Official translation

LAW ON COMPANIES

13 July 2000 No. VIII-1835

Vilnius

CHAPTER ONE

GENERAL PROVISIONS

Article 1. Purpose of the Law

The Law shall regulate the incorporation, reorganisation and liquidation of public and private limited liability companies, their management and activities, the rights and duties of their shareholders. When the provisions of this Law apply both to a public and a private limited liability company, the term "company" shall be used.

Article 2. Public Limited liability company and Private Limited liability company

1. The company is an enterprise whose authorised capital is divided into shares. It may be formed for any business not prohibited by the laws of the Republic of Lithuania.

2. The company is a legal person with limited liability.

3. The company’s assets shall be separated from the shareholders’ assets. It shall be liable for its obligations only to the extent of its assets. The shareholders shall be liable for the obligations of the company only by the amounts which they must pay for their shares.

4. The amount of the authorised capital of a public limited liability company may not be less than LTL 150,000. Its shares may be offered for sale and traded in publicly in compliance with the legal acts regulating public trading in securities.

5. The amount of the authorised capital of a private limited liability company may not be less than LTL 10,000. A private limited liability company must limit the number of its shareholders to 100. The shares of a private limited liability company may not be offered for sale or traded in publicly, unless other laws provide otherwise.

6. The company must have its name which must include the words “akcinė bendrovė” (public limited liability company) or “uždaroji akcinė bendrovė” (private limited liability company) or their respective acronyms (“AB” or “UAB”).

7. The company must have at least one account with the bank registered in the Republic of Lithuania and its own seal.

8. The registered office of the company must be situated in the Republic of Lithuania.

9. The company may be set up for a period of limited or unlimited duration. If the Articles of Association of the company do not specify the period for which it is founded, it shall be deemed to have perpetual existence. The duration of the company may be extended, accordingly amending its Articles of Association.

Article 3. The Incorporators

The incorporators of the company shall be natural and legal persons of the Republic of Lithuania or other states, the State or municipality, who have drawn up and signed a Memorandum of Association in accordance with the procedure established by this Law. Natural and legal persons of the Republic of Lithuania and other states may be incorporators. The number of incorporator of the public limited liability company shall not be limited. The private limited liability company may have not more than 100 incorporators. Each incorporator must acquire shares in the company and become its shareholder.

Article 4. Shareholders

1. Shareholders are natural and legal persons of the Republic of Lithuania or other states, also enterprises without legal personality, the State or municipality who have each acquired at least one share in the company in the manner prescribed by law. For the purposes of this Law the State of Lithuania or municipalities shall also be deemed to be legal persons.

2. Each shareholder shall have such rights in the company which are incidental to the shares in the company owned by him. All shareholders who are in the same position shall have equal rights and duties.

3. If the holder of all shares in the company is one person, the person's written decisions shall be equivalent to the resolutions of the General Meeting.

Article 5. The Company's Articles of Association

1 The Articles of Association of the company constitute the legal document governing the conduct of the company's business.

2. The Articles of Association must state:

1) the name of the company;

2) the company's registered office;

3) the objects of the company and type of business activities;

4) the amount of the authorised capital;

5) the number of shares according to type and class, their nominal value and the rights they carry;

6) the powers of the General Meeting, the procedure for convening the Meetings and their voting rules;

7) the procedure for electing or removing from office members of the Supervisory Board, the Board, the head of the Administration and the powers of the above bodies;

8) the procedure for communicating the notices of the company;

9) the procedure for presenting the company documents and other information to the shareholders;

10) the procedure for making decisions on the establishment of branches and representative offices of the company.

3. The Articles of Association of the company may also contain other provisions which are in conformity with the laws of the Republic of Lithuania.

4. If business activities provided for in the company's Articles of Association are regulated by other laws of the Republic of Lithuania, said laws must be complied with when drafting and amending the company's Articles of Association.

5. The Articles of Association of the company being incorporated must be signed by all the incorporators or their representatives before the statutory meeting. The signature of a natural person must be notarised, whereas the signature of a legal person or his representative shall be attested by a seal. The procedure established for attesting the signature of natural persons shall apply to a foreign legal person who does not posses a seal.

6. The company’s Articles of Association and the amendments thereto shall be valid only upon the registration thereof in the Register of Enterprises of the Republic of Lithuania in the manner prescribed by law.

Article 6. Branch and Representation of a Company

1. The company shall have the right to set up its branches and representations in the Republic of Lithuania and abroad.

2. The company shall be liable for the obligations of the branch or representative office by way of all its assets.

Article 7. Parent Company and Subsidiary

1. A company shall be a parent company if it directly or indirectly holds a majority of the votes in another company which is its subsidiary or if it may directly or indirectly exercise a dominant influence on another company.

2. A company shall directly hold a majority of the votes in another company if it owns shares in another company which grant over 50% of votes at the General Meeting.

3. A company shall indirectly hold a majority of the votes in a third company when it directly holds the majority of votes in another company which directly or indirectly holds a majority of votes in a third company.

4. For the purposes of this Law, the company shall be able to directly exercise a dominant influence on another company only provided it satisfies at least one of the following conditions:

1) the company has the right to elect or remove the head of the Administration, the majority of members of the Board or Supervisory Board of another company and at the same time is a shareholder of this other company;

2) is a shareholder of another company and may decide, under agreements concluded with other shareholders of this other company, on the use of over 50% of the votes granted by the shares in this other company. The proxy giving power to the company to represent another shareholder and to vote for him and make decisions shall be a sufficient proof of such an agreement.

5. The company can exercise indirect dominant influence on a third company only if it satisfies at least one of the following conditions:

1) it is in the position to directly exercise dominant influence on another company which directly or indirectly holds the majority of the votes in a third company or which may directly or indirectly exercise dominant influence on a third company;

2) it holds directly or indirectly the majority of votes in another company which may directly or indirectly exercise dominant influence on a third company;

3) together with the other companies in which it directly or indirectly holds the majority of votes in them or upon which it may directly or indirectly exercise dominant influence, or those other companies jointly hold shares in a third company which carry over 50% of votes at the General Meeting or provided it satisfies the conditions listed in paragraph 4 of this Article.

Article 8. Financial Year of the Company

The company’s financial year shall be the calendar year. Other 12-month periods specifying the beginning and the end of the financial year may also be set in the company’s Articles of Association. If the company was registered after the commencement of the financial year, the day on which the company’s financial year ends, as provided for in its Articles of Association, shall be considered as the close of the company’s financial year. If the company is cancelled from the Register prior to the close of the financial year, the last financial year shall end:

1) in case of liquidation - on the day of drawing up of the document of liquidation;

2) in case of reorganisation - on the day of drawing up of the document of transfer of property.

CHAPTER TWO

INCORPORATION OF THE COMPANY

Article 9. Memorandum of Association

1. The incorporators of the company shall sign the Memorandum of Association. If the company is formed by one person only, he shall sign not the Memorandum of Association, but a document of incorporation to which the requirements of the Memorandum of Association shall apply, except for the requirements laid down in subparagraphs 10 and 12 of paragraph 3 of this Article.

2. The company’s Memorandum of Association shall be a public document.

3. The Memorandum of Association must indicate:

1) the incorporators (names, surnames, personal codes and addresses of natural persons; names of legal persons, their codes, addresses of their registered offices, names and surnames of the representatives of the said persons);

2) the name of the company;

3) the powers and obligations of the incorporators in the incorporation of the company as well as liability for defaulting on their obligations;

4) persons (incorporators and other persons) who may represent the company being incorporated and their powers;

5) the amount of the company’s authorised capital, nominal value of shares, the price of issue of the shares;

6) the number of shares acquired by each incorporator, specifying their number according to types and classes;

7) the rights granted by the shares acquired by the incorporators;

8) the procedure and time limits for the payment for shares, including the procedure and time limits for the payment of initial contributions, default interest for shares not paid up by the due date. The default interest may not be less than 0.05% of the unpaid amount for each missed day;

9) the procedure for convening the statutory meeting;

10) the procedure for submitting to the incorporators the documents of the company which is being incorporated, also of information relating to the statutory meeting;

11) compensation of incorporation costs and remuneration for incorporation;

12) procedure of settlement of disputes between the incorporators;

13) the date of signing the Memorandum of Association.

4. The Memorandum of Association may also contain other provisions which do not conflict with other laws of the Republic of Lithuania.

5. The Memorandum of Association shall be signed by all incporporators or their representatives. Where at least one of the inocporators is a natural person, the Memorandum must be notarised. Where all incorporators are legal persons, the signatures of their managers or authorised persons shall be attested by seals. The procedure established for attesting the signatures of natural persons shall be applied with respect to a foreign legal person who does not possess a seal.

6. The company’s Memorandum of Association, drawn up and signed in the manner laid down in this Law, shall grant the right to open an accumulative deposit account of the company which is being incorporated with a bank registered in the Republic of Lithuania and, in case of incorporation of a public limited liability company, to register the shares with the Securities Commission.

Article 10. Subscription and Payment for Shares of a Company which is being Incorporated

1. The shares of the company which is being incorporated shall be signed by its incorporators. The terms and conditions of the share subscription agreement shall be set out in the Memorandum of Association.

2. Where a public limited liability company is being incorporated, the terms and conditions of the Memorandum of Association, laid down according to the requirements of subparagraphs 6, 7 and 8 of paragraph 3 of Article 9 of this Law shall become effective only after the registration of the shares with the Securities Commission.

3. The shares of a company which is being incorporated must be fully paid within the time limit set in the Memorandum of Association, which may not be longer than 12 months from the date of drawing up and signing of the Memorandum of Association.

4. Paragraphs 1, 2, 7, 8 and 9 of Article 48 of this Law shall apply to the payment for shares of a company which is being incorporated.

5. At the time the company is incorporated, the initial contributions for the shares subscribed for shall be paid only in cash into the accumulative account of the company which is being incorporated within the time limit set in the Memorandum of Association. The company shall be entitled to use the funds in the account only after its registration. The initial contribution of each incorporator shall be not less than one quarter of the nominal value of the shares subscribed for by him plus the whole of any premium, whereas the total amount of initial contributions received prior to the statutory meeting must be not less than the minimum authorised capital of the company prescribed by Article 2 of this Law.

6. If the incorporator partly pays up the shares in money’s worth, the assets used for payment for company shares and the value thereof must be indicated in the Memorandum of Association. Valuation of the contribution made otherwise than in cash prior to the signing of the Memorandum of Association must be made by assets valuers according to the procedure specified in the laws and other legal acts of the Republic of Lithuania which regulate property valuation.

7. The assets valuers who make valuation of contributions made otherwise than in cash must draw up a valuation report indicating, besides other information:

1) the person valuation of whose assets has been made;

2) description of every element of the assets the valuation whereof has been made;

3) description of the valuation methods used;

4) the nominal value of shares acquired for consideration other than in cash;

5) conclusion whether the established value of the assets comprising the contribution made otherwise than in cash corresponds to the number and issue price of shares to be issued for the contribution.

8. The report of the valuers of assets who made the valuation of assets comprising the consideration other than in cash for shares of a public limited liability company which is being incorporated shall be disclosed in the manner prescribed by law.

Article 11. Right to Act on Behalf of the Company which is being Incorporated

1. Before the registration of the company the persons indicated in the Memorandum of Association shall be entitled to enter into contracts on behalf of the company. Such a contract shall impose obligations on the company upon its approval by the General Meeting. If the General Meeting refuses to approve the contract, the persons who entered into it shall be jointly liable for the obligations under the contract.

2. The incorporators of the company or other persons indicated in the Memorandum of Association may receive remuneration from the company for the incorporation of the company or compensation of company incorporation expenses substantiated by documents. Disputes between the incorporators and other persons indicated in the Memorandum of Association regarding the compensation of company incorporation expenses and remuneration for company incorporation shall be settled in court.

3. The shareholders or the company may demand that the incorporators or other persons indicated in the Memorandum of Association compensate for the losses incurred by the company prior to its registration due to their misfeasance, dealing with company incorporation matters in bad faith. The shareholders or the company shall not be entitled to compensation for damage incurred due to contracts approved of by the General Meeting. Disputes concerning compensation for damage shall be settled in court.

Article 12. Statutory Report

1. After all initial contributions for the shares have been paid, the incorporators of the company shall, no later than 15 days before the statutory meeting, draw up the statutory report, which shall specify:

1) incorporation expenses;

2) paid-up authorised capital (paid-up nominal value of shares);

3) proceeds from the sale of shares;

4) expected assets comprising the contribution to be made otherwise than in cash for the subscribed for shares, the value of the contributions and reference to the reports of the valuers of assets who made the valuation of assets comprising the contribution other than in cash;

5) the number of shares subscribed for by each incorporator, for which he has paid the initial contribution, also the number of the shares by types and classes;

6) incorporation expenses subject to reimbursement, remuneration for company incorporation.

2. Each incorporator shall be granted access to the statutory report and shall be entitled to receive its copy.

Article 13. Statutory Meeting

1. After all initial contributions have been paid, the incorporators must convene the statutory meeting before the registration of the company.

2. Provisions prescribed by this Law for the General Meeting, except for the requirements set forth in Articles 24(1), 26, 27(1) and 28 of this Law, shall apply to the statutory meeting. The incorporators shall have right to vote at the statutory meeting. If the statutory meeting does not have a quorum, a repeat statutory meeting shall be called. The agenda of the statutory meeting shall be drawn up by the person authorised by the incorporators in the Memorandum of Association.

3. The statutory meeting shall approve the statutory report of the company, approve the firm of auditors, elect members of the company management bodies, address other issues within the competence of the General Meeting.

4. In case of failure to approve the company’s statutory report or to elect at the statutory meeting members of the company management body who, pursuant to the Articles of Association, are elected by the General Meeting, a repeat statutory meeting shall be convened.

Article 14. Registration of the Company

1. The company shall be subject to registration in the Register of Enterprises of the Republic of Lithuania. The company shall be deemed incorporated and shall acquire the rights of legal person as from the day of its registration.

2. The company shall be registered upon the payment of all initial contributions for shares subscribed for and after the holding of the statutory meeting which approved the company’s statutory report and elected members of company management bodies who, under the company’s Articles of Association, are due to be elected by the General Meeting.

3. If the company is not registered within 4 months from the signing of the Memorandum of Association, it shall be deemed not to have been incorporated and, upon the expiry of the said time limit, the contributions paid in for the shares subscribed for shall be returned.

4. The incorporators shall within 7 days from the day of company registration transfer the documents to the company (to the company Board or, in case such has not been formed, to the head of the Administration), signing the document of transfer.

Article 15. Acquisition of Assets from the Incorporator of Public limited Liability Company

1. For two years after the registration of the public limited liability company every contract of the company for the acquisition of assets from the company incorporator, where the sum of the contract or the aggregate sum of such contracts is not less than 1/10 of the company’s authorised capital, shall become effective only after the valuation thereof by the assets valuers appointed by the Board in the manner prescribed by the laws and other legal acts of the Republic of Lithuania regulating assets valuation and after the approval of the contract/contracts at the General Meeting by an at least two-thirds majority vote and after the disclosure of the assets valuation report in the manner laid down by law.

2. In addition to other information, the assets valuation report shall contain information specified in subparagraphs 1, 2 and 3 of paragraph 7 of Article 10 of this Law and the conclusion as to whether the value of the acquired assets corresponds to the amount paid for them.

3. Paragraphs 1 and 2 of this Article shall not apply where the assets are acquired in the course of regular business activities of the company, also in respect of contracts entered into in the Central Market of the Securities Exchange.

CHAPTER THREE

RIGHTS AND DUTIES OF THE COMPANY AND SHAREHOLDERS

Article 16. Rights and Duties of the Company

1. The company may enter into contracts, assume obligations and have other rights and duties, provided they do not contradict the laws of the Republic of Lithuania.

2. The company shall be entitled to lend and borrow money. The company may not engage in the activities credit institutions. The amount of funds lent by the company to natural and legal persons may not exceed its equity capital.

