (including but not limited to the payments of dividends and share-related interest) the amount of which would exceed the amount of the profits at the end of the last financial year plus any profits brought forward and sums drawn from reserves available for this purpose, less any losses brought forward and sums placed to reserve in accordance with legal acts or the articles of association of the company;
3) to the extent that acquisitions of own shares are permitted, the acquisitions of own shares, including shares previously acquired by the company and held by it, and shares acquired by a person acting in his own name but on the company’s behalf, that would have the effect of reducing the net asset value below the amount mentioned in point 1 of this paragraph.
4. In the case specified in point 3 of paragraph 3 of this Article, the requirements for the acquisition of own shares set out by the Law on Companies shall apply.
Article 37. Acquisition of a part of the capital of non-listed companies
1. When a collective investment undertaking acquires, transfers or holds shares of a non-listed company, the management company that manages such collective investment undertaking must notify the supervisory authority about the holding of the voting rights of the non-listed company held by the collective investment undertaking when it reaches, exceeds or falls below the threshold of 10 %, 20 %, 30 %, 50 % and 75 %.
2. The notifications must contain the information about the new distribution of the voting rights, the conditions subject to which control was acquired (including the identities of the different shareholders involved, any natural person or legal persons entitled to exercise voting rights on their behalf and, if applicable, the chain of undertakings through which the voting rights are effectively held, in the case of legal persons – their name and head office and in the case of natural persons – their names, surnames, business addresses) and the date on which control was acquired.
3. When calculating the percentage of voting rights held by a certain collective investment undertaking, account shall be taken not only of the voting rights held directly by it, but also of indirectly managed shares that, inter alia, are managed by entities controlled by the collective investment undertaking and/or by a natural or legal person acting on own behalf but in the interests of the collective investment undertaking or an entity controlled by the collective investment undertaking.
4. The percentage of voting rights shall be calculated on the basis of all the shares to which voting rights are attached even if the exercise thereof is suspended.
5. The notifications referred to in this Article shall be made as soon as possible, but not later than within ten working days after the date on which the proportion of the voting rights of a collective investment undertaking has reached, exceeded or fallen below the relevant threshold or the date when the collective investment undertaking has acquired control over a non-listed company.
6. The provisions of this Article shall not apply when non-listed companies are small or medium-sized companies within the meaning of the Law on Small and Medium-Sized Business Development or when the non-listed companies are special purpose vehicles with the purpose of purchasing, holding or administrating real estate.
7. Provisions of Article 35(1) of this Law shall apply mutatis mutandis to the duty to notify of the acquisition of a holding in the capital of a non-listed company.
Article 38. Informing employees of non-listed controlled companies about the acquisition of control
1. A management company must ensure that the management bodies of a non-listed controlled company inform the employees’ representatives or, where there are none, the employees themselves about the acquisition of the company’s control without undue delay, but not later than within ten working days following the acquisition of the company’s control.
2. A management company must ensure that the management bodies of a non-listed controlled company make available to the employees’ representatives or, where there are none, to the employees themselves a set of annual financial statements of the company not later than within six months following the end of the financial year.
3. A management company must ensure that the management bodies of a non-listed controlled company communicate to the employees’ representatives or, where there are none, to the employees themselves the information referred to in Article 35(3) of this Law not later than within six months following the end of the financial year.
Article 39. Specificities of the acquisition of control over issuers
Provisions of Article 35(1), (2), (3), (6), (7) and (8), Article 36 and Article 38(1) of this Law shall apply mutatis mutandis to management companies that manage collective investment undertakings acquiring control over issuers.
RIGHT OF MANAGEMENT COMPANIES LICENSED IN THE REPUBLIC OF LITHUANIA TO MANAGE COLLECTIVE INVESTMENT UNDERTAKINGS AND MARKET UNITS OR SHARES OF COLLECTIVE INVESTMENT UNDERTAKINGS
Article 40. Right of a management company to market units or shares to professional investors in the Republic of Lithuania
1. A management company shall have the right to market units or shares of any collective investment undertaking intended for informed investors or special collective investment undertaking which it manages and which is established in the Republic of Lithuania or of a collective investment undertaking established in another Member State (hereinafter: a ‘collective investment undertaking established in another Member State’) only to professional investors in the Republic of Lithuania, subject to notification of the supervisory authority in accordance with the procedure laid down in this Law about the intention to market the units or shares, receipt of the supervisory authority’s consent and meeting of other conditions laid down in this Article.
2. A management company must notify the supervisory authority about each collective investment undertaking established in a Member State whose units or shares are intended to be marketed to professional investors in the Republic of Lithuania. The submitted notification must contain:
1) a programme of operations of the management company providing principal information about the collective investment undertaking whose units or shares the management company intends to market;
4) information on where the master collective investment undertaking is established if the collective investment undertaking is a feeder collective investment undertaking;
5) the information referred to in Article 18 of this Law for each the collective investment undertaking whose units or shares the management company intends to market, if such information has not been provided in observance of point 3 of this paragraph;
6) information on the arrangements established to prevent units or shares of a collective investment undertaking from being marketed to retail investors, including in the cases where the management company relies on independent entities to provide investment services in respect of collective investment undertakings.
3. Together with the notification referred to in paragraph 2 of this Article, the management company must provide the instruments of incorporation, unless they can be accessed in state registers or other state information systems.
4. When informing the supervisory authority about a collective investment undertaking whose units or shares a management company intends to market to professional investors in the Republic of Lithuania, the management company shall not be required to provide to the supervisory authority the documents and/or information which it has already provided when applying for the approval of the instruments of incorporation of this collective investment undertaking according to the Law on Collective Investment Undertakings or the Law on Collective Investment Undertakings Intended for Informed Investors, provided that the management company informs the supervisory authority in writing that the content of such documents and/or information remains up-to-date.
5. The supervisory authority must, within 20 working days following receipt of all documents and information referred to in paragraphs 2, 3 and/or 4 of this Article, inform the management company about its consent or objection to starting marketing units or shares of this collective investment undertaking to professional investors in the Republic of Lithuania.
6. The supervisory authority may object to the marketing of units or shares of a collective investment undertaking to professional investors in the Republic of Lithuania only if the activities of the collective investment undertaking carried out by a management company do not or might not comply with the requirements set out in this Law or other legal acts, or where the marketing of units or shares of the collective investment undertaking managed by the management company would be detrimental to the interests of investors.
7. After the supervisory authority gives its consent to marketing of units or shares of a collective investment undertaking, a management company may start marketing the units or shares of the collective investment undertaking to professional investors in the Republic of Lithuania from the date of the notification of the supervisory authority to that effect.
8. The supervisory authority shall notify its consent to start marketing units or shares of a collective investment undertaking to professional investors in the Republic of Lithuania to the supervisory authority of the Member State of the collective investment undertaking.
9. A management company must give notice to the supervisory authority of any planned material changes in the information provided according to paragraphs 2, 3 and/or 4 of this Article in advance, but not later than one month before implementing the changes. If the supervisory authority considers that, pursuant to a planned change, the management company’s management of a collective investment undertaking will no longer comply with this Law, the supervisory authority shall inform the management company without undue delay that the latter is not to implement the planned change.
10. A management company must give notice to the supervisory authority of unplanned material changes in the information provided according to this Article without delay, but not later than within three working days after such a change has occurred. Where following the implemented change the management company’s management of a collective investment undertaking will no longer comply with this Law, the supervisory authority shall request termination of any activity which breaches the provisions of this Law or its implementing legislation and, if necessary, also take the actions set out in Article 58 of this Law.
11. If a collective investment undertaking established in the Republic of Lithuania is a feeder collective investment undertaking, such collective investment undertaking shall have the right to market units or shares only when a master collective investment undertaking is established in the Republic of Lithuania or in another Member State and is managed by a management company licensed in the Republic of Lithuania or in another Member State.
Article 41. Marketing of units or shares of collective investment undertakings managed by a management company in other Member States
1. A management company licensed in the Republic of Lithuania shall have the right to market units or shares of a collective investment undertaking established in a Member State to professional investors also in other Member States if:
1) before starting to market the units or shares of the collective investment undertaking established in the Member State, the management company submits a notification to the supervisory authority in respect of each collective investment undertaking established in the Member State comprising the information referred to in Article 40(2), (3) and/or (4) of this Law;
2. Before starting to market units or shares of a collective investment undertaking established in the Republic of Lithuania, a management company licensed in the Republic of Lithuania shall, together with the notification specified in point 1 of paragraph 1 of this Article, indicate to the supervisory authority the Member State where it intends to market to professional investors the units or shares of the collective investment undertaking and also provide the information about the procedure for marketing the units or shares of the collective investment undertaking.
3. The supervisory authority must, within 20 working days after the date of receipt of all documents and information referred to in paragraphs 1 and 2 of this Article, transmit the notification to the supervisory authorities of the Member States where it is intended that units or shares of a collective investment undertaking established in the Republic of Lithuania or in another Member State be marketed to professional investors if the collective investment undertaking’s activities carried out by the management company comply with this Law or its implementing legislation.
4. Together with the notification, the supervisory authority shall enclose a statement to the effect that the management company licensed in the Republic of Lithuania is authorised to manage collective investment undertakings established in a Member State with a particular investment strategy.
5. Upon transmission of the notification to the supervisory authorities of the Member States where it is intended that units or shares of a collective investment undertaking established in the Republic of Lithuania or in another Member State be marketed, the supervisory authority shall, without delay, notify about the transmission of all required information the management company licensed in the Republic of Lithuania, which may start marketing in the host Member State the units or shares of the collective investment undertaking established in the Member State as of the date of that notification.
6. Where a collective investment undertaking established in a Member State and managed by a management company licensed in the Republic of Lithuania is a feeder collective investment undertaking, the units or shares of such a collective investment undertaking may be marketed in other Member States only when the master collective investment undertaking is also an undertaking established in a Member State and is managed by a management company licensed in the Republic of Lithuania or in another Member State.
7. The supervisory authority must be notified of any planned material changes in the information provided according to paragraphs 1 and 2 of this Article in advance, but not later than one month before implementing the change. Having noticed that, pursuant to a planned change, the management of a collective investment undertaking established in the Republic of Lithuania carried out by the management company established in the Republic of Lithuania will no longer comply with this Law, the supervisory authority shall inform the management company established in the Republic of Lithuania without undue delay that it is not to implement the change.
8. A management company established in the Republic of Lithuania must, without delay, give notice to the supervisory authority of unplanned material changes in the information provided according to paragraphs 1 and 2 of this Article. Where following the implemented change the management of a collective investment undertaking by the management company no longer complies with this Law or its implementing legislation, the supervisory authority shall request the termination of any activity which breaches the provisions of these legal acts and, if necessary, also take other actions set out in Article 58 of this Law.
9. Where the proposed or implemented changes are acceptable to the supervisory authority and do not affect the management of a collective investment undertaking established in a Member State carried out by a management company licensed in the Republic of Lithuania, or the compliance of the management company licensed in the Republic of Lithuania with this Law, the supervisory authority shall, without delay, inform the supervisory authorities of the host Member State of the management company of those changes.
10. The information referred to in paragraphs 1, 2, 3, 4 and 9 of this Article must be provided in the English language.
11. Information on the procedure for marketing units or shares of a collective investment undertaking shall be subject to legal acts of the host Member State and the implementation of this procedure shall be supervised by the supervisory authority of the host Member State.
12. The form of the notification referred to in paragraph 2 of this Article and provided by a management company to the supervisory authority shall be determined by the supervisory authority.
13. The right of a management company to market units or shares of a collective investment undertaking established in a Member State to retail investors shall be subject to legal acts of the host Member State and the implementation of this procedure shall be supervised by the supervisory authority of the host Member State
Article 42. Right of a management company licensed in another Member State to market units or shares of collective investment undertakings to professional investors in the Republic of Lithuania
1. A management company licensed in another Member State shall have the right to market units or shares of collective investment undertakings that it manages to professional investors in the Republic of Lithuania, provided that the supervisory authority has received from the supervisory authority of the Member State of the management company:
1) a statement to the effect that the management company licensed in another Member State is authorised to manage a collective investment undertaking established in the Member State with a particular investment strategy; and
3) the information referred to in Article 41(2) of this Law about the Member State where the management company intends to market units or shares of the collective investment undertaking to professional investors, and the information about the procedure for marketing the units or shares of the collective investment undertaking.
2. Where the supervisory authority has clear and demonstrable grounds to suspect that a management company licensed in another Member State has been or is carrying out any actions that are in conflict with the provisions of this Law, the supervisory authority shall notify the European Securities and Markets Authority and the supervisory authority of the home Member State of the management company in as specific manner as possible and request taking appropriate actions to ensure that the management company licensed in another Member State markets units or shares of a collective investment undertaking in the Republic of Lithuania without infringing this Law.
3. Where the supervisory authority does not receive an answer from the European Securities and Markets Authority and the supervisory authority of the home Member State of the management company, the supervisory authority may request them to provide the information about the actions taken and their outcomes.
4. The information referred to in paragraph 1 of this Article must be provided in the English language.
Article 43. Right of a management company and of a management company licensed in another Member State to market units or shares of collective investment undertakings established in another Member State to retail investors in the Republic of Lithuania
1. A management company licensed in another Member State to manage collective investment undertakings shall have the right to market to retail investors units or shares of collective investment undertakings established in another Member State that it manages only when the supervisory authority grants authorisation to such a management company to market units or shares of a collective investment undertaking it manages to retail investors in the Republic of Lithuania.
2. The authorisation referred to in paragraph 1 of this Article may be granted if units or shares of a collective investment undertaking established in another Member State are marketed to retail investors in the home Member State and the collective investment undertaking meets the following requirements:
1) its units or shares are admitted to trading on a regulated market registered in the Member State or in a multilateral trading facility; the investment strategy of the collective investment undertaking satisfies the requirements for special collective investment undertakings set out in the Law on Collective Investment Undertakings as regards investment objects and diversification;
2) in the case other than referred to in point 1 of this paragraph – the investment strategy of the collective investment undertaking satisfies the requirements for special collective investment undertakings set out in the Law on Collective Investment Undertakings as regards investment objects, diversification, leverage (borrowing), information provided to investors and the exercise of investors’ rights.