3. The company shall be entitled to borrow from its shareholders, both natural and legal persons, in the ways prescribed by laws. When borrowing from its shareholders, the company may not offer its assets to the shareholders as a colateral. When the company borrows from the shareholders under a loan agreement, the annual rate of interest may not be higher than the last quarter’s weighted average rate of annual interest on the Republic of Lithuania Treasury bills published in “Valstybės žinios” (Official gazette) by the Government or the institution authorised by it.

4. The company may not make advance payments, either directly or indirectly, grant loans or guarantee discharge of obligations where the purpose of the above actions is to provide conditions for other persons to acquire shares in the company.

5. If the company has not settled accounts with the creditors within the fixed time limits and the total debt to the creditors amounts to over 1/20 of the company’s authorised capital, it must obtain the creditors’ written consent before investing assets into another enterprise.

Article 17. Information Contained in the Company’s Letters and Documents

1. The company’s documents whereby orders are placed, also its letters shall indicate:

1) the register in which the company is registered, the administrator of the register and his address;

2) the code of the company;

3) the name of the company as indicated in the company registration certificate;

4) the address of the registered office of the company recorded in the company registration certificate;

5) if the company is in liquidation, the word “in liquidation” must precede the name of the company.

2. Where reference to the capital of the company is made in the letters and documents of the company, the amount of the authorised capital and the amount of the paid-up authorised capital must be indicated.

3. The company’s documents whereby orders are placed and its letters must contain all information about the company referred to in paragraphs 1 and 2 of this Article and about the register in which the company is registered, the register administrator and his address, the name, code number and address of the branch.

Article 18. Rights and Duties of Shareholders

1. Property and non-property rights and duties of shareholders shall be established by this Law and other laws of the Republic of Lithuania and the company’s Articles of Association. The property and non-property rights of shareholders specified in Articles 19 and 20 of this Law may not be subjected to any restrictions, except in cases specified by laws or by court order.

2. The shareholders shall have no financial obligations to the company save for the obligation to pay up, in the prescribed manner, all the shares subscribed for at their issue price. The resolution of the General Meeting obligating all or part of the shareholders to make additional contributions shall be invalid if at least one of them objects to the resolution.

3. A share shall not be divisible into parts. If a share is held by several shareholders, all its holders shall be considered to be a single shareholder. The rights carried by the share shall be exercised by one shareholder as per common notarised agreement. The holders of the share shall be jointly liable for the shareholders’ obligations.

4. In order to implement their property and non-property rights, two or more shareholders may conclude the shareholders’ agreement. The agreement must specify the following:

1) the shareholders - name and surname, personal code number and address of natural persons; name, code number and address of the registered office of legal persons;

2) the company’s name;

3) commitments of the shareholders - parties to the agreement as regards voting on all or on individual items on the agenda of the General Meeting, regarding the implementation of resolutions adopted by the meeting or non-property rights;

4) responsibility for failure to honour the commitments entered into;

5) the procedure for settling disputes between the shareholders - parties to the agreement;

6) the period of validity of the agreement.

5. The person who acquired all shares of the company or the holder of all shares in the company who transferred a part of his shares to another person must within 15 days notify the head of the company Administration of the acquisition or transfer of shares. Notifying of the acquisition of all shares, a natural person must give his name, surname, personal code number and address, whereas a legal person shall indicate its name, code number, address of the registered office. If all shares of the company are acquired by one person or the holder of all shares of the company transfers all or a part of the company shares to other persons, the company shall notify the administrator of the register of enterprises thereof within 15 days from the day the company learnt or should have learnt thereof.

Article 19. Property Rights of Shareholders

1. The shareholder shall have the following property rights:

1) to receive a part of the company's profit (dividend);

2) to receive a part of assets of the company in liquidation;

3) to receive shares without payment if the authorised capital is increased out of the company funds, except in cases specified in paragraph 2 of Article 44 of this Law;

4) to have the pre-emption right, except in cases when the General Meeting decides to withdraw the pre-emption right in acquiring the company’s newly issued shares for all the shareholders;

5) to bequeath all or part of shares to one or several persons;

6) to transfer all or part of the shares into the ownership of other persons. In the private limited liability company this right is limited according to the procedure established in Article 49 of this Law;

7) other property rights provided for by laws or the Articles of Association of the company.

Article 20. Non-property Rights of Shareholders

1. Shareholders shall have the following non-property rights:

1) to participate in the General Meetings;

2) to receive information on the business activities of the company;

3) to appeal to the court against the resolutions or actions of the General Meeting, the supervisory Board and head of the Administration. One or several shareholders may claim, without a specific authorisation, compensation for damage caused to the shareholders;

4) to conclude a contract with the firm of auditors for auditing the company’s activities and documents as prescribed by paragraph 3 of Article 60 of this Law;

5) other non-property rights provided for by laws or the company’s Articles of Association.

2. If all the voting shares of the company are of the same nominal value, all shares, except for special shares the status whereof is regulated by Article 46 of this Law, shall each carry one vote at the General Meeting

3. The company’s Articles of Association may establish that shares of certain classes do not carry voting rights.

4. Except in cases where the shareholder has acquired all the shares of the company, he shall not be entitled to vote:

1) on the approval of the contracts concluded by him with the company where such approval is required under the laws or the company’s Articles of Association;

2) on the adoption of the resolution to withdraw the right of pre-emption in respect of the shares or convertible debentures issued by the company if the right to acquire the above securities is thereby granted to him, his spouse, parents (adoptive parents) and children (adopted children);

3) where the company is operating at a loss due to the violation of provisions of paragraph 8 of Article 22 of this Law, on the suitability for the office held by the members of the Supervisory Board, the Board or the head of the Administration, when this issue is considered by the General Meeting, if he himself is the person under consideration.

5. If voting shares are of different nominal value, one share of the lowest nominal value shall give its holder one vote. The number of votes granted by other shares shall be equal to their nominal value divided by the smallest nominal value of a share. A number of votes shall also be given where in the cases set forth by this Law the right to vote is granted to the owners of non-voting shares. A different procedure for determining the number of votes may also be provided for by the Articles of Association, however, the number of votes given by a share shall be proportionate to its nominal value.

6. The right to vote at the General Meeting convened prior to the expiry the time limit for the payment for the first issue of shares, specified in the Memorandum of Association, shall be given by the shares for which initial contributions have been paid, thereafter voting rights shall be carried only by fully paid shares.

7. At the shareholder’s written request the company must within 5 working days from the receipt of the request present to him for inspection and/or copying annual and interim financial statements, reports on the activities of the company, minutes of the General Meetings and the register of shareholders; the company shall also present minutes of the Supervisory Board and Board meetings to the shareholders who have given a written pledge prescribed by the company not to disclose a commercial secret provided that the minutes contain no restricted information relating to the company’s stock events. A commercial secret shall be information (except for the public information specified by the laws of the Republic of Lithuania) which is attributed to commercial secrets by the resolution of the company Board. Having given a written pledge not to disclose the commercial secret, the shareholder who owns shares the total nominal value whereof accounts for at least 1/20 of the company’s authorised capital or the proxy of the shareholders who own shares the total nominal value whereof accounts for at least 1/20 of the company’s authorised capital shall have the right of access to all minutes of the Supervisory Board or the Board, the contracts entered into by the company, also the offered guarantees, surety, contracts of mortgage and exchange of fixed assets. The shareholders who own shares which carry over 1/2 of all votes shall have the right of access to all company documents. The shareholder or the proxy shall be liable under law for the disclosure of a commercial secret. At the shareholder's request, refusal to present the requested documents must be executed in writing. Disputes relating to the shareholder’s right to information shall be settled in court.

8. Documents or other information relating to the company must be furnished to the shareholders free of charge, unless the company’s Articles of Association provide otherwise. The charge fixed in the Articles of Association may not exceed the cots of furnishing of the documents and other information.

9. The register of shareholders presented to the shareholders shall state the names, surnames (names of legal persons) of the shareholders, the number of registered shares owned by the shareholders, the shareholders’ addresses for correspondence according to the most recent data available to the company.

Article 21. Proxies

1. The shareholder shall have the right to authorise another person to vote for him as his proxy at the General Meeting or perform other legal acts. The proxy of the shareholder who is a natural person must be notarised, whereas the proxy of the shareholder who is a legal person must be attested by it's manager's signature and the seal. The procedure for attesting the signature established for natural persons shall be applied with respect to a foreign legal person who does not possess a seal. The shareholder may by a general written proxy authorise the intermediary of public trading in securities who manages his personal account of the company securities.

2. Upon arrival at the General Meeting and signing in the shareholders registration list, the shareholder’s proxy must present to the person in charge of the registration of the participants in the Meeting the original of the proxy or a notarised copy thereof. The name of the person who gave the proxy and the time when the proxy was given as well as the number and period of validity of the proxy shall be recorded in the registration list.

3. The shareholder may withdraw his proxy. He must notify the company in writing of the withdrawal of the proxy.

4. If the proxy fills in the general ballot on behalf of the shareholder and submits it to the company before it receives the shareholder’s notice of the withdrawal of the proxy, the general ballot shall be deemed valid and the shareholder shall not be entitled to vote at the shareholders’ meeting, except in the case where the shareholder proves that the proxy knew or should have known about the withdrawal of the proxy before the submission of the general ballot to the company.

5. If shares are sold or otherwise transferred to the depository (an institution which keeps records of securities, organises and controls operations with securities) and the bank further converts them issuing depositary receipts or using other financial instruments, the authorised agent of the depository shall vote at the General Meeting following the written directions of the shareholders or according to the shareholders’ agreement.

CHAPTER FOUR

MANAGEMENT OF THE COMPANY

Article 22. Management Bodies

1. The management bodies of the company shall include the General Meeting, the Supervisory Board, the Board, and the head of the Administration.

2. The compulsory management bodies of a public limited liability company shall be the General Meeting, the head of the Administration and at least one collegial management body - the Supervisory Board or the Board.

3. The compulsory management bodies of a private limited liability company shall be the General Meeting and the head of the Administration. Formation of the Supervisory Board and the Board in a private limited liability company shall not be compulsory.

4. If the Supervisory Board is not formed in the company, its functions shall not be assigned to other management bodies.

5. Where the Board is not formed in the company, its functions, rights, duties and responsibility established by this Law shall be taken over by the head of the Administration, save for the rights and duties taken over pursuant to this Law by the Supervisory Board or the General Meeting.

6. In case the General Meeting adopts amendments to the Articles of Association regarding the number of the Supervisory Board or Board members or a new management body, the newly-elected members of the management body shall commence their activities no earlier than from the day of registration of the amendments to the Articles of Association in the Register of Enterprises of the Republic of Lithuania.

7. The General Meeting shall not be entitled to charge other management bodies to address the issues assigned to its competence. The General Meeting shall have the right to obligate to address the issues assigned to the competence of the Supervisory Board, the Board or the Administration

8. The management bodies of the company shall act only for the benefit of the company and its shareholders. The management bodies of the company shall not be entitled to make decisions or perform other actions which violate the company’s Articles of Association or are against the objects of the company specified in the Articles of Association, manifestly go beyond normal production-business risks, are undoubtedly unprofitable (purchase of goods, services or works at prices exceeding market prices or their underselling, waste of the company’s assets) or are unmistakably ineffective from the economic point of view.

Article 23. Restriction of Rights of the Members of Management Bodies

1. Unless he is given consent of the management body which elected him, a member of the Supervisory Board, the Board, the head of the Administration may not be on the Supervisory Board or Board (or bodies equivalent to them) of the enterprise engaged in similar business activities or enterprise which continues the company’s production or service process and sale of products. Without having been given authorisation by the management body which elected him, the head of the Administration may not be the head of Administration of any other enterprise.

2. If a member of the company’s Supervisory Board, the Board or the head of the Administration violated the requirements set in paragraph 1 of this Article, he shall resign from the management bodies of the enterprise or company and be held responsible under law.

3. Every candidate to the members of the company’s management bodies must inform the management body which is electing him where and what office he holds, how his other activities are connected with the company and its parent or subsidiary companies.

4. Every candidate to the members of the company’s management bodies or member of the company’s management body shall notify the management body which is electing or has elected him if he owns shares accounting for 1/4 or more of the authorised capital of an enterprise engaged in similar activities or an enterprise which continues the company’s production or services process and sale of products.

5. If a member of the company’s management body violates the requirements of this Law, every shareholder of the company shall be entitled to appeal to the court for the compensation of damage caused to the company within 90 days from the day when he found out or should have found out of the violations committed by the management body member.

Article 24. General Meeting

1. The General Meeting is the supreme management body of the company. All persons who are the shareholders of the company on the day of the meeting, irrespective of the number and class of shares they hold, shall have the right to attend the company's General Meeting, unless the company’s Articles of Association provide that the General Meeting (including a repeat meeting) may be attended by persons who were shareholders of the public limited liability company at the close of the shareholders’ registration day of the General Meeting. The shareholders’ registration day of the General Meeting shall be not earlier than 30 days and not later than 10 days prior to the General Meeting in respect of which the day is designated and not earlier than the tenth day after the Board meeting which designated the day. Members of the Supervisory Board and the Board as well as the head of the Administration, even though they are not shareholders, shall be entitled to participate in the Meeting and be given the floor. Every General Meeting shall elect the chairman and secretary of the meeting, except in the case specified in paragraph 7 of this Article.

2. Only the General Meeting may:

1) amend and supplement the Articles of Association of the company (except for the cases provided for in paragraph 6 of Article 39, paragraph5 of Article 51, paragraph 3 of Article 52 and paragraph 6 of Article 55 of this Law);

2) approve the firm of auditors, elect the members of the Supervisory Board, if the Supervisory Board is not formed - members of the Board, if the Board is not formed - the head of the Administration;

3) dismiss the firm of auditors, members of the Supervisory Board, members of the Board elected by the General Meeting, the head of the Administration. If the company is operating at a loss, the General Meeting must consider the suitability for office of the members of the Supervisory Board, the Board, or the head of the Administration;

4) fix the conditions of payment for auditing services, the annual payments (bonuses) from the net profit to the members of the Board and the Supervisory Board pursuant to the provisions of Article 61 of this Law;

5) approve the annual financial statements, the business report of the Board (if the Board is not formed - the head of the Administration);

6) adopt a resolution to increase the authorised capital:

7) determine the type, class, number and set the minimum issue price of the shares issued by the company;

8) adopt a resolution to withdraw for all the shareholders the pre-emptive right to acquire the shares or convertible debentures of the specific issue of shares or convertible debentures issued by the company;

9) adopt a resolution to reduce the authorised capital (with the exception of cases provided for in paragraphs 5 and 6 of Article 39 and paragraph 6 of Article 55 of this Law;

10) adopt a resolution to issue convertible debentures;

11) adopt a resolution to exchange the company’s shares of one type or class for those of another type or class, approve the procedure of exchange of shares;

12) adopt a resolution for the company to purchase its own shares;

13) adopt a resolution to liquidate the company or to cancel the liquidation of the company (with the exception of the cases provided for in subparagraphs 2, 3 and 4 of paragraph 1 of Article 75 of this Law);

14) elect and dismiss the liquidator of the company (with the exception of the cases provided for in subparagraphs 2, 3 and 4 of paragraph 1 of Article 75 and paragraph 1 of Article 76 of this Law);

15) adopt a resolution to reorganise the company and approve the draft plan of reorganisation (except in the case provided for in Article 73 of this Law);

16) for a period of two years from the registration of a public limited liability company approve the contracts for the acquisition of assets from the incorporator of the company if the sum of a separate contract or the total sum of contracts amounts to at least 1/10 of the company’s authorised capital;

17) adopt a resolution on the appropriation of the profit (except in the case provided in paragraph 8 of Article 61 of this Law);

18) adopt a resolution to build up reserves, with the exception of the revaluation reserve;

19) adopt a resolution on the transfer, lease or mortgage of fixed assets the value whereof amounts to over 1/20 of the company’s authorised capital as well as on offering guarantee, surety for the discharge of obligations of other entities, when the amount of the obligations exceeds 1/20 of the company’s authorised capital.