3. In order to obtain the authorisation referred to in paragraph 1 of this Article, a management company, a management company licensed in another Member State to manage collective investment undertakings must provide to the supervisory authority of the home Member State of a collective investment undertaking a statement to the effect that the management company is authorised to manage the collective investment undertaking and to market to retail investors its units or shares in that Member State and the document attesting that the management company and the collective investment undertaking it manages comply with the requirements set out in this Article and the documents and information supporting that:
1) in the case referred to in point 1 of paragraph 2 of this Article – a statement of the operator of a regulated market or of a multilateral trading facility to the effect that the units or shares of the collective investment undertaking are traded on that market or in that facility, the documents and information specifying the investment objects in which the collective investment undertaking’s assets are invested and compliance with diversification requirements, the key investor information document, if applicable, or the key information document; or
2) in the case referred to in point 2 of paragraph 2 of this Article – the documents and information referred to in points 1 to 5 of paragraph 2 and in paragraph 3 of Article 40 of this Law, the key investor information, where applicable, or the key information, information on the procedure for marketing the units or shares of the collective investment undertaking in the Republic of Lithuania; information on the management company’s representative in the Republic of Lithuania – the head office (address) in the Republic of Lithuania, its phone, e-mail, the address of the website where the information on the collective investment undertaking is published, explanations on the exercise of the right of investors to access information and changes in it, to receive payments when redeeming units or shares and making other payments and on the settlement of disputes with the investors.
4. In the case referred to in point 2 of paragraph 3 of this Article, a representative of a management company, a management company licensed in another Member State to manage collective investment undertakings may be only a legal person established in the Republic of Lithuania and authorised to provide investment services, also a branch of a legal person established in a Member State authorised to provide investment services in the Republic of Lithuania.
5. The supervisory authority shall, within 20 working days following receipt of documents and information by the supervisory authority, have the right to request that a management company, a management company licensed in another Member State to manage collective investment undertakings provides to the supervisory authority additional documents and/or information attesting the compliance of a collective investment undertaking with the requirements set out in this Article.
6. The key investor information document, where applicable, or the key information document must be drawn up in the Lithuanian language. Other documents or information must be drawn up in the Lithuanian language and/or English language.
7. The supervisory authority must, within 40 working days following receipt of all documents and information to be provided under paragraphs 3 and 5 of this Article, inform a management company, a management company licensed in another Member State to manage collective investment undertakings about the granting or refusal of an authorisation to start marketing the units or shares of a collective investment undertaking to retail investors in the Republic of Lithuania.
8. A management company, a management company licensed in another Member State may start marketing units or shares of a collective investment undertaking established in another Member State to retail investors in the Republic of Lithuania from the date of adoption by the supervisory authority of a decision to grant the authorisation referred to in paragraph 1 of this Article to the management company, the management company licensed in another Member State.
9. A management company, a management company licensed in another Member State must give notice to the supervisory authority of any planned material changes in the information referred to in paragraph 3 of this Article in advance, but not later than one month before implementing the planned changes. If, according to the assessment of the supervisory authority, following a planned change the requirements of this Article will no longer be met, the supervisory authority shall inform the management company without undue delay that the latter is not to implement the planned change.
10. A management company, a management company licensed in another Member State must, without delay, give notice to the supervisory authority of unplanned material changes in the information referred to in paragraph 3 of this Article. Where following the implemented change the requirements of this Article are no longer met, the supervisory authority shall request the termination of any activity which breaches the provisions of this Law or its implementing legislation and, if necessary, also take other actions set out in Article 58 of this Law.
11. Provisions of Article 42(2) and (3) of this Law, except for the provisions regarding the European Securities and Markets Authority, shall apply mutatis mutandis to the supervisory authority.
12. This Article shall apply mutatis mutandis to collective investment undertakings established in another Member State and intended for investors who satisfy the criteria set out in the Law on Collective Investment Undertakings for Informed Investors. The authorisation referred to in paragraph 1 of this Article may be granted to such collective investment undertakings if:
1) the collective investment undertaking established in another Member State meets the requirements set out in the Law on Collective Investment Undertakings for Informed Investors, and its units or shares may be marketed only to a strictly defined group of retail investors in the home Member State who satisfy the criteria set out in the Law on Collective Investment Undertakings for Informed Investors and
2) a management company, a management company licensed in another Member State provides the following supporting documents and information: the statement and the attesting document referred to in paragraph 3 of this Article and the documents and information referred to in points 1 to 5 of paragraph 2 and in paragraph 3 of Article 40 of this Law.
13. This Article shall apply mutatis mutandis to the acquisition of the right of a management company, as well as of a management company licensed in another Member State to market units or shares of collective investment undertakings established in a third country that they manage to retail investors in the Republic of Lithuania.
Article 44. Conditions for the provision of services of management companies in other Member States
1. A management company shall have the right, either directly or through a branch:
1) to manage a collective investment undertaking established in another Member State where the licence of the management company provides for the possibility to manage that type of collective investment undertakings;
2. A management company intending to manage a collective investment undertaking established in another Member State and/or to provide the services referred to in points 1 to 4 of Article 4(3) of this Law for the first time shall communicate to the supervisory authority:
1) information on the Member State in which it intends to manage the collective investment undertaking directly or by establishing a branch and/or to provide the services referred to in points 1 to 4 of Article 4(3) of this Law;
3. When establishing a branch of a management company licensed in the Republic of Lithuania, the organisational structure of the branch, the contact details of the head office of the branch in another Member State and of the persons responsible for the management of the branch shall be communicated additionally.
4. The supervisory authority shall, within 30 calendar days of receiving the documentation in accordance with paragraph 2 of this Article or within 60 calendar days of receiving the documentation in accordance with paragraph 3 of this Article, transmit all documents to the supervisory authority of the host Member State of the management company licensed in the Republic of Lithuania. The supervisory authority shall enclose a statement to the effect that the management company has been licensed.
5. Such transmission shall occur only if the management of a collective investment undertaking by the management company licensed in the Republic of Lithuania and activities of the management company comply and will continue to comply with the provisions of this Law and its implementing legislation.
6. The supervisory authority shall immediately notify the management company licensed in the Republic of Lithuania about the transmission of the documents effected in the manner specified in paragraph 4 of this Article. Upon receipt of the notification, the management company may start to provide its services in the host Member State of the management company.
Article 45. Right of a management company licensed in another Member State to provide services in the Republic of Lithuania
1. A management company licensed in another Member State shall have the right, either directly or through a branch:
1) to manage a collective investment undertaking established in the Republic of Lithuania where the licence of the management company provides for the possibility to manage that type of collective investment undertakings;
2. This right may be granted to a management company licensed in another Member State only provided that the supervisory authority of the management company licensed in another Member State has communicated to the supervisory authority the information and documents referred to in Article 44(2) and, where relevant, in Article 44(3) of this Law attesting the licensing of the management company.
3. A management company licensed in another Member State shall have the right, either directly or through a branch, to establish collective investment undertakings in the Republic of Lithuania and to market their units or shares in accordance with the procedure laid down by this Law, the Law on Law on Collective Investment Undertakings or the Law on Collective Investment Undertakings for Informed Investors.
Article 46. Operating conditions for management companies that manage non-EU collective investment undertakings
1. A management company shall have the right to manage non-EU collective investment undertakings the units or shares of which are not marketed in the Republic of Lithuania and/or in other Member States provided that:
1) the supervisory authority and the supervisory authorities of the third country where the collective investment undertaking is established cooperate and exchange information;
2. A management company shall have the right to market units or shares of non-EU collective investment undertakings to professional investors in the Republic of Lithuania and/or in other Member States provided that:
1) cooperation and information exchange arrangements are in place between the supervisory authority and the supervisory authority of the third country of a collective investment undertaking;
2) the supervisory authorities of the Republic of Lithuania and of the third country have signed an agreement which fully complies with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and Capital and ensures an effective exchange of information in tax matters, including any multilateral tax agreements;
3) other Member States where the management company intends to market units or shares of the non-EU collective investment undertakings and the third country in which a collective investment undertaking is established have signed agreements which fully comply with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and Capital and ensure an effective exchange of information in tax matters, including any multilateral tax agreements;
4) the third country where the collective investment undertaking is established is not listed as a Non-Cooperative Country and Territory by FATF (Financial Action Task Force);
5) there are no legal obstacles preventing the supervisory authority from monitoring the activities of a non-EU collective investment undertaking;
3. Where the supervisory authority of the Member State where a management company licensed in the Republic of Lithuania intends to market units or shares of non-EU collective investment undertakings disagrees with the assessment made on the application of points 1 and 4 of paragraph 2 of this Article by the supervisory authority, the supervisory authority of that Member State may refer the matter to the European Securities and Markets Authority which may act in accordance with the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010.
4. Before starting to market units or shares of a non-EU collective investment undertaking to professional investors in the Republic of Lithuania, a management company shall submit a notification to the supervisory authority in respect of each collective investment undertaking whose units or shares the management company intends to market to professional investors. The marketing requirements applied to the management company and the rights and responsibilities of the supervisory authority upon receipt of the notification in respect of each non-EU collective investment undertaking which is managed by the management company and the units or shares of which the management company intends to market to professional investors in the Republic of Lithuania shall be specified mutatis mutandis in Article 40 of this Law.
5. Before starting to market units or shares of a non-EU collective investment undertaking in other Member States, a management company licensed in the Republic of Lithuania shall submit a notification to the supervisory authority in respect of each non-EU collective investment undertaking whose units or shares the management company intends to market to professional investors. The marketing requirements applied to the management company and the rights and responsibilities of the supervisory authority upon receipt of the notification in respect of each non-EU collective investment undertaking which is managed by the management company licensed in the Republic of Lithuania and the units or shares of which the management company intends to market in other Member States shall be specified mutatis mutandis in Article 41 of this Law.
6. The supervisory authority shall inform the European Securities and Markets Authority that a management company has been authorised to market units or shares of a non-EU collective investment undertaking in the Republic of Lithuania and/or in other Member States.
Article 47. Marketing in the Republic of Lithuania of units or shares of a non-EU collective investment undertaking managed by a management company established in the Republic of Lithuania or in another Member State
1. The supervisory authority may authorise a management company licensed in the Republic of Lithuania or in another Member State to market to professional investors in the territory of the Republic of Lithuania the units or shares of non-EU collective investment undertakings it manages or the units or shares of feeder collective investment undertakings established in the Republic of Lithuania or in another Member State whose master collective investment undertakings are not established in the Republic of Lithuania or in another Member State provided that:
1) the management company complies with all the requirements except for the procedure for transferring assets to a depositary. In that case, the management company must ensure that one or more entities are appointed to perform the functions specified in Article 24(9) and (13) and Article 28 of this Law;
2) cooperation and information exchange arrangements are in place between the supervisory authority and the supervisory authority of the third country where a collective investment undertaking is established;
3) the third country where the collective investment undertaking is established is not listed as a Non-Cooperative Country and Territory by FATF (Financial Action Task Force);
4) there are no other legal obstacles preventing the supervisory authority from effectively monitoring the activities of a non-EU collective investment undertaking;
Article 48. Member State of reference of a non-EU management company
1. In order to manage or market in the Republic of Lithuania units or shares of collective investment undertakings, a non-EU management company must obtain a licence issued by a Member State of reference.
2. Where a non-EU management company intends to manage one or several collective investment undertakings established in the Republic of Lithuania, the Member State of reference of that management company shall be the Republic of Lithuania, and the supervisory authority shall be responsible for the proper monitoring and licensing procedure of the management company.
3. Where a non-EU management company intends to manage several collective investment undertakings established in the Republic of Lithuania and in other Member States and does not intend to market units or shares of collective investment undertakings it manages in the Republic of Lithuania and/or in other Member States, the Republic of Lithuania shall be considered the Member State of reference of the management company if that is the State where most of the collective investment undertakings managed by the management company are established or where the largest amount of assets is being managed.
4. Where a non-EU management company intends to market units or shares of only one collective investment undertaking established in the Republic of Lithuania and only in the Republic of Lithuania, the Republic of Lithuania shall be considered the Member State of reference of the management company concerned.
5. Where a non-EU management company has also established a collective investment undertaking in the Republic of Lithuania, the Republic of Lithuania may also be the Member State of reference of the management company.
6. Where a non-EU management company intends to market units or shares of only one collective investment undertaking established in a third country and only in the Republic of Lithuania, the Republic of Lithuania must be considered the Member State of reference of the non-EU management company.
7. Where a non-EU management company intends to market units or shares of only one collective investment undertaking established in the Republic of Lithuania or in another Member State, but in different Member States, the Republic of Lithuania may be considered the Member State of reference of the non-EU management company if the units or shares of that collective investment undertaking are marketed in it.
8. Where a non-EU management company manages a collective investment undertaking established in another Member State the units or shares of which are marketed in the Republic of Lithuania, the Republic of Lithuania may be considered the Member State of reference of the management company.
9. Where a non-EU management company intends to market in the Republic of Lithuania and in other Member States the units or shares of only one non-EU collective investment undertaking, the Republic of Lithuania may be considered the Member State of reference of the management company concerned.
10. Where a non-EU management company intends to market in the Republic of Lithuania the units or shares of several collective investment undertakings established in the Republic of Lithuania or in another Member State, the Republic of Lithuania shall be considered to be the Member State of reference where the management company intends to develop effective marketing in the Republic of Lithuania for the units or shares of most of those collective investment undertakings.
11. Where a non-EU management company intends to market in the Republic of Lithuania and in other Member States the units or shares of several collective investment undertakings established only in the Republic of Lithuania, the Republic of Lithuania may be considered to be the Member State of reference.
12. Where a non-EU management company intends to market in the Republic of Lithuania or in another Member State the units or shares of several collective investment undertakings established in the Republic of Lithuania or in another Member State and units or shares of non-EU collective investment undertakings, or market in the Republic of Lithuania and in another Member State the units or shares of several non-EU collective investment undertakings, the Member State of reference may be the Republic of Lithuania if the non-EU management company intends to develop effective marketing in the Republic of Lithuania for the units or shares of most of those collective investment undertakings.
13. Where a non-EU management company intends to market units or shares of a collective investment undertaking established in a Member State in different Member States, including the Republic of Lithuania, but the collective investment undertaking is not established in the Republic of Lithuania, the Republic of Lithuania may be the Member State of reference if it is where the management company intends to develop effective marketing for the units or shares.
14. Where according to the provisions of this Article the Republic of Lithuania may alternatively be a Member State of reference, a non-EU management company shall submit a request to determine the Member State of reference to all Member States which are possible Member States of reference according to the provisions of this Law. Having received the request of the non-EU management company and in cooperation with supervisory authorities of other Member States, the supervisory authority shall, within 30 calendar days, jointly decide the Member State of reference for the non-EU management company.
15. Having received a positive or negative advice from the European Securities and Markets Authority according to Article 49(1) of this Law, the supervisory authority shall take a licensing decision and not later than within five working days notify about that a non-EU management company. The date of sending the notification shall be considered to be the date of notification.
Article 49. Cooperation with the European Securities and Markets Authority in determining the Member State of reference
1. Where in accordance with the procedure and conditions set out in Article 48 of this Law the Republic of Lithuania is determined as the Member State of reference, the supervisory authority must, without undue delay but not later than within five working days, inform of the decision the European Securities and Markets Authority and request the European Securities and Markets Authority for advice on the performed assessment. In its notification to the European Securities and Markets Authority, the supervisory authority shall provide the justification by the management company of its assessment regarding the Member State of reference and information on the marketing strategy of units or shares of a collective investment undertaking.