3. The General Meeting may also adopt other resolutions which are not provided for under this Law for the other management bodies of the company.

4. The person who is on the list of registered share holders, compiled on the day of the General Meeting or on the day of record of shareholders of the General Meeting of the public limited liability company, may attend the General Meeting upon producing a document which is a proof of personal identity. The holder of bearer shares may also attend the General Meeting upon presenting an excerpt from the account issued by the securities account manager about the bearer shares owned by him or which he owned at the close of the day of record of the General Meeting.

5. The shareholders (their proxies) taking part in the General Meeting shall be registered by signing in the shareholder registration list. The shareholder registration list must indicate the number of votes held by each shareholder. The list shall be signed by the chairman and secretary of the Meeting. The shareholders who have already voted by the general ballot must be named in the registration list.

6. The minutes of the General Meeting shall be within 3 working days signed by the chairman, the secretary of the Meeting and at least one shareholder authorised by the Meeting. The shareholders who have at least 1/20 of votes at the General Meeting shall be entitled to additionally appoint their representative for the signing of the minutes of the General Meeting. To that end they shall present to the chairman of the Meeting an application signed by the shareholders. The person authorised (appointed) to sign the minutes shall be entitled to present his commentaries or opinion in writing about the facts set out in the minutes.

7. The Government shall not elect the chairman and secretary of the Meeting if it is attended by less than three shareholders. In such event the shareholder registration list and the minutes of the General Meeting shall be signed by each shareholder attending the General Meeting.

8. Settlement of disputes relating to the invalidity of the minutes of the General Meeting or parts thereof shall be within the jurisdiction of the court. The list of registration of the attending shareholders, the proxies and the general ballots of shareholders who voted in advance as well as documents which are proof of the shareholders having been notified of the convening of the General Meeting shall be attached to the minutes of the General Meeting. The minutes of the General Meeting at which the resolutions changing the information on the company kept with the Register of Enterprises of the Republic of Lithuania were adopted, the minutes (copies thereof) with annexes (copies thereof) must be presented to the administrator of the Register of Enterprises within 10 days after the meeting. Minutes of the General Meetings are official documents. They shall be preserved and kept in accordance with the procedure established by the Law of the Republic of Lithuania on Archives. Falsification of the above minutes shall be punishable in the manner prescribed by law.

Article 25. Inspector of the General Meeting

1. The General Meeting of the company may elect the inspector of the General Meeting for the next General Meeting. The inspector of the General Meeting shall be a shareholder of the company.

2. If the General Meeting fails to elect the inspector for the next General Meeting or where the elected inspector is not in the position to perform his duties, he shall be appointed by the Board prior to the Meeting, in case the election of the inspector is provided for in the Articles of Association of the company.

3. The inspector of the General Meeting shall establish:

1) the total number of shares carrying the right to vote at the Meeting;

2) the number of submitted valid and invalid general ballots filled in advance;

3) the number of valid and invalid proxies submitted;

4) the number of vote-carrying shares represented at the Meeting (both personally and through a proxy and having filled in the general ballot-papers);

5) whether the Meeting has a quorum;

6) the results of voting at the Meeting.

Article 26. Convening the General Meeting

1. The right of initiative to convene the General Meeting shall be vested in the Supervisory Board, the Board and the shareholders who have at least 1/10 of all votes, unless the Articles of Association provide for a smaller amount of votes, as well as the institution which holds special shares.

2. The General Meeting shall be convened on the resolution of the Board. If the Board has not been formed in the company, or if the number of the company’s Board members is not more than one half of their number specified in the Articles of Association, the General Meeting shall be convened on the decision of the head of the Administration. The General Meeting must be convened on the decision of the head of the Administration if the Board of the company fails to convene the Meeting in the instances and within the time limits provided for in this Law. The General Meeting may be convened on the decision of the shareholders with more than 1/2 of all votes or holding special shares if the persons who attempted to initiate the convening of the meeting did not receive a favourable decision of the company’s Board or head of the Administration as regards the convening of the General Meeting.

3. The General Meeting may be called upon the court order if:

1) the meeting has not been called within 4 months of the end of the financial year and at least one shareholder has brought the matter to court;

2) the initiators of the General Meeting applied to the court with a complaint about the failure by the Board or the head of the Administration to convene the General Meeting as prescribed by paragraph 6 of this Article;

3) the creditors of the company applied to the court complaining about the failure to call an Extraordinary General Meeting in the case specified in subparagraph 1 of paragraph 5 of this Article.

4. The Board must convene the Annual General Meeting each year within 4 months of the end of the financial year.

5. The Extraordinary General Meeting must be convened if:

1) the company’s equity capital falls below 3/4 of the authorised capital specified in the Articles of Association;

2) the number of the Supervisory Board or Board members has declined to 2/3 of their number specified in the company’s Articles or less than their minimum number prescribed by this Law (because of the retirement or inability to continue in office);

3) the head of the Administration of a private limited liability company, elected by the General Meeting, resigns or is not in the position to continue performing his duties;

4) the firm of auditors terminates the contract with the company or is for any other reasons unable to audit the company’s annual statements;

5) it is requested by the shareholders with the right of initiative, the Supervisory Board or the Board;

6) the duration of the company specified in the Articles of Association is drawing to a close;

7) it is required under other laws or the company’s Articles.

6. The persons who initiated the convening of the General Meeting shall file an application with the Board (if the Board is not formed or the number of Board members is not more than half of their number indicated in the Articles - to the head of the Administration), indicating the reasons and objectives of convening the Meeting, the drafts of the proposed resolutions, proposals regarding the date and place of the Meeting. If the Board (or the head of the Administration) fails to come to an agreement with the persons initiating the Meeting on settling in any other way the issues proposed for the Meeting, it must convene the General Meeting within 40 days of the receipt of the application.

7. In the case provided for in subparagraph 6 of paragraph 5 of this Article the Extraordinary General Meeting must be convened at least 30 days before the expiry of the company duration period specified in the Articles of Association. The period of duration of the company may be extended at the Meeting by amending the Articles of Association of the company or the liquidator shall be elected.

8. The venue of the General Meeting must be in territory of the municipality in which the registered office of the company is located. If the shares of the public limited liability company are listed on the Official List of the Stock Exchange registered in the Republic of Lithuania, the venue of the General Meeting may be in the territory of the municipality where the headquarters of the Stock Exchange are located.

Article 27. Agenda of the General Meeting

1. The agenda of the General Meeting shall be drawn up by the company management body or institution upon adopting a decision to convene the General Meeting. Issues proposed by the persons initiating the Meeting must be included in the agenda of the Meeting.

2. The agenda of the General Meeting may be supplemented upon the proposal to include new issues, put forward by the Supervisory Board, the Board (if the Board is not formed - the head of the Administration), the institution holding special shares or shareholders with not less than 1/20 of all votes. The proposal to supplement the agenda may be submitted not later than 15 days before the General Meeting. The company management bodies and persons specified in this paragraph may also submit new drafts of resolutions, propose additional candidates to the company management bodies, the firm of auditors. The Articles may also provide for less votes entitling the shareholders to supplement the agenda of the General Meeting, propose new draft resolutions, additional candidates to the members of company management bodies elected by the General Meeting, the firm of auditors.

3. If the agenda of the Meeting referred to in the notice on the calling of the Meeting has been changed, the shareholders must be notified of the changes in the agenda in the same manner in which the notice of the General Meeting is given no later than 10 days before the Meeting.

4. If removal from office of the members of the company management bodies or dismissal of the firm of auditors is on the agenda of the General Meeting, the issues regarding the election of new members of the management bodies or approving a new firm of auditors must accordingly be included in the agenda.

5. The General Meeting shall not be entitled to adopt resolutions on issues not on the agenda if it is not attended by all the voting shareholders.

6. Only the agenda of the Meeting which failed to take place shall be valid at repeat meeting.

Article 28. Notice of the General Meeting

1. The management body of the company or the institution which passed a decision to convene the General Meeting shall present to the head of the Administration information and documents required for giving a notice of the General Meeting. The head of the Administration must publish the notice of the General Meeting in the periodical publications specified in the Articles of Association or hand in the notice to every shareholder against by his signature or send the notice by registered mail no later than 30 days before the day of the Meeting. The General Meeting may be convened without observing the above time limits if all voting shareholders or their proxies give their written consent thereto. The shareholders of private limited liability companies shall in all cases be delivered the notices upon their signed acknowledgement of the delivery or by a registered letter. The head of the Administration shall inform the shareholders at the opening of the Meeting of the documents proving that the shareholders have been given notice of the General Meeting. The documents must be attached to the minutes of the General Meeting.

2. If a repeat meeting is convened, the shareholders must be informed in the manner laid down in paragraph 1 of this Article. In this case an at least 10 days’ notice is required.

3. Notices of the General Meeting must specify:

1) the name of the company and the address of the registered office;

2) the date, time and place of the Meeting;

3) the agenda of the Meeting;

4) the company’s management body or the institution which adopted the decision to convene the General Meeting and the persons who initiated the calling of the Extraordinary General Meeting;

5) where the passing of the resolution on the reduction of the authorised capital is on the agenda of the Meeting - the purpose and intended method of the reduction of capital.

4. At least 30 days before the General Meeting the shareholders must be granted access to the documents available to the company, relating to the agenda of the Meeting, including drafts of the resolutions, as well as the application filed with the Board (or the head of the Administration) by the persons who initiated the convening of the General Meeting. If the shareholder so desires in writing, the head of the Administration shall within 3 days from the receipt of the written request deliver to him upon his signed acknowledgement all draft resolutions of the Meeting or shall send him the above drafts by a registered letter. A notice must be given with the drafts of the resolutions indicating on whose initiative they have been included. Where the person who initiated the draft resolution has submitted explanations of the draft resolution, these must be attached to the draft resolutions.

Article 29. Quorum of the General Meeting and Passing of Resolutions

1. A General Meeting may pass resolutions provided that it is attended by the holders of shares which carry over 1/2 of all votes. After the presence of a quorum has been established, the quorum shall remain continuously throughout the Meeting. If a quorum is not present, a repeat Meeting must be convened within 15 days, which shall be authorised to adopt resolutions on the issues on the agenda irrespective of the number of shareholders attending the Meeting. If the consent of the holders of a certain type or class of shares is necessary in order to adopt a resolution, a resolution regarding the consent may be adopted by a meeting of the holders of a certain type or class of shares, attended by the shareholders who own over 1/2 of all the shares of the type or class. The procedure for convening the General Meeting shall be applicable for calling the meeting.

2. For the purpose of establishing the total amount of the votes carried by the shares of the company and the quorum of the General Meeting, the shares the exercise of the voting right granted by which is prohibited under paragraph 7 of Article 55 of this Law, under other laws and on the basis of the court order, shall be considered as non-voting shares.

3. A possibility for voting in advance may be provided for in the Articles of Association of the company. In this case the shareholder entitled to vote at the meeting, having been presented for scrutiny the agenda and draft resolutions, may notify the General Meeting in advance in writing (by filling in the general ballot) whether he is “for” or “against” each resolution. The advance voting by ballot shall be included in the quorum of the meeting and the results of voting. The general ballots of the meetings which have not taken place shall be valid at repeat meetings. The shareholder shall have no right to vote at the General Meeting for the resolution in respect of which he has expressed his will in advance in writing.

4. Voting at the General Meeting shall be decided on a show of hands. On the issues on which at least one shareholder requests a secret vote be taken and provided that he is supported by shareholders possessing at least 1/10 of votes at the General Meeting, secret voting shall be mandatory to all shareholders.

5. The resolutions of the General Meeting shall be adopted by a simple majority vote of the shareholders present, with the exception of the following cases:

1) election of the Supervisory Board or the Board in accordance with the regulations laid down in paragraph 3 of Article 32 of this Law;

2) adoption of resolutions on the issues specified in subparagraphs 1, 6, 7, 9, 10, 11, 13, 15, 16, 17, 18, 19 of paragraph 2 of Article 24 this Law, requiring a 2/3 majority vote of those present at the Meeting;

3) adoption of the resolution specified in subparagraph 8 of paragraph 2 of Article 24 of this Law, which requires a 3/4 majority vote of those present at the Meeting;

4) adoption of resolutions which requires approval of the holders of certain types or classes of shares.

6. The company’s Articles of Association may provide for a larger than 2/3 majority required in order to adopt resolutions specified in subparagraph 2 of paragraph 5 of this Article and a larger than 3/4 majority for the adoption of the resolution referred to in subparagraph 3 of paragraph 5 of this Article.

7. If in the cases specified paragraph 4 of Article 20 of this Law the shareholder is not entitled to vote, the results of the voting shall be established according to the number of votes of shareholders present at the Meeting who are entitled to vote on deciding the issue.

Article 30. General Ballot

1. If the company’s Articles of Association provide for the possibility to vote in advance, the company shall prepare the general ballots. The following shall be indicated in the ballot:

1) drafts of the resolutions which shall be put to a vote at the General Meeting. The wording of the draft resolutions must be such as to allow the shareholder to vote either for or against the resolution;

2) candidates to the members of the company’s management bodies elected at the General Meeting, the firm which is a candidate to the firm of auditors which has to be approved. The above candidates must be presented in the manner which would enable the shareholder to mark the candidate he is voting for or to indicate the number of votes he gives to each candidate to the Supervisory Board (if the Supervisory Board is not formed - the Board) members.

2. All draft resolutions and candidates to the members of the company’s management bodies elected by the General Meeting, the candidate firms from which the firm of auditors has to be approved, which have been put forward by the persons on whose initiative the Meeting has been convened and the company’s management bodies or persons specified in paragraph 2 of Article 27of this Law must be entered in the general ballot not later than 15 days before the General Meeting.

3. The company must not earlier than 15 days and not later than 10 days before the General Meeting send the general ballots by registered mail or hand them in personally against signature to the shareholders entitled to vote should the shareholders so request in writing.

4. After the general ballot has been sent or handed in to the shareholder, the ballot may not be changed. The company’s Articles of Association may provide that new drafts of resolutions and candidates to the management bodies elected by the General Meeting or to the firm of auditors to be approved may not be put forward after the general ballot has been sent or handed in.

5. The name, surname and personal code (name and code of the legal person) of the shareholder must be indicated on the general ballot.

6. The general ballot signed by the shareholder (his proxy) shall be deemed valid if it contains the requisites prescribed by paragraph 5 of this Article and is delivered to the company not later than one day before the General Meeting. The general ballot signed by the shareholder (his proxy) and delivered to the company shall be irrevocable, save for the exception laid down in paragraph 4 of Article 21 of this Law.

Article 31. Invalidity of the Resolutions of the General Meeting

1. On the application of the interested persons, the resolution of the General Meeting shall be declared invalid in accordance with the judicial procedure if:

1) the issue on which the resolution is adopted has not been entered in the agenda of the Meeting in accordance with the procedure established by law;

2) the registration documents and information changed by the resolution adopted by the Meeting have not been registered in the Register of Enterprises of the Republic of Lithuania in the cases and within the time limit prescribed by laws;

3) the procedure for convening the meetings or drawing up the agenda, prescribed by Articles 26, 27 and 28 of this Law, has been violated;

4) the company has not prepared and/or sent/or delivered the general ballots drawn up in the manner prescribed by this Law to the shareholders who requested the ballots, if the possibility of advance voting is provided for in the company’s Articles of Association, except where this did not have a decisive effect upon the quorum of the Meeting or the adoption or rejection of the resolution;

5) the shareholder was represented at the General Meeting by a person who did not have the shareholder’s proxy, the shareholder’s proxy voted at the Meeting exceeding his powers, vote was taken by holders of non-voting shares, except where the shareholder’s vote did not affect the quorum of the Meeting or the passing or rejection of the resolution;

6) the resolution is not in compliance with the Articles of Association of the company, this Law, or other laws of the Republic of Lithuania;

7) the resolution is detrimental to the company.