2. Where the supervisory authority disagrees with the determination of the Member State of reference of a management company, the supervisory authority concerned may refer the matter to the European Securities and Markets Authority which may act in accordance with the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010.
3. Where it is established that the Member State of reference is the Republic of Lithuania and, in the opinion of the supervisory authority, a non-EU management company is in breach of its obligations under this Law, the supervisory authority shall notify the European Securities and Markets Authority thereof within 10 calendar days, setting out full reasons.
Article 50. Change of the Member State of reference of a non-EU management company
1. The determination of the Member State of reference shall not be affected by the further business development of a management company in the European Union or the European Economic Area, unless this Law specifies otherwise.
2. Where the Member State of reference is the Republic of Lithuania and a management company changes its strategy of marketing of units or shares within two years of its licensing and where that change would have affected the determination of the Member State of reference, the management company shall, without delay but no later than within ten working days, notify the supervisory authority of the change before implementing it and shall indicate the proposed Member State of reference in accordance with the criteria set out in Article 48 of this Law.
3. Having decided that the choice of the management company under paragraph 2 of this Article is appropriate, the supervisory authority must, without undue delay but not later than within five working days, inform of the decision the European Securities and Markets Authority and request the European Securities and Markets Authority for advice on the performed assessment.
4. Where the supervisory authority agrees with the assessment made by the management company, the supervisory authority shall inform the supervisory authority of the new Member State of reference of the change. The supervisory authority shall, without undue delay, transfer a copy of the issued licence and of the supervision file relating to the management company to the new Member State of reference. From the date of transmission of the licence and of the supervision file, the supervisory authority shall no longer be competent for licensing and supervising the management company.
5. Where the supervisory authority disagrees with the determination of the Member State of reference proposed by the management company or receives from the European Securities and Markets Authority a negative advice regarding the selected new Member State of reference, the supervisory authority may:
1) request that the management company, having regard to the advice, selects another Member State of reference; or
2) disagree with the advice of the European Securities and Markets Authority. In that case, the supervisory authority shall notify its disagreement and reasons to supervisory authorities of all Member States in which the non-EU management company intends to market the units or shares of a collective investment undertaking it manages.
RIGHT OF NON-EU MANAGEMENT COMPANIES TO MANAGE COLLECTIVE INVESTMENT UNDERTAKINGS ESTABLISHED IN THE REPUBLIC OF LITHUANIA AND TO MARKET UNITS OR SHARES OF COLLECTIVE INVESTMENT UNDERTAKINGS THEY MANAGE TO PROFESSIONAL INVESTORS IN THE REPUBLIC OF LITHUANIA
Article 51. Operating conditions for non-EU management companies that manage collective investment undertakings established in the Republic of Lithuania and/or market units or shares of collective investment undertakings to professional investors in the Republic of Lithuania
1. Before starting its activities, a non-EU management company intending to manage collective investment undertaking established in the Republic of Lithuania, and/or to market units or shares of collective investment undertakings it manages to professional investors in the Republic of Lithuania must obtain a licence from the supervisory authority of its Member State of reference.
2. Where the Republic of Lithuania is the Member State of reference of a management company, the supervisory authority shall issue a licence provided that:
1) the non-EU management company has an constituted representative in the Republic of Lithuania who is a representing person for the management company in the European Union or the European Economic Area, and any official correspondence between the management company and other entities takes place through the legal representative;
2) the non-EU management company intending to manage a collective investment undertaking and/or to market units or shares of the collective investment undertaking complies with all requirements set out in this Law except for Articles 41-45;
3) the non-EU management company intending to manage a collective investment undertaking and/or marketing units or shares of the collective investment undertaking in the Republic of Lithuania has applied for the licence in accordance with the procedure set out in this Law and subject to the reservations of paragraph 7 of this Article;
3. The supervisory authority may, on the basis of the regulatory technical standards developed by the European Securities and Markets Authority, decide that a non-EU management company and/or a non-EU collective investment undertaking the units or shares of which are marketed in the Republic of Lithuania is not in a position to comply with all the requirements established for its activities if the non-EU management company can demonstrate that it is impossible to combine such compliance with compliance with the mandatory law provisions to which the non-EU management company and/or the non-EU collective investment undertaking is subject; however, the law to which the non-EU management company and/or the non-EU collective investment undertaking is subject ensures the same level of protection to the investors of the collective investment undertaking, and the non-EU management company and/or the non-EU collective investment undertaking complies with that law.
4. The supervisory authority must, without undue delay but not later than within five working days, inform of the decision the European Securities and Markets Authority, stating its reasons, and request the European Securities and Markets Authority for advice on the assessment.
5. A non-EU management company that manages a collective investment undertaking established in the Republic of Lithuania shall have the right to market its units or shares in the Republic of Lithuania only having submitted to the Member State of reference an appropriate notification about its activities and having received confirmation from the Member State of reference that the management company is authorised to start marketing the units or shares. The provisions of Article 41(2) to (11) of this Law shall apply mutatis mutandis to the notification procedure and change of information.
6. A non-EU management company that manages a non-EU collective investment undertaking shall have the right to market its units or shares in the Republic of Lithuania only having submitted to the Member State of reference an appropriate notification about its activities and having received confirmation that the management company is authorised to start marketing the units or shares. The provisions of Article 41(2) to (8) of this Law shall apply mutatis mutandis to the notification procedure and change of information. The supervisory authority shall ensure the possibility to receive the information from Member States of reference in electronic format.
7. A non-EU management company intending to manage a collective investment undertaking established in the Republic of Lithuania (if the Republic of Lithuania is the Member State of reference) must communicate to the supervisory authority the information whose communication procedure and content shall mutatis mutandis be subject to the provisions of Article 44(2) to (6) of this Law.
8. The supervisory authority shall notify the European Securities and Markets Authority about a licence to manage collective investment undertakings.
9. The provisions of Article 41(7), (8) and (9) of this Law shall apply mutatis mutandis to the procedure for the adoption, approval of and objection to any planned or implemented changes in relation to the information submitted according to this Article.
10. The information provided by a non-EU management company about collective investment undertakings established in the Republic of Lithuania it manages and about those collective investment undertakings managed by the non-EU management company the units or shares of which may be marketed under a licence shall be subject to the requirements of points 6 to 13 of Article 6(2) of this Law regarding the provision of information.
11. Where the supervisory authority or the supervisory authority of the third country where a management company is established rejects a request to exchange information, the supervisory authorities concerned may refer the matter to the European Securities and Markets Authority, which may act in accordance with the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010.
12. Where the supervisory authority disagrees with the additional conditions imposed by the supervisory authority of another Member State on a non-EU management company licensed in another Member State, the supervisory authority may refer the matter to the European Securities and Markets Authority, which may act in accordance with the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010.
Article 52. Right of non-EU management companies to manage collective investment undertakings established in the Republic of Lithuania or in other Member States
1. A non-EU management company holding a licence issued by the Member State of reference and indicated in Article 51 of this Law shall have the right, either directly or through a branch, to manage collective investment undertakings established in the Republic of Lithuania where the licence provides for the possibility to manage that type of collective investment undertakings.
2. Where a non-EU management company intends to manage collective investment undertakings established in other Member States and the Member State of reference is the Republic of Lithuania, the non-EU management company shall communicate to the supervisory authority information on the Member State in which it intends to manage, either directly or by establishing a branch, the collective investment undertakings established in that Member State and a programme of operations stating in particular the services it intends to perform and identifying the collective investment undertakings it intends to manage.