2. A resolution of the General Meeting may be appealed against to the court not later than within 30 days from the day when the person learned or should have learnt about its adoption.

Article 24. Formation of the Supervisory Board

1. The Supervisory Board is a collegial body supervising the activities of the company and directed by its chairman.

2. The number of members of the Supervisory Board shall be set by the Articles of Association of the company; the number of members must be not less than 3 and not more than 15.

3. The Supervisory Board shall be elected by the General Meeting. During the election of the Supervisory Board members each shareholder shall have the number of votes which is equal to the number of votes carried by the shares held by him as established pursuant to Article 20 of this Law multiplied by the number of members of the Supervisory Board being elected. The shareholder shall distribute the votes at his discretion, giving them for one or several candidates. Candidates who receive the greatest number of votes shall be elected. If the number of candidates who received an equal number of votes is larger than the number of vacancies on the Supervisory Board, a repeat voting shall be held in which each shareholder may vote only for one of the candidates who received an equal number of votes.

4. The Supervisory Board shall be elected for a term not exceeding 4 years. The number of terms a member may serve on the Supervisory Board shall not be limited.

5. The Supervisory Board shall elect the chairman of the Supervisory Board from among its members.

6. Only legally capable natural persons may serve as members of the Supervisory Board. Prohibited from serving on the Supervisory Board shall be:

1) members of the company’s Board;

2) head of the Administration of the company;

3) a person indicated in paragraph 1 of Article 23 of this Law;

4) a person who, pursuant to the laws of the Republic of Lithuania, has no right to perform these duties.

7. The General Meeting may remove from office the entire Supervisory Board in corpore or its individual members before the expiry of their term.

8. A member of the Supervisory Board may resign from office prior to the expiry of his term upon giving a written notice thereof to the Supervisory Board at least 14 calendar days in advance.

9. If a member of the Supervisory Board is removed from office, resigns or for any other reason stops performing his duties and the shareholders who hold at least 1/20 of all votes in the company object to the election of individual members of the Supervisory Board, the operating Supervisory Board must be dismissed and a new Supervisory Board in corpore must be elected. Should individual members of the Supervisory Board be elected, they shall be elected only until the expiry of the term of office of the operating Supervisory Board.

10. The general meeting may remunerate (pay bonuses to) members of the Supervisory Board for their work only out of the net profit, taking into account the provisions of Article 61 of this Law.

Article 33. Powers and Responsibility of the Supervisory Board

1. The Supervisory Board shall:

1) elect members of the Board (if the Board is not formed - the head of the Administration) and remove them from office. If the company is operating at a loss, the Supervisory Board must consider the suitability of the Board members (if the Board is not formed - the head of the Administration) for their office;

2) analyse the work of the Board and the head of the Administration, the use of financial resources, the organisation of production and management, the profitability of capital, remuneration for work, the correctness of depreciation deductions, the company’s financial prospects;

3) make proposals and comments to the General Meeting on the company’s annual financial statements, the draft of the profit distribution and the report on the company’s activities drawn up by the Board (the head of the Administration);

4) represent the company when disputes between the company and its Board member or the head of the Administration or his deputy are brought before the court;

5) submit proposals to the Board and the head of the Administration to revoke their resolutions which are not in conformity with the laws of the Republic of Lithuania or the Articles of Association of the company or the resolutions of the General Meeting;

6) consider other issues provided for in the Articles of Association or in the resolutions adopted by the General Meeting.

2. The Supervisory Board shall have no right to assign or delegate its functions to the Board or the head of the Administration.

3. The Supervisory Board shall be entitled to appoint a firm of auditors to audit the accounting documents and financial statements of the company. The General Meeting may fix the maximum amount of funds that may be allotted to pay the charges of the firm or auditors.	4. At the request of the Supervisory Board the company’s head of the Administration and the Board must present documents relating to the activities of the company and provide conditions for inspecting the company's assets. Members of the Supervisory Board must keep the company's commercial secrets divulged to them in the course of their duties confidential.

5. The Supervisory Board shall commence its activities upon the closure of the General Meeting which elected it, save for the exception provided for in paragraph 6 of Article 22.

6. The procedure of work of the Supervisory Board shall be laid down in the work regulations of the Supervisory Board adopted by it.

7. The Supervisory Board must meet at least once quarterly. Its regular meetings shall be called according to the schedule by the chairman of the Supervisory Board or, in his absence, by the vice chairman. Extraordinary meetings shall be called at the request of no less than 1/3 of the members of the Supervisory Board. The procedure for announcing meetings shall be laid down in the work regulations of the Supervisory Board.

8. Members of the Supervisory Board shall have equal rights. During voting each member shall have one vote. In the event of a tie the chairman’s vote shall be casting.

9. If a member of the Supervisory Board is unable to attend the meeting, he may take a written vote "for" or "against" the resolution which is being voted on, provided that he has familiarised himself with the draft resolution.

10. The Supervisory Board may adopt resolutions if its meeting is attended by more than half of its members. The members of the Supervisory Board who voted in advance shall also be included in the quorum. Resolutions of the Supervisory Board shall be adopted by a simple majority vote of those present (including members who cast their vote in advance in writing), with the exception of resolutions on removing members of the Board from office. Such resolutions shall be adopted by a 2/3 vote of the Supervisory Board members present at the meeting (including members who voted in advance in writing).

11. Members of the Supervisory Board shall be liable in the manner established by law for concealing violations of the company's business activities, inadequate control of business activities, if that provided conditions for the Board or the head of the Administration to ignore the laws of the Republic of Lithuania or the Articles of Association of the company.

Article 34. Formation of the Board

1. The Board is a collegial body, whose activities shall be directed by the chairman of the Board.

2. The number of the Board members, which may not be less than 3, shall be established by the company’s Articles of Association.

3. The Board and its chairman shall be elected by the Supervisory Board for a term not exceeding 4 years; in its absence, the Board members shall be elected by the General Meeting in accordance with the procedure established by Article 32 of this Law for the election of the Supervisory Board. The Board shall elect its chairman from among its members. The institution holding special shares shall be entitled to appoint one Board member. There is no limitation on the number of terms of office a member of the Board may serve.

4. Only competent natural persons may be appointed/elected as members of the Board. The following persons may not be appointed or elected as members of the Board:

1) members of the Supervisory Board of the same company or its parent company registered in the Republic of Lithuania;

2) a person specified in paragraph 1 of Article 23 of this Law;

3) a person who, under the laws of the Republic of Lithuania, may not serve on the Board.

5. The Supervisory Board (if the Supervisory Board is not formed - the General Meeting) may remove the Board in corpore or its individual members from office before the expiry of their term.

6.A member of the Board may resign from his post before the expiry of his term of office, notifying the Board in writing at least 14 calendar days in advance.

7. The General Meeting may remunerate (pay bonuses to) members of the Board for their work on the Board only out of the net profit, taking into account the provisions of Article 61 of this Law.

Article 35. Powers and Responsibility of the Board

1. The Board shall consider and approve:

1) the structure of the company management and positions;

2) posts in which persons are employed only by holding competitions;

3) salaries of the head of the Administration and his deputies;

4) the office rules of the head of the Administration and his deputies, the rules of the branches of the company.

2. The Board shall elect and remove from office the head of the Administration. The Board shall approve of the candidates nominated by the head of the Administration to his deputies as well as well as of the candidates to the posts to which employees are chosen on the basis of competition.

3. The Board shall analyse and evaluate the material submitted by the head of the Administration on:

1) the strategy of production, technical, research, design and experimental work as well as other business activities;

2) the organisation of management and production;

3) the sources of accumulation of financial resources and ways of their use;

4) contracts entered into by the company;

5) financial situation of the company;

6) results of business activities, income and expenditure estimates, stock-taking data and other records of valuables.

4. The Board shall analyse, assess the company’s draft annual financial statements and draft of the appropriation of profit and, having approved of the above drafts, submit them to the General Meeting. The Board shall determine the method of estimating asset depreciation and depreciation rates.

5. The Board must hold General Meetings in due time, ensure the compiling of the list of holders of registered shares, draw up the agendas of the General Meetings, present to the shareholders the company's annual financial statements, the draft of the appropriation of profit, the report on the company’s activities and other required information for considering the items on the agenda.

6. The Board shall adopt:

1) decisions on the company becoming the incorporator, member of other enterprises;

2) decisions on the transfer, lease or mortgage of fixed assets the value whereof amounts to over 1/20 of the company’s authorised capital as well as on offering guarantee or surety for the discharge of obligations of other entities, when the amount of the obligations exceed 1/20 of the company’s authorised capital;

3) decisions on the acquisition of fixed assets the price whereof exceeds 1/20 of the company’s authorised capital;

4) other decisions which are assigned to the competence of the Board by the company’s Articles of Association or resolutions of the General Meeting.

7. A resolution of the General Meeting adopted by an at least 2/3 majority vote shall be required for every decisions of the Board specified in subparagraph 2 of paragraph 6 of this Article. During a financial year the sum of the total balance-sheet value of the fixed assets transferred, leased, or mortgaged under the contracts entered into without the approval of the General Meeting and the amount of other entities’ liabilities for the fulfilment whereof guarantee or surety is offered may not exceed 1/20 of the company's authorised capital value. The company’s Articles of Association may provide for other cases where the approval of the General Meeting is required for the decisions of the Board.

8. The Board shall discharge its functions for the term fixed in the Articles of Association or until a new Board is elected and commences its work.

9. The procedure of work of the Board shall be set forth in the Rules of Work the Board adopted by it.

10. Every member of the Board shall have the right of initiative to convene the Board meeting. The decisions adopted by the Board shall be valid if voted in favour of by at least a half of the Board members. The Articles of Association of the company may prescribe a larger majority of votes required for the adoption of decisions. When this is provided for by the laws of the Republic of Lithuania, the member of the Board appointed by the institution representing special shares shall have the right of veto when voting on separate issues. When other issues are put to the vote, the Board member appointed by the institution representing special shares shall not be entitled to vote. A member of the Board shall not be entitled to vote when the Board meeting is taking a decision on his pecuniary liability issues or personal matters relating to his work in the company.

11. The Board must invite the head of the Administration to every meeting of the Board, provided he is not a member of the Board, and provide him with an opportunity to have access to the information relating to the issues on the agenda.

12. The Board shall be prohibited from restricting the auditor’s powers or interfering with his work in any other way.

13. The members of the Board must keep the company's commercial secrets confidential.

14. The chairman and members of the Board must jointly compensate for the losses incurred by the company by reason of the decisions of the Board adopted in violation of the company's Articles of Association, this Law and other laws of the Republic of Lithuania. Released from the obligation to compensate for the losses shall be persons who voted against the decision or did not attend the meeting at which the decision was adopted, provided that they file with the presiding officer a written protest within 7 days after they learnt or should have learnt about the decision. The resignation of a member of the Board or his removal from office shall not release him from the obligation to compensate for the losses incurred through his fault. A member of the Board may be released from the obligation to compensate for the losses inflicted by him through the performance of his duties provided that he acted in accordance with the company’s documents and other information the accuracy whereof was beyond reasonable doubt, or if he acted within the limits of normal production-business risks. Disputes concerning the compensation for losses shall be settled in court.

Article 36. Report on the Company’s activities

1. 10 days before the Annual General Meeting the Board must draw up a report on the company’s activities. The report shall contain:

1) an overview of the company’s activities in the financial year;

2) names of the company’s subsidiary companies, the number of shares of the companies acquired by the company, the total nominal value of the said shares and the share in the authorised capital of the these companies represented by them, assessment of benefit derived by the company form holding a majority of votes or exercising a dominant influence in the said companies;

3) the number of own shares and shares of other companies acquired and transferred in the course of the financial year as well as substantiation of the said acquisitions and transfers;

4) information on the company’s branches;

5) material events in the company at the close of the financial year;

6) plans and forecasts of the company’s activities.

2. The company’s Articles of Association may also set other requirements for the report on the company’s activities.

3. If the Board is not formed in the company, the report on the company’s activities, meeting the requirements of this Article, must be drawn up by the head of the Administration.

4. The reports on the activities of public limited liability companies and private limited liability companies specified paragraph 2 of Article 60 of this Law must be audited by the auditor prior to the Annual General Meeting. The reports on the activities of the above companies shall be public: upon the request of every interested person the company must provide conditions for access at the company’s registered office to the report on the company’s activities and the auditor’s opinion on the report or present a copy of the above documents or a part thereof.

5. If the General Meeting fails to approve the report on the company’s activities or gives the report a negative evaluation, the Board (if the Board is not formed - the head of the Administration) shall lose its powers. The Board (the head of the Administration) shall discharge its functions until the election of a new Board (the head of the Administration). If the report on the company’s activities is not approved, the head of the Administration or the Board, if it is elected by the General Meeting, must forthwith convene the General Meeting for the election of a new head of the Administration or the Board.

Article 37. Internal Auditor of the Company

1. The company’s Articles of Association may stipulate that the financial activities of the company shall be controlled by the internal auditor.

2. The internal auditor shall be elected by the General Meeting for the term set in the Articles of Association.

3. The procedure of work of the internal auditor shall be established by the work regulations of the internal auditor.

4. The Administration and Board of the company must submit to the internal auditor the accounting and financial documents requested by him.

5. The company shall pay the internal auditor a salary for his work. The amount of the salary or the terms and conditions of payment for work shall be determined by the General Meeting.

6. The internal auditor must keep the company’s commercial secrets divulged to him in the exercise of control over the company’s financial activities confidential.

7. The internal auditor’s qualification requirements shall be set by the Government of the Republic of Lithuania or the institution authorised by it.

Article 38. Head of the Administration and the Administration

1. The company shall have the head of the Administration (the president, director general, director).

2. The head of the Administration shall direct the Administration which shall organise and carry out the company’s business activities. The head of the Administration shall approve the work regulations of the Administration, employ and dismiss the Administration staff members, conclude employment contracts with them.

3. The head of the company’s Administration shall represent the company in the relations with the third parties both in the court and in the arbitration institution. The head of the Administration shall acquire the right to represent the company from the date fixed in the employment contract.

4. The head of the Administration may enter into contracts specified in paragraph 6 of Article 35 of this Law only on the basis of the decisions of the Board. The company’s Articles of Association may specify other cases when the head of the Administration may enter into contracts with third parties only having been given the consent of the General Meeting or the Board. The limits on the powers of the head of the Administration of the company, arising under the Articles of Association, may never be relied on as against third parties, even if the Articles of Association have been disclosed in the manner prescribed by law.

5. The head of the Administration must communicate to the Board material specified in paragraphs 3 and 4 of Article 35 of this Law.

6. In his activities the head of the Administration of the company shall be guided by the company’s Articles of Association, resolutions of the General Meeting, decisions of the Board and work regulations of the Administration.

7. The head of the Administration may have deputies. The Articles of Association of the company may specify spheres of activity where the deputies of the head of the Administration shall be entitled to act independently and to enter into contracts of the company. The limits on the powers of the deputy head of the Administration may be relied on by the company as against third parties only from the day of disclosure of the Articles of Association in the manner prescribed by law.

8. The head of the Administration shall be elected and removed from office by the Board of the company (if the Board is not formed - by the Supervisory Board, and where the Supervisory Board is not formed either - by the General Meeting). A competition may be held to choose the head of the Administration. The Board of the company (if the Board is not formed - the Supervisory Board, and where the Supervisory Board is not formed either - the person authorised by the General Meeting) must within 2 working days notify the administrator of the Register of Enterprises in writing of the election or removal from office of the head of the Administration.

9. The head of the Administration may be a competent natural person with whom a contract of employment shall be concluded. A person not entitled under the laws of the Republic of Lithuania to occupy the post may not be appointed head of the Administration.