3. Where a non-EU management company intends to manage a collective investment undertaking established in another Member State by establishing a branch, in addition to the information required according to paragraph 2 of this Article, the management company shall submit the information about the organisational structure of the branch, the head office in another Member State, and the names, surnames and contact data of the persons responsible for the management of the branch.
4. The supervisory authority shall, within 30 calendar days of receiving the complete documentation in accordance with paragraph 2 of this Article or within 60 calendar days of receiving the complete documentation in accordance with paragraph 3 of this Article, transmit that documentation to the supervisory authority of the host Member State of the management company. Such transmission shall occur only if the management of a collective investment undertaking by the management company complies and will comply with this Law, and the non-EU management company otherwise complies with this Law. The supervisory authority shall also enclose a statement to the effect that the supervisory authority has issued a licence to the non-EU management company.
5. The supervisory authority shall immediately notify the non-EU management company and the European Securities and Markets Authority about the transmission of the documentation referred to in paragraph 4 of this Article.
6. A non-EU management company must give notice to the supervisory authority of any planned changes in the information provided according to this Article in advance, but not later than 30 calendar days before implementing the planned changes. If the supervisory authority considers that, pursuant to a change, the management of a collective investment undertaking by the management company would no longer comply with this Law or that the management company would otherwise no longer comply with this Law, the supervisory authority must inform the management company without undue delay that it is not to implement the planned change. In other case, the supervisory authority shall without undue delay inform the supervisory authority of the host Member State of the management company of those changes.
Article 53. Cooperation with the European Securities and Markets Authority on matters of activities of a non-EU management company
1. Where the Republic of Lithuania is not the Member State of reference of a non-EU management company but it disagrees with the licensing of the non-EU management company by the supervisory authority of the Member State of reference of the non-EU management company, the supervisory authority may request action according to Regulation (EU) No 1095/2010 from the European Securities and Markets Authority, which may act in accordance with the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010.
2. Where the Republic of Lithuania is the Member State of reference and the supervisory authority, acting in accordance with Article 51(3) of this Law, decides to issue a licence to a non-EU management company and the advice received from the European Securities and Markets Authority according to Article 51(4) of this Law is negative, the supervisory authority may issue the licence to the non-EU management company, however the supervisory authority shall give notice of such licensing, stating its reasons, to supervisory authorities of all Member States in which the non-EU management company intends to market units or shares of a collective investment undertaking it manages.
3. Where the Republic of Lithuania is the Member State of reference, the supervisory authority shall inform the European Securities and Markets Authority of the outcome of the licensing process, about any changes in or withdrawal of a licence issued to a non-EU management company, applications for the licence that have been rejected and shall provide data about non-EU management companies having asked for the licence and the reasons for the rejection of the applications.
4. The supervisory authority shall make every effort to comply with the guidelines and recommendations drafted by the European Securities and Markets Authority according to Article 16 of Regulation (EU) No 1095/2010.
5. Within two months of the issuance of a guideline or recommendation of the European Securities and Markets Authority, the supervisory authority shall confirm whether it complies or intends to comply with that guideline or recommendation. In the event that the supervisory authority does not comply or does not intend to comply, it shall inform the European Securities and Markets Authority, stating its reasons.
Article 54. Conditions of marketing units or shares of collective investment undertakings managed by a non-EU management company to professional investors in the Republic of Lithuania
1. A non-EU management company shall have the right to market units or shares of a collective investment undertaking it manages to professional investors in the territory of the Republic of Lithuania, provided that the management company complies with the requirements of transparency and disclosure of information to investors, submits to the supervisory authority the annual reports referred to in Article 22 of this Law and meets other requirements set out in this Article.
2. Units or shares of a collective investment undertaking managed by a non-EU management company may be marketed in the Republic of Lithuania only if appropriate cooperation agreements for the purpose of systemic risk oversight and in line with international standards are in place between the supervisory authority, the supervisory authority of the third country of the management company and the supervisory authority of the collective investment undertaking in order to ensure an efficient exchange of information that allows the supervisory authority of the respective Member State to carry out its duties in accordance with this Law.
3. In case the supervisory authority or the supervisory authority of a third country rejects a request to exchange information, the supervisory authorities concerned may refer the matter to the European Securities and Markets Authority, which may act in accordance with the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010.
4. Units or shares of collective investment undertakings managed by a non-EU management company may be marketed in the Republic of Lithuania only if the third country where the management company and the collective investment undertaking are established is not listed as a Non-Cooperative Country and Territory by FATF (Financial Action Task Force).
Article 55. Supervisory authority
1. The supervisory authority shall be responsible for the supervision of management companies established in the Republic of Lithuania and for the supervision of depositaries of collective investment undertakings established in the Republic of Lithuania. In the cases specified in this Law, the supervisory authority shall be responsible for the supervision of the management companies and depositaries of collective investment undertakings established in other Member States, however, only to the extent the activities of such undertakings need to be supervised and monitored with respect to activities thereof in the Republic of Lithuania.
2. Where the Republic of Lithuania is the host Member State of a management company, and the management company established in another Member State or a third country manages collective investment undertakings established in the Republic of Lithuania and/or markets units or shares of collective investment undertakings it manages by establishing a branch, the supervisory authority shall be responsible for compliance of the management company with the requirements set out in Article 13 of this Law.
3. Where the Republic of Lithuania is the host Member State of a management company and the supervisory authority ascertains that the management company that manages collective investment undertakings established in the Republic of Lithuania and/or markets units or shares of collective investment undertakings it manages in the Republic of Lithuania, whether or not through a branch, infringes the requirements of this Law in relation to which the supervisory authority has responsibility for supervising compliance, the supervisory authority shall require the management company to put an end to the activities infringing the requirements of this Law and inform the supervisory authority of the home Member State of the management company thereof.
4. Where the management company refuses to provide the supervisory authority with information or fails to put an end to the infringement referred to in paragraph 3 of this Article within an established term, the supervisory authority shall inform the supervisory authority of the home Member State of the management company thereof.
5. Where, despite the sanctions imposed by the supervisory authority of the home Member State or because the sanctions imposed prove to be inadequate or because the particular sanction is not available, the management company continues to refuse to provide the information requested by the supervisory authority and persists in infringing legal acts of the Republic of Lithuania, the supervisory authority shall have the right, after informing the supervisory authority of the home Member State of the management company, to take measures to prevent any further infringements. For that purpose, the supervisory authority shall have at its disposal all measures provided for in legal acts of the Republic of Lithuania, including those referred to in Articles 58 and 61 of this Law, and the right, to the extent necessary, to prevent the marketing of units or shares of collective investment undertakings in the Republic of Lithuania, and, if necessary, the initiation of transactions by the management company in the Republic of Lithuania. Where the management company manages collective investment undertakings established in the Republic of Lithuania, the supervisory authority shall have the right to require the management company to cease managing those collective investment undertakings.
6. Where the Republic of Lithuania is the host Member State of a management company and the supervisory authority has clear and demonstrable grounds for believing that the management company fails to comply with the requirements in relation to which the supervisory authority has no responsibility for supervising compliance, the supervisory authority shall inform the supervisory authority of the home Member Sate of the management company thereof.
7. Where, despite the sanctions imposed by the supervisory authority of the home Member State or because the sanctions imposed prove to be inadequate or because the supervisory authority of the home Member State fails to act within a reasonable timeframe, the management company persists in acting in a manner that is prejudicial to the interests of the investors of a collective investment undertaking, the financial stability or the integrity of the market in the Republic of Lithuania, the supervisory authority shall have the right, after informing the supervisory authority of the home Member State of the management company, to take all appropriate measures needed in order to protect the investors of the collective investment undertaking concerned in order to protect the financial stability and the integrity of the market in the Republic of Lithuania. For that purpose, the supervisory authority shall have the right to prevent further marketing of units or shares of the collective investment undertaking in the Republic of Lithuania.
8. The procedure laid down in paragraphs 6 and 7 of this Article shall also apply in the event that the Republic of Lithuania is the host Member State of a management company and the supervisory authority has clear and demonstrable grounds for disagreement with a decision of the Member State of reference to issue a licence to a non-EU management company.
9. Where the Republic of Lithuania is the home Member State of a management company and the supervisory authority receives from the supervisory authority of the host Member State of the management company a notification that the management company infringes the requirements in relation to which the supervisory authority of the host Member State has responsibility for supervising compliance according to Directive 2011/61/EU and the management company refuses to provide the supervisory authority of the host Member State with information or fails to take the necessary steps to prevent the infringements, the supervisory authority must:
1) without delay take all appropriate measures provided for by legal acts necessary to ensure that the management company provides the information requested by the supervisory authority of the host Member State of the management company or puts an end to the infringement;
2) request the necessary information from the supervisory authority of the host Member State of the management company;
10. Where the Republic of Lithuania is the home Member State of a management company and the supervisory authority receives from the supervisory authority of the host Member State of the management company a notification that the management company infringes the requirements in relation to which the supervisory authority has responsibility for supervising compliance, the supervisory authority must take all steps provided for by legal acts, including requesting information from the supervisory authorities in third countries.
11. Where the supervisory authority disagrees on the measures taken by the supervisory authority of another Member State pursuant to paragraphs 3-10 of this Article, the supervisory authority concerned may refer the matter to the European Securities and Markets Authority, which may act in accordance with the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010.
12. The supervisory authority shall exercise its supervisory functions in accordance with this Law, the Law on Markets in Financial Instruments, the Law of the Republic of Lithuania on the Bank of Lithuania and shall have the rights and responsibilities prescribed for a competent authority by this Law and other laws of the Republic of Lithuania, also by Regulation (EU) No 345/2013, Regulation (EU) No 346/2013, Regulation (EU) No 2017/1131 and Regulation (EU) No 2019/1156.
Article 56. Functions and rights of the supervisory authority
The supervisory authority shall perform the following functions:
1) issue, suspend and withdraw licences of management companies and impose sanctions specified by this Law;
2) issue licences to non-EU management companies where the Republic of Lithuania is a Member State of reference;
4) on request of the supervisory authority of a management company’s host Member State where the management company manages and/or markets units or shares of a collective investment undertaking, provide the information necessary for the supervision of the management company’s compliance with the applicable rules for which that competent authority is responsible;
5) perform other functions prescribed in this Law and other laws of the Republic of Lithuania, Regulation (EU) No 345/2013, Regulation (EU) No 346/2013, Regulation (EU) No 2017/1131 and Regulation (EU) No 2019/1156.
2. In addition to other duties and rights specified in this Law and other legal acts, the supervisory authority shall have the right, in performing the functions assigned to it:
1) to require the depositary and the management company to provide the information necessary for performing the functions of the supervisory authority with respect to these undertakings, including the management companies established in other Member States and in third countries that manage collective investment undertakings established in the Republic of Lithuania and/or market units or shares of collective investment undertakings they manage in the Republic of Lithuania;
2) to take all due measures established by legal acts to ensure that management companies and depositaries comply with the requirements set out by this Law and other legal acts at all times;
3. In performing the functions delegated to it under Regulation (EU) No 345/2013, Regulation (EU) No 346/2013 and Regulation (EU) No 2019/1156, the supervisory authority shall have the rights specified in points 1 and 2 of paragraph 2 of this Article, in points 8 and 9 of Article 60(1) of this Law and in points 2, 3, 6, 7, 8, 9, 10 and 11 of Article 42(4) and Article 42(8) and (9) of the Law on the Bank of Lithuania.
Article 57. Protection of information received for the purpose of supervision
Article 58. Rights of the supervisory authority in considering infringements of legal acts regulating activities of management companies
1. The supervisory authority shall organise and carry out inspections in order to determine compliance with this Law and other legal acts the supervision of compliance wherewith is assigned to the remit of the supervisory authority.
2. Requirements for inspections organised by the supervisory authority shall be set out in Article 421 of the Law on the Bank of Lithuania. In performing an inspection, employees of the supervisory authority shall have the rights provided for in the Law on the Bank of Lithuania and this Law.
3. Where the supervisory authority establishes or has valid grounds to suspect infringement of legal acts the supervision of compliance wherewith is assigned to its remit or any irregularities in a management company’s activities, as well as where the stability and sound activities of the management company or the interests of the public, investors and/or members are threatened, the supervisory authority shall issue to the management company the following mandatory instructions in accordance with the procedure laid down by the Law on the Bank of Lithuania:
2) to ban for up to three months the initiation of transactions of acquisition of investment instruments for the account of a collective investment undertaking;
3) to eliminate the infringements of the legal acts or the irregularities of the activities within the time limit set by the supervisory authority;
5) to provide the supervisory authority with additional information or to provide it more frequently with the information necessary for the performance of supervisory functions;
4. Where the supervisory authority establishes or has valid grounds to suspect any infringements of legal acts or irregularities in a management company’s activities, as well as when the stability and sound activities of the management company or the interests of the public, investors and/or members are threatened, the supervisory authority shall have the right mutatis mutandis, acting in accordance with the procedure laid down in Article 421 of the Law on the Bank of Lithuania applicable to permissions of the court, to seek provisional sequestration of the persons’ assets. The supervisory authority’s requests for sequestration of assets shall be investigated by Vilnius Regional Administrative Court.
5. Management companies must comply with the mandatory instructions specified in paragraph 3 of this Article within the time limits set by the supervisory authority and notify the supervisory authority thereof in writing without delay, but not later than on the next working day after complying with the instruction in question.
Article 59. Cooperation of the supervisory authority with other supervisory authorities
1. Personal data that the supervisory authority is obliged or intends to manage may be transferred to the supervisory authority of another Member State or the supervisory authority of third country in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ 2016 L 119, p. 1).
2. The adequacy of the level of protection secured by a Member State or a third country shall be assessed taking account of the circumstances related to a data transmission operation or operations and the nature of the data, the purpose and the duration of a proposed management operation or operations, the state or states of origin and the destination, general and sectoral legislation effective in the third country, professional regulations and security measures effective in the country concerned.
3. The supervisory authority shall disclose the information received from the supervisory authority of another Member State only provided the supervisory authority concerned has obtained explicit consent of the competent authority which has transmitted the information and, where applicable, the information is disclosed solely for the purposes for which that supervisory authority has given its consent.
4. The data received from a third country or from a Member State or from supervisory authorities thereof shall be retained for not longer than five years.
5. Having received from the supervisory authority of another Member State a request to provide the necessary information, the supervisory authority shall reply to the request within 20 working days or request the information justifying the request.
6. For the purpose of the implementation of supervision, the supervisory authority shall cooperate with the supervisory authorities of other Member States, also the European Securities and Markets Authority, and the European Systemic Risk Board.
7. The supervisory authority may notify the European Securities and Markets Authority about the following requests of another Member State that have been rejected or not fulfilled within a reasonable period of time for:
8. Inter alia, provisions of Section Two of Chapter X of the Law on Collective Investment Undertakings shall apply mutatis mutandis to cooperation of the supervisory authority with other supervisory authorities, unless this Law explicitly provides otherwise.