10. The contract of employment shall be signed with the head of the Administration by the chairman of the Board (if the Board is not formed - by the Supervisory Board, and where the Supervisory Board is not formed either - by the person authorised by the General Meeting). If the head of the Administration is a member of the company Board, the contract of employment with him shall be signed by the chairman of the Supervisory Board (if the Supervisory Board is not formed - by the person authorised by the General Meeting).

11. If the head of the Administration is not a member of the Board, he shall participate in the meetings of the company in a deliberative capacity.

12. If the head of the Administration or his deputy enters into a contract which is beyond his competence, exceeding exposure to normal business risk, or performed other unlawful actions thereby inflicting damage on the company (including loss of profit) or if by reason thereof the persons derive direct or indirect benefit at the cost of the company or shareholders, the company and the shareholder or shareholders of the company shall be entitled to claim through the court compensation for the damage (including the loss of profit) incurred because of the contract or the above actions.

13. Having entered into a contract beyond his competence, the head of the Administration shall bear subsidiary liability if the claims of the third person are not satisfied in full from the company.

CHAPTER FIVE

CAPITAL OF THE COMPANY

Article 39. The Capital Structure

1. The company's capital shall be divided into equity capital and borrowed capital. The equity capital shall be formed out of the share issue price and the profit of the company. The borrowed capital shall be formed by issuing debentures, taking loans and by borrowing funds in any other way.

2. The company's equity capital shall consist of:

1) the authorised capital;

2) the share premium (the amount above nominal value);

3) revaluation reserve;

4) legal reserve;

5) reserves for purchasing own shares (in public limited liability companies);

6) reserves specified in the Articles of Association;

7) other reserves;

8) profit (losses) brought forward;

7) grants and subsidies;

10) deferred charges (expenditure formed by increasing the current period costs or reducing the income, which are anticipated in the subsequent periods in order to correctly reflect the performance of the periods).

3. The authorised capital shall amount to the sum total of the nominal values of all subscribed for shares of the company.

4. If the company's equity capital becomes less than 3/4 of the authorised capital specified in the Articles of Association, the Board shall convene the Extraordinary General Meeting. The Meeting may adopt a resolution to reduce the company’s authorised capital by the amount which is not less than the difference between the equity capital and the authorised capital or to liquidate the company. The shareholders may also decide to cover the difference by additional contributions.

5. If the General Meeting failed to adopt the resolutions provided for in paragraph 4 of this Article and the difference between the equity capital and the authorised capital was not covered by additional contributions, the Board shall within 15 days from the General Meeting, but not later than within 2 months from the moment when it learnt or should have learnt of the equity capital having fallen below 3/4 of the authorised capital, must apply to the court for the reduction of the authorised capital of the company by the sum whereby the equity capital has fallen below the authorised capital.

6. After the court order to reduce the company’s authorised capital becomes effective, the Board of the company must change the amount of the authorised capital of the company accordingly, first of all by cancelling its own shares acquired by the company and, should this prove insufficient, by reducing the nominal value of the remaining shares or cancelling the shares, reducing the number of shares for all shareholders in proportion to the number of shares of the company owned by them and by making appropriate amendments in the Articles of Association of the company. The amended Articles of Association of the company must be presented for registration in the Register of Enterprises of the Republic of Lithuania within 15 days from the coming into effect of the court order.

7. Paragraphs 4, 5 and 6 of this Article shall not apply until the expiry of the time limit for payment for the company shares of the last issue.

Article 40. Reserves and their Composition

1. The revaluation reserve - the amount whereby the value of long-term tangible and financial assets increased upon the asset revaluation. The revaluation reserve shall be reduced when the revalued assets are written off, subjected to wear, depreciated or transferred into the ownership of the State, municipality or other persons. The revaluation reserve may not be used to reduce losses. The revaluation reserve may be applied to increase the authorised capital in accordance with the procedure established in Article 53 of this Law.

2. The legal reserve shall be formed from the deductions from the net profit in accordance with the procedure established in paragraph 4 or Article 61 of this Law and shall be used to cut the losses. In case of reduction of the authorised capital the legal reserve may be reduced retaining the ratio specified in paragraph 4 of Article 61 of this Law. When decreasing the authorised capital, the difference in the amount of the legal reserve shall be attributed to the profit or loss of the accounting period to be appropriated.

3. The reserve for purchasing own shares shall be formed in order to cover the acquisition value of the own shares of a public limited liability company. The amount of the reserve may not be less than the sum total of the values of own shares acquired by the public limited liability company.

4. The reserves specified in the Articles of Association and other reserves shall consist of the reserves available for distribution and reserves not available for distribution.

5. Reserves not available for distribution shall be formed in accordance with the procedure established by law and the company’s Articles of Association for specific purposes by transferring part of the net profit of the accounting period. Reserves not available for distribution shall be formed, reduced and liquidated upon the resolution of the General Meeting by an at least 2/3 majority vote. When reserves not available for distribution are being reduced or liquidated, the authorised capital shall be increased by an appropriate amount and the nominal value of shares shall be increased pro rata to the nominal value of shares of the company owned by the shareholders, or new shares shall be issued.

6. Reserves available for distribution shall be formed and used only in accordance with the procedure established in the Articles of Association of the company.

7. The reserves provided for in paragraphs 3 and 4 of this Article shall be formed only after the legal reserve prescribed by paragraph 2 of this Article has been formed.

Article 41. Shares

1.Shares are securities signifying an ownership position in a company, evidencing the participation of their holders in the company's capital and entitling them to property and non-property rights. Shares in private limited liability companies may be represented by certificates (documents printed in accordance with the requirements established by the Government of the Republic of Lithuania ) or uncertificated (represented by entries in the securities accounts). The shares of public limited liability companies must be uncertificated. The shares of public limited liability companies must be registered with the Securities Commission.

2. The nominal value of a share must be quoted in litas without indicating the centas.	3. Shares are divided into the following types:

1) according to the manner of disposal - into registered and bearer shares;

2) according to the rights attached - into ordinary and preference shares.

4. The shares of one type are divided into classes according to the rights carried by them. The rights carried by the shares of different classes must be specified in the Articles of Association of the company. All shares of one class must be of equal nominal value.

5. Uncertificated shares shall be represented by entries in securities accounts. The securities accounts of private limited liability companies shall be administered by the issuing private limited liability company, whereas the securities accounts of public limited liability companies shall be administered by the entities specified in the Law on Public Trading in Securities (hereafter – account administrators).

6. The accounts administrator which has opened the shareholder’s securities account shall issue, upon the shareholder’s request, the statement of account indicating the number of shares and other information relative to the shares entered in the account, which is prescribed by law.

7. The information that must be provided in the securities accounts in relation to uncertified shares shall be specified by the regulatory enactments regulating the accounting of securities and trading in securities.

8. A share represented by a certificate must state:

1) the word "Share " and the type of the share;

2) the code and name of the private limited liability company;

3) nominal value of the share;

4) number;

5) the rate of dividend on preference shares and the voting right carried by them;

6) the date of issue;

7) the name, surname and personal code (the name and code of a legal person);	8) the signature of the chairman of the Board (if the Board is not formed – the head of the Administration) attested by the seal of the private limited liability company.

9. Shares may be offered for secondary trading after the company has been registered or its authorised capital has been increased and after the shares have been fully paid up at their issue price.

10. The company shall be prohibited from issuing shares which may be exchanged for debentures and for shares of the types other than those prescribed by this Law.

Article 42. Partly Paid Shares

1. Partly paid certificated shares shall be marked by provisional statements from the shareholders’ list (shareholders register). The statements must specify the shareholder, the number of shares subscribed for by him and the amount paid in for the shares or the value of contributions made otherwise than in cash, the balance required in order to have the shares fully paid up and the deadline for payments. Upon the payment of the full share issue price, the provisional statements must be replaced by certificated shares.

2. Entries in the securities accounts of shareholders, representing partly paid uncertificated shares, shall state the amount paid, the amount still due and the deadline for payments. This data shall also be specified in the statement of securities account of a shareholder issued to the shareholder.

Article 43. Registered and Bearer Shares

1.The owner (shareholder) of a certificated registered share is the person whose name is indicated on the share. The said persons must be registered in the share register of the private limited liability company. The share register must state the following information about the shareholder: name, surname, personal code and address of the person, address (the name of the legal person, its code and registered office address), the number of shares of the company owned by the shareholder and the nominal value of the shares.

2. The owner of an uncertificated registered share or bearer share is the person in whose name the securities account has been opened. The shares owned by the person shall be entered in this account.

3. Private limited liability companies may have only registered shares.

4. Public limited liability companies shall be entitled to be provided by the administrators of accounts, according to the procedure established by the regulatory enactments regulating the accounting of securities and trading in securities, information about the registered shares of that company recorded in the securities accounts administered by them, the shareholders’ lists and data relating to them.

5. Public limited liability companies shall have no right to demand that the administrators of accounts disclose the identity of the owners of bearer shares and provide information about them.

6. Registered shares of a public limited liability company may be exchanged for bearer shares or vice versa by a resolution of the General Meeting adopted by an at least 2/3 majority vote of the holders of each type of shares, the holders of registered and bearer shares taking separate votes at the Meeting.

Article 44. Ordinary and Preference Shares

1.Ordinary shares constitute the main part of the company's shares. The nominal value of the preference shares may not exceed 1/3 of the authorised capital. All ordinary shares must be of equal nominal value.

2. The property rights of the ordinary share holders to dividend and a part of the assets of the company in liquidation may be realised only after the satisfaction of claims of the holders of preference shares. Only the holders of ordinary shares shall have the right to receive new shares which are issued when the company’s authorised capital is increased out of the company’s profit carried forward and reserves not available for distribution. If the authorised capital is increased out of the share premium or revaluation reserve, the holders of both preference and ordinary shares shall have equal rights to get new shares.

3. Conversion of ordinary shares into preference shares shall be prohibited.

4. The company’s preference shares may be converted into ordinary shares by the resolution of the General Meeting adopted by an at least 2/3 majority vote of the holders of each type of shares participating in the Meeting, the holders of preference shares and ordinary shares taking a separate vote. When converting preference shares with cumulative dividend into ordinary shares, the company must make a full settlement with the holders of preference shares or undertake to settle the debt in the coming financial year.

5. It shall be prohibited to fix the amount of dividend for the holders of ordinary shares in the Articles of Association or share subscription agreement.

6.The property and non-property rights carried by preference shares, as well as the procedure for changing the rights must be established prior to their issue and must be recorded in the Articles of Association of the company. The amount of dividend shall be established as a percentage of the nominal value of the share. The specific (fixed) amount of the dividend on preference shares as a percentage of the nominal value of the share must be established in the company’s Articles of Association. The dividend on preference shares may not be in excess of the higher of the following: a triple amount of the last quarter’s weighted average of the annual interest rate on the T-notes of the Republic of Lithuania issued in litas by auction in the last calendar quarter, which is published in the “Valstybės žinios” (Official Gazette) by the Government or the institution authorised by it or a double amount of the dividend on ordinary shares, valid on the day of the General Meeting which adopted the company’s Articles of Association or their amendments establishing property and non-property rights carried by the preference shares.

7. If the profit is not sufficient for the payment of the dividend specified on the preference shares, all the preference shares with different dividend rates shall be paid the dividend of a proportionately smaller amount.

8.The dividend on preference shares may be cumulative or non-cumulative. This shall be established in the Articles of Association before the shares are issued.

9.The holder of cumulative preference shares shall be guaranteed the right to the rate of dividend specified on the shares. If the profit is not sufficient for the payment of the full amount of the dividend, the unpaid sum must be carried over to the next financial year.

10. The dividend or part of the dividend on non-cumulative preference shares which has not been paid to the shareholders may not be carried over to the next financial year.

11. The Articles of Association may establish that the preference shareholders have no voting rights. If in two consecutive financial years the company fails to pay the full amount of dividend to the holders of cumulative non-voting preference shares, such shareholders shall acquire the voting right. The shareholders shall retain this right until the end of the financial year in which they are paid the full amount of the dividend due to them.

Article 45. Workers' Shares

1. The workers' shares are registered shares sold on preferential terms or otherwise transferred to the workers of the company. Such shares may be issued after all shares subscribed for at the moment of incorporation have been fully paid for.

2. The Articles of Association of the company may restrict the transfer of workers' shares, but the period of restriction may not be longer than three years after the day of the issue of shares. It shall also be established that the holder of a workers’ share has no right to transfer the share into the ownership of another person who has no right to acquire such shares. After the expiry of the term of this restriction, the share shall lose the status of a workers’ share and shall be converted into an ordinary registered share. If the workers' share is inherited before the expiry of the time period of restriction of transfer, the status of the workers' share shall not change.

3. The workers' shares may be paid, except for the initial contributions for them, by making deductions from the workers's salary (wage), if the deducted amounts are accumulated in a special fund at the workers' request. It shall be prohibited to compel a worker to buy the company's shares or to make deductions from his wages for the payment for the shares for which he has not subscribed.

Article 46. Special Shares

1. Special shares are ordinary registered shares granting the State or the municipality additional non-property rights. The special share status may be accorded, on the resolution of the General Meeting, to any share (shares) owned by the State or the municipality provided that the following conditions are complied with:

1) the State or the municipality waives 2/3 or more votes at the General Meeting held by it by selling or transferring in any other way part of the shares of the company owned by the State or the municipality;

2) the principal business of the company is in the sphere of transport, energy, oil sector, communications or public utilities.

2. A special share shall carry the following additional rights:

1) to veto the resolutions of the General Meeting, also other resolutions regarding the reorganisation, liquidation of the company, cancellation of the special share status, as well as other resolutions which the owner of a special share is entitled veto exercising the right granted to him by the laws on transport, energy, oil, communications or public utilities sectors;

2) to make an intervention on every issue discussed at the General Meeting;

3) to convene the General Meeting and propose items for the agenda of the Meeting and drafts of resolutions.

3. The special share shall lose its special share status when:

1) the State or municipality transfers the share into the ownership of another person;

2) the resolution on the cancellation of the special share status is adopted by the General Meeting.

Article 47. Subscription for Shares

1. Shares shall be subscribed for when the company and a natural or legal person conclude a written share subscription agreement, except in the case of company incorporation. By the subscription for shares agreement one party commits itself to allot a certain number of new shares and the other party binds itself to pay the full issue price of the shares subscribed for. The procedure of subscription for the shares of a public limited liability company, issued in the course of an increase in the authorised capital and distributed through the Securities Exchange registered in the Republic of Lithuania, the setting and payment of a price shall be determined by the Securities Commission.

2. The subscription agreement of the company must state:

1) the name of the company and the address of its registered office;

2) the amount of authorised capital and the amount of increase in the authorised capital;

3) the date of the General Meeting at which the resolution to increase the authorised capital has been adopted;

4) the date and number of registration of the shares of the public limited liability company;

5) the nominal value and the issue price of the shares, the number of shares of each type and class issued and the rights they carry;

6) time limits for the allotment of shares of a public limited liability company;

7) the procedure and time limits of payment for shares, the sum of late payment penalty for failure to pay for shares when due. The sum of late payment penalty may not be less than 0.05% on the unpaid amount for each missed day;

8) the procedure of share allotment to the persons who subscribed to them in the event of over-subscription;

9) the possibility and procedure of increasing the authorised capital of the company in the event of under-subscription (amending and registering the Articles of Association of the company as provided for in paragraph 1 of Article 51 of this Law);

10) the name, surname, personal number and address of the subscriber (the name, code number, registered office address of the legal person and the name and surname of its representative);

11) the number of shares subscribed for according to their types and classes.

3. The head of the Administration shall be responsible for the drafting of the share subscription agreement and the accuracy of the information.