9. The supervisory authority shall exercise its powers for the purpose of cooperation also when the activity under investigation does not constitute an infringement of legal acts applicable in the Republic of Lithuania. Where the supervisory authority has clear and demonstrable grounds for believing that acts contrary to this Law are being or have been carried out by a management company not subject to supervision in the Republic of Lithuania, the supervisory authority shall notify thereof the European Securities and Markets Authority and the competent authorities of the home and host Member States of the management company concerned in as specific a manner as possible.
Article 60. Sanctions imposed by the supervisory authority
1. The supervisory authority shall impose upon persons the following sanctions:
1) publish a notice on the infringement of this Law and other legal acts and the person who has committed the infringement;
2) issue a warning regarding the infringement of this Law and other legal acts and order to put an end to the infringement of a legal act within the set time limit;
4) obligate a management company to replace the manager and/or the person who takes investment decisions;
5) suspend (restrict), as long as grounds for suspension exist, the voting right of a shareholder of a management company or an internally managed investment company;
6) require a management company to delegate the management of a collective investment undertaking to another management company that would take the necessary actions to remedy the existing situation or, where the management of the collective investment undertaking is not delegated, to cease managing it;
7) ban activities in the Republic of Lithuania of a management company established in another Member State or in a third country;
8) suspend the licence of a management company to provide one or several services as long as grounds for suspension exist; when the grounds for suspension of the licence cease to exist, the supervisory authority shall restore the validity of the licence without delay, but not later than within five working days after ascertaining that the grounds have ceased to exist;
2. Where management companies infringe the provisions of Regulation (EU) No 345/2013, Regulation (EU) No 346/2013, Regulation (EU) No 231/2013, Regulation (EU) No 2017/1131 or Regulation (EU) No 2019/1156, the supervisory authority shall have the right:
3. The supervisory shall have the right to impose upon the depositary of a collective investment undertaking the following sanctions:
1) make public an infringement of this Law and other legal acts and the person who has committed the infringement;
2) issue a warning regarding an infringement of this Law and other legal acts and instruct to put an end to the infringement of a legal act within a set time limit;
Article 61. Grounds and procedure for imposing sanctions
1. The supervisory authority may impose the sanctions provided for in this Law where at least one of the following grounds exists:
1) activities regulated by this Law are carried out without holding a licence or an authorisation granted in accordance with the procedure laid down by this Law or without other consent of the supervisory authority, where such a licence, authorisation or consent is necessary or where an undertaking’s right to engage in a certain activity is restricted under this Law, or other actions or activities prohibited under this Law are carried out;
2) the licence, authorisations or approvals specified by this Law have been obtained on the basis of false information provided to the supervisory authority or by any other irregular means;
3) information specified by this Law or other legal acts or requested by the supervisory authority is not provided within set time limits, or information provided is incomplete, false or inaccurate;
4) a management company no longer meets the requirements on the basis of which its licence has been issued;
5) the requirements set out by Regulation (EU) No 1060/2009, Regulation (EU) No 2017/1131 or Regulation (EU) No 2019/1156 have been breached;
6) a management company is unable to fulfil its obligations or there are data showing that it will be unable to fulfil them in the future;
7) the mandatory instructions given by the supervisory authority under Article 58 of this Law are not fulfilled in accordance with the established procedure or are fulfilled improperly;
8) one or more persons appointed to or holding the posts of managers of a management company and an internally managed investment company, persons taking investment decisions do not meet the repute, qualification and work experience requirements set out under Article 13(2) of this Law and other legal acts;
3. Sanctions upon the management company of a collective investment undertaking where the units or shares of the collective investment undertaking are offered to the public or where it is offered publicly to make contributions in breach of requirements for the drawing up, approving and publishing of a prospectus set out in the Law on Securities and Regulation (EU) 2017/1129 (except for exemptions to the publishing of a prospectus provided for in the Law on Securities and Regulation (EU) 2017/1129) shall be imposed by the supervisory authority in observance of provisions of the Law on Securities and the Law on the Bank of Lithuania.
Article 62. Fines
1. The supervisory authority shall impose fines:
1) upon legal persons where paragraph 6 of this Article is not applicable – up to 10 % of the total annual turnover;
2. The total annual turnover of a legal person on the basis of which the amount of a fine is set shall be determined according to data of the most recently drawn-up (signed) annual financial statements. Where the legal person belongs to a parent undertaking within the meaning of the Law of the Republic of Lithuania on the Supplementary Supervision of Entities in a Financial Conglomerate, the total annual turnover on the basis of which the amount of the fine is set shall be the turnover specified in the most recently drawn-up (signed) annual consolidated financial statements of the principal parent undertaking.
3. Where the infringements listed in Article 61(1) of this Law result in generating illegal income, other pecuniary advantage, avoiding losses or causing damage, and the size of such income or other pecuniary advantage, avoided losses or caused damage, if measurable, exceeds the amounts of fines referred to in paragraphs 1 or 4 of this Article, the supervisory authority shall have the right to impose a fine of up to a double amount of the illegally generated income, other pecuniary advantage, avoided losses or caused damage.
4. Where it is difficult or impossible to determine the total annual turnover of a legal person or where the total annual turnover of the legal person is smaller than EUR 1 000 000, the supervisory authority shall impose upon the legal person a fine in the amount of up to EUR 100 000 instead of the fine referred to in point 1 of paragraph 1 of this Article.
5. In the cases referred to in Article 61(1)(7) of this Law, the supervisory authority shall impose for each day of the non-fulfilment or improper fulfilment of a mandatory instruction a fine in the amount of up to 1 % of the total annual turnover, and where it is difficult or impossible to determine the total annual turnover – up to EUR 1 500.
6. Infringements of the Law on Securities and Regulation (EU) 2017/1129 shall be subject to fines specified in the Law on Securities.
7. Fines shall be calculated in accordance with the procedure laid down in Article 433 of the Law on the Bank of Lithuania.
I promulgate this Law passed by the Seimas of the Republic of Lithuania.
PRESIDENT OF THE REPUBLIC DALIA GRYBAUSKAITĖ
Annex
to the Law of the Republic of Lithuania
on Managers
of Alternative Collective Investment Undertakings
LEGAL ACTS OF THE EUROPEAN UNION IMPLEMENTED BY THIS LAW
1. Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (OJ 2009 L 302, p. 1), as amended by Regulation of the European Parliament and of the Council (EU) No 462/2013 (OJ 2013 L 146, p. 1).
2. Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ 2011, L 174, p. 1), as amended by Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ 2014 L 173, p. 349).
3. Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (OJ 2013 L 83, p. 1).
4. Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013 on European venture capital funds (OJ 2013 L 115, p. 1).
5. Regulation (EU) No 346/2013 of the European Parliament and of the Council of 17 April 2013 on European social entrepreneurship funds (OJ 2013 L 115, p. 18).
6. Directive 2013/14/EU of the European Parliament and of the Council of 21 May 2013 amending Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision, Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) and Directive 2011/61/EU on Alternative Investment Funds Managers in respect of over-reliance on credit ratings (OJ 2013 L 145, p. 1).
7. Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds (OJ 2017 L 169, p. 8).
8. Regulation (EU) 2017/1991 of the European Parliament and of the Council of 25 October 2017 amending Regulation (EU) No 345/2013 on European venture capital funds and Regulation (EU) No 346/2013 on European social entrepreneurship funds (OJ 2017 L 293, p. 1).