4. At the request of the person who subscribed for a share prior to the registration of the company or the registration of the Articles of Association in which an increased amount of the authorised capital is indicated, the company (when the company is being incorporated - its incorporators) must, within 15 days from the written request, return his contributions without any deductions if:

1) the company was being incorporated in violation of the laws of the Republic of Lithuania;

2) the authorised capital has been increased in violation of this Law;

3) inaccurate or incomplete information specified in subparagraphs 1- 9 of paragraph 2 of this Article has been presented in the subscription agreement.

5. The company may not subscribe for its own shares.

6. The members of the management bodies of the company, who passed a resolution to subscribe for shares in violation of paragraph 5 of this Article, shall themselves pay up the shares. Having paid up the shares, they shall become their owners.

Article 41. Payment for Shares

1. Payment for shares means the payment of the share issue price in cash or by contributions made otherwise than in cash by the persons who subscribed for shares. Only the assets which are the objects of civil circulation and which may be rated economically may be used as contributions in kind. Works and services may not be used as contributions.

2. The share issue price must be not less than its nominal value.

3. The shares issued by the company must be fully paid up within the period specified in the subscription agreement, but not later than within 12 months after the signing of the agreement. The subscription agreement must indicate the dates for the payment for shares, including the date for the payment of the initial contribution.

4. The initial contributions in cash of each person who subscribed for shares may not be less than a sum equal to one quarter of the nominal value of the shares subscribed for by him plus the whole of the premium on the issue price. If in the course of an increase in the authorised capital the initial contributions are paid otherwise than in cash, the contributions for the total price of the shares must be transferred in full within the time limit set for the payment of the initial contributions.

5. If in the course of an increase in the authorised capital the shares are fully or part ly paid for by a contribution made otherwise than in cash, the property, whereby the payment is made, the person transferring it and the value of the contribution must be established in the resolution of the General Meeting regarding an increase in the authorised capital.

6. A contribution made otherwise than in cash must be valued by the assets valuer according to the procedure prescribed by the laws and other legal acts of the Republic of Lithuania regulating assets valuation prior to the General Meeting at which an increase in the authorised capital is planned by issuing shares for the above contribution. The requirements of assets valuation reports are set forth in paragraph 7 of Article 10 of this Law. The report of assets valuers who perform valuation of contributions made otherwise than in cash for the shares of a public limited liability company shall be disclosed according to the procedure established by law.

7. The company may not release the persons who subscribed for the shares from his obligations to the company to pay up for the shares subscribed for, except in the cases provided for in paragraph 14 of Article 54 and paragraph 5 of Article 76 this Law.

8. Shares shall be considered to have been paid up when the person who subscribed for them pays in the last contribution in cash and transfers all assets provided for in the share subscription agreement (the last part of the non-cash contribution) into the ownership of the company.

9. If a person who subscribed for shares fails to pay the contributions for the subscribed shares within the prescribed time limit, the company shall have the right to:

1) sell the shares subscribed for by the debtor. If the shares are sold for a lower price than the subscriber's debt to the company, the company shall be entitled to demand that he pay the balance. If the shares are sold at a higher price, the difference must be returned to the debtor. The share selling costs shall be covered by the person who failed to pay up for the shares;

2) to demand that the person who subscribed for shares pay the late payment penalty provided for in the subscription agreement and to recover the unpaid amounts by filing for claims.

Article 47. Transfer of Shares

1. Certificated registered shares shall be transferred into the ownership of other persons by making on the share an appropriate inscription - the endorsement. The provisions of the Law of the Republic of Lithuania on the Bills of Exchange and Promissory Notes shall apply to the form of the endorsement and the identification of the holder of registered shares.

2. The transfer of uncertificated shares shall be marked by making a debit entry in the transferor's securities account and a credit entry in the transferee's account.

3. Entering into a contract on the transfer of uncertificated shares, the parties to the contract must present to their account managers a written contract which must give at least the following information:

1) the code and name of the company;

2) nominal value of the shares being transferred and their number according to the types and classes;

3) for shares of the public limited liability company - share issue code assigned by the Central Securities Depository of Lithuania;

4) the amount of dividend on preference shares and the voting right attached to them.

4. The account managers shall have no right to make an entry according to a contract in which at least one item of the information specified in paragraph 3 of this Article is missing.

5. The requirements of paragraphs 3 and 4 of this Article shall not apply to the share transfer contracts concluded on the Securities Exchange.

6. The person who subscribed for the shares before the registration of the company being incorporated or before the registration of amendments to the Articles of Association of the company due to the increase in the authorised capital shall have no right to transfer to other persons the shares subscribed for by him.

7. The shareholder may not transfer to other persons partly paid shares.

8. Public limited liability companies shall be prohibited from introducing any restrictions on the right of the shareholders to transfer fully paid shares into the ownership of another person in the manner prescribed by this Law, except in the case provided for in paragraph 2 of Article 45 of this Article. Private limited liability companies shall be prohibited from imposing any more stringent restrictions on the right of shareholders to transfer shares than those prescribed by paragraphs 9, 10, 11 and 12 of this Article.

9. The shareholder must notify the head of the Administration of the private limited liability company in writing of his intention to transfer all or part of the shares in the private limited liability company, indicating the number of the shares being transferred according to their types and classes, the method of transfer and, if the shares are sold, the selling price. The shareholder shall not be required to notify of the intention to transfer the shares if he transfers the shares to another shareholder of the private limited liability company.

10. The shareholder of a private limited liability company may not be given consent to the transfer of his shares to another person or persons who are not shareholders of the private limited liability company, unless by reason of the transfer of shares the number of shareholders of the private limited liability company would become larger than established in paragraph 5 of Article 2 of this Law. The head of the Administration must notify the shareholder of the consent to or prohibition of the transfer of shares in the private limited liability company within 5 days from the day of the receipt of the shareholder's notification, except in cases when the shares are sold.

11. The existing shareholders of the private limited liability company shall have the right of pre-emption to acquire all shares in the private limited liability company, which have been offered for sale. The head of the Administration of the private limited liability company must within 5 days from the receipt of the shareholder's notice of his intention to sell the shares to a person who is not a company shareholder notify every shareholder of the company against his signature or by sending a notice by registered mail, indicating the class, number and price of the shares offered for sale as well as the time limit within which the shareholder may communicate to the company his wish to purchase the shares offered for sale. The time limit may not be shorter than 15 days and longer than 30 days from the day of the dispatch of the notice or letter. The head of the Administration must within 45 days from the receipt of the shareholder's notice inform the shareholder of the consent to or prohibition of the sale of shares, of the wish of other shareholders to purchase all shares the above shareholder is offering for sale. If one or several shareholders of the private limited liability company expressed their wish to purchase all shares in the private limited liability company offered for sale by the shareholder, the latter must sell the shares to the shareholders (one or several) who expressed their wish, whereas the shareholder/shareholders who expressed his/their wish must purchase all those shares at the price not lower than the one indicated in the notice, effecting the payment within 3 months from the day of submission to the head of the Administration of the private limited liability company of the notice of intention to sell the shares, unless otherwise agreed with the shareholder who is selling the shares.

12. If the shareholder has not been notified within the time limits set in paragraphs 10 and 11 of this Articles, the shareholder shall acquire the right to transfer the shares, in the event of sale - to sell the shares at the price not lower than the one specified in the notice.

13. In the event of transfer of shares in the private limited liability company according to other laws or in the course of enforcement of a court order, no consent to the transfer of shares shall be required.

14. If, in the case specified in paragraph 13 of this Law or after the acquisition of the shares in the private limited liability company by inheritance, the number of shareholders of the private limited liability company becomes larger than established in paragraph 5 of Article 2 of this Law and does not fall down to the prescribed limit within 12 months, the private limited liability company must be reorganised into a public limited liability company or liquidated.

Article 50. Invalidity of the Shares Issued by the Company

1. Shares shall be invalid and shall not carry any property or non-property rights if:

1) they have been offered for secondary trading in violation of the requirements of paragraph 9 of Article 41;

2) the shares of the public limited liability company have not been registered with the Securities Commission or have been cancelled from the register (their registration has been cancelled) in the manner prescribed by laws.

2. If the private limited liability company has changed its name, exchanged one type of shares for another type of shares, reduced the nominal value of its certificated shares or the rights of preference shareholders, it must also exchange the certificated shares held by the shareholders or make appropriate inscriptions on them. If within 3 months after the notification of the shareholder against his signature or by a registered letter the shareholder fails to present the certificated shares to the Board of the private limited liability company (if the Board is not formed - to the head of the Administration), the said shares shall become invalid, while the new certificated shares shall be deposited with the private limited liability company until there are collected.

3.The company must make an announcement about the invalidity of shares in the periodical publication specified in the Articles of Association.

4. If the certificated share issued by the private limited liability company is damaged and not suitable for circulation, but is, however, identifiable, the company must replace it at the holder's request. Expenses incurred by exchanging the certificated shares shall be covered by the holders of the shares.

5. Lost, destroyed or missing certificated shares shall be replaced by the company according to the procedure established by the laws of the Republic of Lithuania.

Article 51. Increase of the Authorised Capital

1. The authorised capital of the company shall be increased by issuing new shares or increasing the nominal value of the issued shares and amending the Articles of Association accordingly.

2. The authorised capital of the company shall be increased on the resolution of the General Meeting adopted by an at least 2/3 majority vote. Where there are several types or classes of shares, the resolution on the increase of the authorised capital shall be adopted by an at least 2/3 majority vote in favour, the holders of each type or class of shares taking separate votes. The approval of the holders of non-voting shares of preference classes, adopted by an at least 2/3 majority vote shall also be necessary for adopting a resolution on increasing the authorised capital through additional contributions by issuing preference shares.

3. The company may issue new shares or increase the nominal value of shares only when its authorised capital has been fully paid (at the price of the last issue of shares).

4. The resolution of the General Meeting to increase the authorised capital must be disclosed in the manner prescribed by law.

5. Amendments to the Articles of Association relative to the increase of the authorised capital shall be registered in the Register of Enterprises after all the shares have been subscribed for and the initial contributions have been collected. In case of undersubscription during the subscription period, the authorised capital may be increased by the amount equal to the sum of nominal values of the shares subscribed for only in case this has been provided for in the resolution of the General Meeting which adopted the resolution on increasing the authorised capital. Based on this resolution, the Board of the company shall have the right to change the amount of the authorised capital and to amend the Articles of Association accordingly. In this case the increase in the authorised capital may not exceed the nominal value of the shares subscribed for.

6. The authorised capital shall be deemed increased only upon the registration of the amendments to the Articles of Association in the Register of Enterprises of the Republic of Lithuania.

Article 52. Increase of the Authorised Capital by Additional Contributions

1. The authorised capital of the company may be increased by additional contributions of its shareholders and other persons only upon the issue of new shares.

2. An insolvent company shall be prohibited from increasing its authorised capital through additional contributions by making a public offer for share subscription. It may make an offer for purchase of shares only to its shareholders, workers and creditors.

3. If a public limited liability company has issued convertible debentures, its authorised capital may be increased by issuing new shares (of the nominal value, type and class specified in the resolution concerning the issue of convertible debentures), for which the convertible debentures must be exchanged if within the time period specified in the resolution to issue convertible debentures their holder expressed his wish to exchange the debentures for shares. Shares shall be granted in exchange for convertible debentures upon the expiry of the time period specified in the resolution to issue convertible debentures, whereafter the Board shall change the amount of the authorised capital in accordance with the share issue offered for convertible debentures, amend the Articles of Association of the company and present them for registration. In this case paragraph 4 of this Article shall not apply. Payment for convertible debentures shall be deemed payment for the shares into which the debentures are converted.

4. If the amendments to the company's Articles of Association, relating to the increase in the authorised capital, are not registered in the Register of Enterprises of the Republic of Lithuania within 6 months from the day of the General Meeting which adopted the resolution on increasing the authorised capital by additional contributions, the authorised capital shall be considered as not to have been increased. In this case the contributions for the shares subscribed for must be repaid forthwith.

Article 53. Increase of the Authorised Capital out of the Funds of the Company

1. The authorised capital of the company may be increased upon the resolution of a General Meeting out of the retained profit, share premium or reserves (except for the reserves for purchasing own shares and reserves available for distribution) by issuing new shares which are transferred to the shareholders without payment, or by increasing the nominal value of the previously issued shares.

2. The General Meeting shall pass a resolution to increase the authorised capital on the basis of the financial statement drawn up not earlier than 30 days prior the Meeting. Where the resolution to increase the authorised capital is adopted at the Annual General Meeting, the resolution may be passed on the basis of the annual financial statements.

3. It shall be prohibited to increase the authorised capital of the company out of the retained profit, share premium or reserves until the losses shown in the financial statements are covered.

4. The amendments to the Articles of Association relative to increasing the authorised capital out of the funds of the company shall be registered in the Register of Enterprises. Alongside with the other documents, the administrator of the Register shall be presented the company's financial statements on the basis whereof the resolution to increase the authorised capital has been adopted.

5. When the company is increasing its authorised capital out of the retained profit, premium on the shares or reserves, the shareholders shall be entitled to free new ordinary shares pro rata to the total nominal value of shares owned by them on the day of the General Meeting which adopted the resolution on increasing the authorised capital, except in the cases specified in paragraph 2 of Article 44 of this Law and paragraph 6 of this Article.

6. When the company increases the authorised capital out of the retained profit, premium on shares or reserves, implementing the resolution of the General Meeting or the court order to rectify the violations committed in the course of authorised capital formation or increase, the shareholders, whose property rights were violated, shall have the pre-emptive right to free new shares pro rata to the shares owned by them. The General Meeting may adopt a resolution to rectify the violations committed in the course of the authorised capital formation or increase by re-allotting the shares if the shareholders who after the committed violations owned more shares or owned shares of higher nominal value than was due to them, on the day of the General Meeting (when the resolution to rectify the violations is passed) own a not smaller amount of shares or own shares of not lower nominal value than is necessary to rectify the violations and provided that the shareholders give a written approval of such a resolution.

7. Upon the registration in the Register of Enterprises of the Republic of Lithuania of the amendments to the Articles of Association relative to increasing the authorised capital, the Board shall, according to the procedure established in the Articles of Association, notify the shareholders of the procedure for collecting the new shares. The uncollected shares shall be kept by the company until their collection. If the shares are uncertificated, the new shares shall be entered in the securities account by crediting them to the account.

8. If the amendments to the company's Articles of Association relative to increasing the authorised capital are not registered in the Register of Enterprises of the Republic of Lithuania within 3 months from the day of the General Meeting which adopted the resolution to increase the authorised capital out of the funds of the company, the authorised capital shall be deemed not to have been increased.

9. The new shares shall give their holders equal rights with the holders of other shares of the same class to receive dividend for the business year in which the new shares were issued.

Article 54. Reduction of the Authorised Capital

1. The authorised capital may be reduced in order to:

1) pay out the available funds of the company to all the shareholders pro rata to the nominal value of the shares owned by them ;

2) cover the losses entered in the company’s balance sheet;

3) cancel the shares in the company acquired by the company itself or its subsidiary in violation of the provisions of Article 55 of this Law;

4) in other cases provided for by this Law.

2. The authorised capital may be reduced only in the following ways:

1) by decreasing the nominal value of shares;

2) by cancelling shares.

3. The authorised capital may be reduced by the resolution of the General Meeting adopted by an at least 2/3 majority vote or by the court order in the cases provided for ion paragraph 6 of Article 39 and paragraph 6 of Article 55 of this Law. Where the company has issued shares of different types and classes, the General Meeting may reduce the authorised capital if this is approved of by majority vote of holders of at least 2/3 of shares of the type or class (including the holders of non-voting shares) participating in the Meeting, who take separate votes. The reduced authorised capital may not be less than the minimum amount of the company's authorised capital established in Article 2 of this Law.

4. If the company is reducing its authorised capital in the case specified in subparagraph 1 of paragraph 2 of this Article, a resolution to increase the company's authorised capital through additional contributions by issuing new shares to be acquired by the creditors may be adopted at the same General Meeting.

5. When reducing the authorised capital the company must in the first place cancel the shares acquired by the company itself and its subsidiary. The nominal value of all shares remaining after the cancellation of the shares in the company acquired by the company and its subsidiaries or the number of the shares shall be reduced proportionately to all shareholders, except in the case provided for in subparagraph 3 of paragraph 1 of this Article.

6. Every creditor of the company must be notified against his signature or by a registered letter of the resolution to reduce the authorised capital of the company. Moreover, the resolution to reduce the authorised capital of the company must be published in the periodical publication specified in the Articles of Association or every shareholder must be notified thereof against his signature or by a registered letter. The resolution to reduce the authorised capital of the company, indicating the way in which the capital is to be reduced, must be disclosed in the manner prescribed by law.

7. While reducing its authorised capital, the company must provide additional safeguards for the discharge of its obligations to each creditor who claims them, except in the cases provided for in paragraph 9 of this Article.

8. Additional safeguards for the discharge of obligations may be claimed by the creditor, whose rights arose prior to the day of disclosure of the resolution regarding the reduction of the authorised capital of the company. The company creditor may file his claims within 2 months from the notification of the creditor of the resolution to reduce the authorised capital of the company or the day of mailing of the letter by registered mail.

9. The company may refrain from providing the creditors additional safeguards for the discharge of obligations if at least one of the following conditions is satisfied:

1) the total amount of the creditors' claims does not exceed 1/2 of the amount of the company's equity capital after the reduction of the authorised capital;

2) the creditor's claims are adequately secured being protected by unfailing safeguards - pledge, suretyship or guarantee. In these cases disputes concerning the provision of additional safeguards for the discharge of obligations shall be settled in court;

3) the authorised capital is reduced with a view to cutting the losses entered in the company's balance sheet.

10. Amendments to the Articles of Association of the company relative to the reduction of its authorised capital shall be presented to the administrator of the Register of Enterprises for registration not earlier than 3 months after the performance of all actions specified in paragraph 6 of this Article, also after the provision of additional safeguards for the discharge of obligations to the creditors who so requested or after the court decision on the inadmissibility of the creditors' claims becomes effective. If the authorised capital is reduced in order to cut the company's loses entered in its balance sheet, the amendments to the Articles of Association may be presented to the administrator of the Register of Enterprises for registration immediately after the adoption of the resolution of the General Meeting.

11. The authorised capital shall be deemed reduced only after the registration of the amendments to the Articles of Association in the Register of Enterprises of the Republic of Lithuania.

12. If amendments to the Articles of Association of the company regarding the reduction of the authorised capital have been registered in violation of the requirements of this Article regarding the provision to the creditors of additional safeguards for the discharge of obligations, the reduction of the authorised capital may be declared invalid by the court order.

13. If the shareholders fail to deliver to the Board, by the date set by the General Meeting, shares for withdrawal from circulation and cancellation, the company’s Board shall publicly declare said shares invalid.

14. Reducing its authorised capital in the case specified in subparagraph 1 of paragraph 1 of this Article, the company may return the shareholders their share of paid-in contributions or release them from the unpaid amounts of contributions due for the shares subscribed for, corresponding to the amount payable to them had the shares been fully paid up. Upon the reduction of the authorised capital, the shareholders may be paid only in cash, unless the Articles of Association of the company or the subscription agreement establish otherwise.

Article 55. The Right of the Company to Purchase its own Shares

1. A public limited liability company the shares whereof have been listed in the official or current list of the Stock Exchange registered in the Republic of Lithuania shall be entitled to purchase its own shares. The transactions must be concluded on the central market of the Stock Exchange.

2. Own shares may be purchased upon the resolution of the General Meeting. The General Meeting must specify by its resolution:

1) the purpose of the purchase of own shares;

2) the maximum number of shares the purchase whereof is permitted;

3) the duration of the period within which the company may purchase its own shares, which may not be longer than 18 months;

4) the maximum and minimum price of the shares being purchased.

3. The nominal value of the shares being purchased by a public limited liability company together with the own shares already held by the company may not be higher than 1/10 of the authorised capital.

4. A public limited liability company shall be prohibited from purchasing its own shares if, following the purchase, the equity capital would become less than the aggregate amount of the authorised capital and reserves which are not available for distribution under paragraph 3 of Article 62.

5. The shares of the company purchased in violation of the provisions of this Article must be transferred into the ownership of another person within 12 months from the purchase thereof.

6. If the shares are not transferred within the time limit specified in paragraph 5 of this Article, they must be cancelled and the authorised capital must be reduced accordingly. In case of failure by the company to cancel the shares, the shares shall be cancelled and the authorised capital shall be reduced accordingly by the court order. The company's management bodies, shareholders and creditors shall have the right to apply to court. After the court makes an order to reduce the authorised capital of the company, the Board of the company must change the amount of the company's authorised capital accordingly by cancelling the company's own shares purchased in violation of the requirements of this Article and make appropriate amendments to the Articles of Association of the company. The amendments to the Articles of Association of the company must be presented for registration within 15 days from the coming into effect of the court order.

7. Having purchased its own shares, the public limited liability company shall have no right to exercise property and non-property rights carried by the shares.

8. The public limited liability company shall be prohibited from purchasing its own shares which have not been fully paid up.

9. The public limited liability company may purchase its own shares only provided it has or builds up a reserve for the purchase of own shares, the amount whereof is not less than the aggregate value of own shares being purchased and those already held.

10. Responsibility for compliance with the conditions specified in paragraphs 3, 4, 7, 8, 9 and 14 of this Article while implementing the decision to purchase own shares of the company shall rest with the head of the Administration.

11. The company's consent to accept own shares as safeguards for the discharge of obligations shall be equivalent to the acquisition of own shares and the provisions of this Article must be applied with respect thereto.

12. If shares of the company are subscribed for or acquired by its subsidiary, the shares shall be deemed to have been subscribed for or acquired by the company whose shares are subscribed for or acquired. The provisions of paragraphs 5 and 6 of Article 47 of this Law shall apply in respect of the above subscription for shares, while the provisions of this Article shall be applicable to the acquisition of shares.

13. Paragraph 12 of this Article must also be applied where the company or companies in which the company whose shares are being purchased holds a majority of the votes or which may exercise a dominant influence as defined in Article 7 of this Law, have been incorporated pursuant to the laws of foreign states and are of the legal form corresponding a public limited liability company or a private limited liability company.

14. The private limited liability company and the public limited liability company whose shares have not been listed in the official or current list of the Stock Exchange registered in the Republic of Lithuania shall be prohibited from acquiring its own shares.

Article 56. Debentures

1. A debenture of a public limited liability company is a term debt security under which the public limited liability company which is the issuer of the debenture becomes the debtor of the debenture holder and assumes obligations for the benefit of the debenture holder. The obligations shall be indicated in the resolution to issue debentures and in the debenture subscription agreement.

2. The obligations of the public limited liability company, prescribed by paragraph 1 of this Article, shall comprise the payment of interest and redemption of debentures, or solely the redemption of debentures, also the granting of the right to exchange the debentures for the shares of the public limited liability company which issued the debentures.

3. The debentures of one and the same issue shall grant their holders equal rights.

4. The resolution to issue debentures may be adopted by the General Meeting of the public limited liability company by a simple majority vote or by the Board if this is provided for in the Articles of Association. The provision shall not be applicable to the adoption of the resolution to issue convertible debentures.

5. In the resolution to issue debentures and in the debenture subscription agreement the public limited liability company must indicate the fixed date of debenture redemption, from which date the debenture holder shall acquire the right to receive from the public limited liability company a sum of money equal to the nominal value of the debenture. The debenture holder shall have equal rights with other creditors of the public limited liability company.

6. Before issuing debentures offered for public subscription, the public limited liability company may conclude an agreement with a bank registered in the Republic of Lithuania or brokerage firm (making a notice to the effect in the prospectus of the debentures). Under the agreement the bank or the brokerage firm would undertake to safeguard the interests of the holders of debentures of a certain issue where there are relations with the public limited liability company, while the public limited liability company would undertake to pay it a remuneration. The bank or the brokerage firm must protect the rights and legitimate interests of the debenture holders as they would protect their own rights and legitimate interests if they were the holders of all the debentures of the issue. The bank or the brokerage firm shall have the right to file an application with the court for the protection of the rights of debenture holders.

7. Holders of over 1/2 of the debentures of one specific issue shall have the right to:

1) dismiss the bank or the brokerage firm protecting their interests and demand that the public limited liability company conclude an agreement with the bank or brokerage firm of their choice;

2) bring to the notice of the bank or the brokerage firm protecting their interests that the violation committed by the public limited liability company in relation to the specific issue of debentures offered for public subscription is immaterial and therefore no special actions are needed to protect their interests (the provision shall not be applicable with respect to the violations committed by the public limited liability company in relation to debenture redemption and payment of interest).

8. In the cases where the debentures issued by the public limited liability company are secured by a charge on the assets, the bank or the brokerage firm shall be considered as the holder of the security. It shall exercise the rights of the security holder for the benefit of all debenture holders. Third persons may offer the bank or brokerage firm surety or guarantee for the discharge of the company's obligations arising due to the issue of debentures. In the event of a default in the discharge of all or part of the obligations, the bank or the brokerage firm must transfer to the debenture holders the funds received from the third parties.

9. If the debenture holder fails to present the debenture for redemption or does not claim interest within 3 years form the redemption date, he shall forfeit his right of claim to the above.

10. Debentures shall be uncertificated and shall be represented by entries in the securities accounts of their holders. Requirements laid down for uncertificated securities shall be applicable to the accounting of debentures and of trading in debentures.

11. Private limited liability companies shall be prohibited from issuing debentures.

Article 57. Convertible Debentures

1. A public limited liability company may issue debentures which may be exchanged for shares of the company.

2. The resolution to issue convertible debentures may be adopted by the General Meeting of the public limited liability company by an at least 2/3 majority vote. Where there are several classes of shares, the resolution to issue convertible debentures shall be adopted if approved of by an at least 2/3 majority vote of the holders of each class of shares taking a separate vote. If the resolution to issue convertible debentures contains a notice to the effect that the convertible debentures which are being issued may be converted into preference shares, the approval of the holders of preference non-voting shares adopted by an at least 2/3 majority vote shall also be necessary in order to pass the above resolution.

3. The resolution of the General Meeting to issue convertible debentures shall at the same time be a resolution to increase the company's authorised capital by the sum equal to the aggregate amount of nominal value of shares which may be exchanged for convertible debentures.

4. The resolution to issue convertible debentures and debenture subscription agreement shall contain the following information:

1) the type, class, nominal value of the shares for which the convertible debentures may be exchanged;

2) the rate at which the convertible debentures shall be exchanged for shares;

3) time limit by which the holder of convertible debentures shall have the right to demand that the convertible debentures be exchanged for shares.

5. Public limited liability companies with partly paid up authorised capital shall have no right to issue convertible debentures.

6. The resolution to issue convertible debentures must be disclosed in the manner prescribed by law. The report of the Board of the public limited liability company on the results of issue of convertible debentures must also be disclosed in the manner prescribed by law.

Article 58. Acquisition of Shares or Convertible Debentures Issued by the Company by Exercising the Right of Pre-emption

1. The shareholders of the company shall have the right to acquire on a pre-emptive basis the shares or debentures issued by the company in proportion to the nominal value of the shares owned by them on the day of the General Meeting which adopted the resolution to increase the authorised capital by additional contributions.

2. The offer to acquire on a pre-emptive basis the shares or debentures of the public limited liability company and the time limit for exercising the right of pre-emption must be disclosed in the manner prescribed by law. Every shareholder of the private limited liability company must be notified against signature or by a registered letter of the possibility to subscribe for the shares issued by the company by exercising the right of pre-emption.

3. The time limit within which the shareholder may acquire shares or convertible debentures by exercising the right of pre-emption may not be shorter than 30 days from the day of disclosure of the offer to the shareholders of the public limited liability company or from the day of sending of the notice or registered letter to the shareholders of the public limited liability company.

4. The shareholders of the public limited liability company shall be entitled to assign, according to the procedure laid down by the Securities Commission, other persons their right of pre-emption to acquire the shares issued by the public limited liability company.

5. The shareholders' right of pre-emption to acquire the shares or convertible debentures being issued by the company may be withdrawn by a resolution of the General Meeting adopted by an at least 3/4 majority vote. If the person or persons to whom the right of pre-emption to acquire the securities issued by the company are known to the General Meeting when the above resolution is being passed, the said persons and the number of shares or convertible debentures each of the persons may acquire shall be specified in the resolution.

6.The Board of the company shall present a written report to the General Meeting at which the withdrawal of the right of pre-emption is to be discussed. The report must indicate the following:

1) reasons for withdrawing the right of pre-emption;

2) justification of the proposed issue price of securities;

3) the person or persons to whom it is proposed to grant the right of pre-emption in acquiring said securities and the number of securities being issued which each of the above persons may acquire.

7. The resolution of the General Meeting of the public limited liability company concerning the withdrawal of the shareholders' right of pre-emption in acquiring the shares or convertible debentures being issued by the company must be disclosed in the manner prescribed by law. A private limited liability company must notify every shareholder of such a resolution against his signature or dispatch the notification by registered mail.

8.There may not be a partial withdrawal of right of pre-emption in acquiring shares or convertible debentures being issued by the company may.

9. Withdrawal of the right of pre-emption shall not abolish the shareholders' right to acquire the shares or convertible debentures being issued by the company.

CHAPTER SIX

FINANCES AND DISTRIBUTION OF PROFIT

Article 59. Financial Resources of the Company

1. The financial resources of the company shall be formed from the internal and external sources. Internal sources shall consist of profit, the external sources shall include contributions for shares, proceeds from debentures, grants and subsidies, borrowed funds and other equivalent funds.

Article 60. Audit of the Company

1. At the close of the financial year, before the Annual General Meeting, the firm of auditors approved by the General Meeting must audit financial statements at all public limited liability companies.

2. Paragraph 1 of this Article must be applied with respect to all private limited liability companies which satisfy at least two of the conditions listed below:

1) sales income exceeds LTL 5 000 000 in the accounting financial year;

2) the average number of pay-roll workers in the accounting financial year is not less than 50;

3) the sum of assets shown in the balance sheet exceeds LTL 2 500 000.

3. Every shareholder of the company or a group of shareholders shall be entitled to enter into a contract with the firm of auditors of his/their choice for auditing the activities and accounting documents of the company, ascertaining whether there are any indications of insolvency or fraudulent bankruptcy, whether or not the company's assets are being squandered, loss-yielding contracts are concluded, the rights of the shareholders are infringed, including an unwarranted payment of wages or application of relief or concessions (which resulted in the decrease in company profits or brought about losses to the company). The costs of the audit shall be covered by the shareholders who concluded the contract with the firm of auditors. If the auditor confirmed the facts stated in the shareholders' application, the company shall reimburse the shareholders the auditing costs, but not more than 1/4 of the amount of damage inflicted on the company or its shareholders. The shareholders shall not be reimbursed the costs of a repeat audit of the same matter. The Board of the company and the head of the Administration must ensure that all documents of the company necessary for audit which are specified in the contract with the firm of auditors are made available to the auditor.

4. The audit shall be carried out in accordance with the legal acts regulating audit and the work of auditors.

Article 61. Profit (Loss) Appropriation

1. The net after-tax profit (loss) made during the financial year must be appropriated by the Annual General Meeting, approving the annual financial statements. It shall be prohibited to change (reappropriate) the profit (loss) appropriation approved by the General Meeting before the next Annual General Meeting.

2. When distributing the profit, the General Meeting shall appropriate the total amount of the result (profit or loss) to be appropriated, amounts to be transferred from reserves, taking into account the provisions of other Articles of this Law, and the shareholders contribution against losses. If the amount is a positive quantity, the amount deductible to the legal reserve under paragraph 4 of this Article shall be subtracted therefrom first of all, whereas the remaining part may be appropriated by the General Meeting for the purposes specified in subparagraphs 7, 8, 9 and 10 of paragraph 3 of this Article and for supplementing the legal reserve. If the amount referred to in the first sentence of this paragraph is a negative quantity, it shall be carried forward to the next year as the result to be carried forward or the authorised capital of the company shall be reduced.

3. The resolution concerning the appropriation of net profit (loss) shall indicate:

1) result - profit (loss) brought forward from the previous year at beginning of the financial year;

2) current year net result - profit (loss);

3) result - profit (loss) to be appropriated;

4) transfers from reserves;

5) shareholders contribution against losses (if the shareholders decide to cover all or part of the profit(loss) to be appropriated);

6) appropriation of profit to legal reserve;

7) appropriation of profit to other reserves;

8) appropriation of profit for the payment of dividend;

9) other instances of profit appropriation: payment of annual bonuses to Board and Supervisory Board members, payment of incentives to workers and other allocations;

10) result - profit (loss) to be carried forward to the next financial year.

4. If the sum total of the legal reserve and share premium is less than 1/10 of the authorised capital, deductions to the legal reserve shall be mandatory and may not be less than 1/20 of profit to be appropriated or in the amount which would allow the legal reserve to reach the amount of 1/10 of the authorised capital.

5. The amount appropriated for the payment of annual bonuses for the Board and Supervisory Board members, incentives for workers and other allocations ( subparagraph 9 of paragraph 3 of this Article) may not exceed 1/5 of the net profit. The share of profit appropriated for the payment of annual bonuses for the Board and Supervisory Board members and incentives for workers may not exceed the sum appropriated for the payment of dividends.

6. Incentives for workers may be paid by advance payments every quarter provided that a sufficient amount of profit is anticipated based on the current results of economic activities. Advance payment of bonuses to the Board and Supervisory Board members shall be prohibited.

7. Payment of dividends, annual bonuses to the Board and Supervisory Board members and incentives for workers shall be prohibited in case of failure by the company to pay taxes prescribed by law within the set time limits or to make settlement with the agricultural producers for the produce sold within the financial year for which the distribution is made.

8. If the Annual General Meeting refuses to distribute the profit or to adopt a resolution concerning profit appropriation, the Board of the company must within 30 days from the Meeting appropriate the profit according to the following rules:

1) the share of profit appropriated for legal reserve, for other reserves shall be the share of profit which has been used for the acquisition of fixed assets and financial assets in the financial year the profit for which is being distributed;

2) the balance of the profit to be appropriated shall be divided into two equal parts: one for the payment of dividends, the other - to be carried forward to the next financial year.

Article 62. Dividends

1. The dividend is the share of the profit appropriated for the shareholder, which is proportionate to the nominal value of the shares owned by him. If a share is not fully paid, the shareholder's dividend shall be reduced in proportion to the unpaid amount of the share price. If the share is not fully paid and the time limit for payment has expired, the dividend shall not be paid. The Articles of Association may establish that the dividend on fully paid share shall be reduced if the last instalment of their price was paid in the financial year for which the dividend is appropriated.

2. Dividends declared by the General Meeting shall be the company's liability to its shareholders. The shareholder shall have the right to claim payment of the dividend as the company’s creditor. The company shall have the right to recover the dividend paid out to the shareholder if the shareholder knew of the irregularity of the distribution made to him or could not have been unaware of it.

3. The General Meeting shall be prohibited from declaring and paying out dividends if the company's equity capital is or, following such a distribution, would become lower than the amount of the authorised capital plus those reserves which may not be distributed plus the deferred costs or if the company is insolvent or if it would become insolvent after the payment of dividends. The reserves which may not be distributed shall comprise the legal reserve plus the sum of share premium amounting up to 1/10 of the authorised capital, other reserves not available for distribution, the revaluation reserve and a part of the reserve for purchasing own shares, amounting to the aggregate value of own shares acquired by the company.

4. If the company's balance sheet shows losses, the General Meeting shall have no right to declare and pay out dividends until the offsetting of the losses or reduction of the authorised capital by reason thereof. The resolutions concerning the offsetting of the losses or reduction of the authorised capital by the amount of the losses and regarding the declaration and payment of dividends may be adopted at the same Meeting. Dividends may be paid out to the shareholders only after the losses have been offset or the authorised capital has been reduced by the amount of the losses.

5. The company must pay out the dividends no later than 3 months after the day of adoption of the resolution on profit appropriation, except for the case provided for in paragraph 3 of this Article. Payment of dividends in advance shall be prohibited.

6. The company shall pay out dividends in cash.

7. Persons, who were members of the company on the day when the General Meeting declared the dividends, shall be entitled to the dividend.

CHAPTER SEVEN

REORGANISATION OF THE COMPANY

Article 63. Reorganisation of the Company

1. Companies may be reorganised by way of merger, division or restructuring.

2. Merger of companies may be effected by:

1) merger by acquisition - the operation whereby one or more companies transfer to another company all their assets and liabilities and cease to exist as legal persons after the reorganisation;

2) merger by the formation of a new company - the operation whereby a new company is formed from the companies which cease to exist as legal persons after the reorganisation.

3. Division of companies may be effected by:

1) division by acquisition - the operation whereby after being wound up without going into liquidation following the reorganisation, the company transfers all its assets and liabilities to more than one company which continue their activities;

2) division by formation of new companies - the operation whereby new companies are formed out a company which ceases to exist after the reorganisation;

3) unbundling - the operation whereby a part is separated from a company which is retained as a going concern and a new company is formed from the part which has been separated.

4. A company may be restructured in the following ways:

1) by restructuring a private limited liability company into a public limited liability company - the Articles of Association of the company shall be revised and the shares of the company shall be registered with the Securities Commission;

2) by restructuring a public limited liability company into a private limited liability company - the Articles of Association of the company shall be revised and the registration of the shares with the Securities Commission shall be cancelled.

5. A company may be reorganised only after its authorised capital has been fully paid up (at the price of the last issue of shares).

6. A company which has been put into liquidation may not be reorganised.

7. Liquidation procedure shall not be applied to companies which cease to exist after the reorganisation.

Article 64. Exchange of Shares in the Course of Reorganisation

1. In the course of reorganisation of the companies by merger or division, the shares of the companies which are to be wound up must be exchanged for the shares in the new companies which will operate after the reorganisation, except in the cases specified in paragraph 4 of this Article. When the company is reorganised by applying the method of unbundling, a part of the shares of the company which is being divided shall be exchanged for the shares in the newly formed company.

2. The shares in the recipient companies which will operate after the reorganisation may be allocated to the shareholders of the companies which will cease to exist after the reorganisation in proportion to the authorised capital of the company under reorganisation or otherwise.

3. Where shares in the recipient companies are allocated to the shareholders of the company being divided otherwise than in proportion to their rights in the authorised capital of that company, the minority shareholders of that company (those who voted against or abstained when the resolution to reorganise the company was put to the vote) shall have the right to demand, within 45 days after the approval of the draft plan of reorganisation at the General Meeting, that their shares be purchased by the company being divided before the completion of reorganisation. The provisions of Article 55 of this Law shall not apply to such purchase of shares. Paragraph 4 of this Article shall be applicable to the purchased shares. The price paid for the shares being purchased must correspond to the value of shares held by the shareholder in the company being divided. The price shall be determined taking into account the average market price of the shares for a 6-month period immediately preceding the approval of the draft plan of reorganisation or, in case of division of a private limited liability company or a public limited liability company the shares whereof have not been in public trading within the period of 6 months immediately preceding the approval of the draft plan - according to the results of valuation of assets of the company being divided. Disputes concerning the amount of the consideration for shares shall be determined by a court. If the nominal value of the shares demanded to be purchased amounts to over 1/10 of the authorised capital of the company being divided, the reorganisation of the company under the approved draft plan of reorganisation may not be continued.

4. The shares of the company which ceases to exist after the reorganisation or of the company reorganised by the method of unbundling may not be exchanged for the shares in the company which will operate after the reorganisation if the shares have been acquired by:

1) the company which ceases to exist after the reorganisation or the company which is being reorganised by unbundling;

2) the company which will operate after the reorganisation.

5. When shares are exchanged for new shares in the companies which will operate after the reorganisation, the shareholders of companies which cease to exist after the reorganisation or the shareholder of the company reorganised by unbundling may be paid the difference in the share price in cash. The payment in cash may not exceed 10% of the nominal value of the new shares in the companies which will operate after the reorganisation, allocated to the shareholders.

Article 65. Taking over of the Assets, Rights and Liabilities of the Companies being Reorganised

1. The companies newly formed in the course of reorganisation and the companies which will continue its activities after the reorganisation shall be the successors to all the assets, rights and liabilities of the reorganised companies. The assets, rights and liabilities shall be allocated to the companies under the draft plan of reorganisation, at the same time specifying the time limits within which they will be taken over.

2. Where an asset of the company being divided is not allocated by the draft plan of reorganisation to any of the companies, which will operate after the reorganisation, the asset and the proceeds from the sale thereof shall be taken over by all the companies which will operate after the reorganisation in proportion to the share of equity capital allocated to each of those companies under the draft plan of reorganisation.

3. Where a liability of the company being divided is not allocated under the draft plan of reorganisation to any of the companies which will be operating after the reorganisation, each of these companies shall be jointly and severally liable for it. Such joint and several liability of each company shall be limited to the amount of the equity capital allocated to each company under the draft plan of reorganisation.

4. Where a liability of the company being divided is allocated under the draft plan of reorganisation to one of the companies which will operate after the reorganisation, the said company shall be first of all liable for it. In case it fails to discharge the liability or a part thereof, all the other companies which will operate after the reorganisation shall be jointly and severally liable for it (or for the undischarged part thereof). Such joint and several liability of each company shall be limited to the amount of equity capital allocated to each company under the draft plan of reorganisation.

5. If a company which will cease existence after the reorganisation has issued debentures which are not due for redemption before the date of completion of reorganisation, the debentures must be exchanged for the debentures of public limited liability companies specified in the draft plan of reorganisation which will operate after the reorganisation. The debentures must give their holders rights at least equivalent to the rights they possessed before the reorganisation of the public limited liability company. If they are exchanged for debentures conferring their holders less rights, the public limited liability company for whose debentures they are exchanged must redeem the debentures of the debentures holders who so desire. The debentures must be redeemed if so demanded by the bank or brokerage firm representing the interests of the debenture holders. The debentures must be redeemed within 2 months from the completion of reorganisation, but not later than by their redemption date fixed in the agreement to issue debentures.

Article 66. Draft Plan of Reorganisation

1. The company ,may be reorganised only according to the draft plan of company reorganisation. The plan must state the following:

1) method of reorganisation;

2) the name, type and registered office of every company being reorganised and of a new company formed in the course of reorganisation;

3) the ratio at which the shares of the companies being reorganised are exchanged for new shares, taking into account the difference in prices, substantiation of the ratio, the number of new shares according to types and classes and their nominal value;

4) the rules of allocation to the shareholders of the company being divided of shares in the new companies which will operate after the reorganisation;

5) the procedure and time limits of issue of new shares;

6) the difference in the price of the shares owned by the shareholders and the shares allocated after the reorganisation which will be paid out in cash;

7) the date from which the shareholders of the company which will cease its existence shall become entitled to participate in profits of the company which will operate after the reorganisation and any special conditions affecting that entitlement;

8) the date from which the transactions of the company which ceases to exist after the reorganisation shall be treated for accounting purposes as being those of the company which will operate after the reorganisation;

9) the rights conferred by the company which will operate after the reorganisation to the holders of shares of certain classes and debentures, other measures provided for in respect of the said persons;

10) in case of the division by formation of new companies - the precise description of the assets, rights and liabilities of the company being divided and allocation thereof to the companies which will operate after the reorganisation;

11) special rights, if such are provided for, conferred upon the members of the management bodies of the companies being reorganised, who participate in the reorganisation;

12) the terms and conditions upon the fulfilment whereof the reorganisation may be completed (the companies being reorganised and the new companies formed in the course of the reorganisation may transmit to the administrator of the Register the documents required for the registration of the revised Articles of Association of the reorganised companies, cancellation from the Register of the companies which cease to exist after the reorganisation, entering in the Register the newly formed companies);

13) the procedure for convening the first General Meetings of shareholders of the companies which will operate after the reorganisation;

14) the anticipated economic indicators of the companies which will operate after the reorganisation.

2. In case of merger or division of companies the draft plan of reorganisation may be prepared only after the valuation of the assets of the companies being reorganised has been made by the valuers of assets and assets valuation reports have been draw up. The report on the valuation of assets of the public limited liability company must be disclosed in the manner prescribed by law no later than 30 days before the General Meeting, which has the issue of the company reorganisation on its agenda.

3. The Articles of Association of every company which will operate after the reorganisation must be drawn up together with the draft plan of reorganisation and shall be a constituent part of the draft plan of reorganisation.

4. The draft plan of reorganisation may be proposed and the procedure of reorganisation may be initiated in the company by the holders of shares in the company the nominal value whereof accounts for no less than 1/3 of the authorised capital, the Supervisory Board and the Board.

Article 67. Assessment of the Draft Plan of Reorganisation

1. The draft plan of reorganisation must be assessed. The draft plan of reorganisation shall be assessed by the firm of auditors with which the Board of the company shall conclude a contract for the assessment of the draft plan of reorganisation.

2. The companies being reorganised must submit to the firm of auditors all information and documents, also present all computations and explanations requested by the firm of auditors, which are necessary in order to assess the draft plan of reorganisation.

3. The firm of auditors must draw up a report on the assessment of the draft plan of reorganisation which shall contain:

1) conclusions on whether the share exchange ratio is correct and justified;

2) methods applied for determining the share exchange ratio and conclusions on the suitability of the methods for establishing the value and their impact thereon;

3) description of any special valuation difficulties which have arisen.

4. The report on the draft plan of reorganisation must be drawn up and submitted to the company no later than 30 days before the General Meeting, which has the issue of the company reorganisation on its agenda.

Article 68. Report of the Board

The Board of every company being reorganised shall no later than 30 days before the General Meeting, the agenda whereof contains the issue of the company reorganisation, draw up a report explaining the terms of reorganisation laid down in the draft plan of reorganisation and setting out the legal and economic grounds for them, in particular the share exchange ratio and the criterion determining allocation of shares. The report of the Board shall also describe any assets valuation difficulties which have arisen. The report must present information of the drawing up of reports prescribed by paragraph 2 of Article 66 of this Law and about the administrators of the Register of Enterprises as well as files in which the reports are deposited.

Article 69. Notification of the Planned Reorganisation

1. Every company being reorganised must notify every creditor of the company against his signature or by a registered letter of the planned reorganisation of the company. In addition, every company being reorganised must announce of the planned reorganisation in the periodical publication specified in the Articles of Association or notify every shareholder of the company thereof against his signature or by a registered letter. The draft plan of the company reorganisation must be disclosed in the manner prescribed by law. All the above must be performed not later than 30 days before the General Meeting, which has the issue of the company reorganisation on its agenda.

2. No later than 30 days before the General Meeting, one of the items on the agenda whereof is the approval of the draft plan of company reorganisation, every shareholder must be provided an opportunity to have access, at the registered office of every company being reorganised to:

1) the draft plan of reorganisation;

2) the annual financial statements of the companies being reorganised for the period of three preceding years;

3) financial statements of the public limited liability companies being reorganised, drawn up on the basis of the data, not older than of the first day of the third month before the General Meeting, which has the company reorganisation on its agenda, if the last financial statements had been drawn up for the financial year which ended more than 6 months before the Meeting;

4) reports prescribed by paragraph 2 of Article 66 and Article 67 of this Law;

5) reports drawn up by the Boards of the companies being reorganised, prescribed by Article 68 of this Law.

3. The financial statements specified in subparagraph 3 of paragraph 2 of this Article must be drawn up according to the same methodological principles as those applied for drawing up the last annual financial statements.

4. At the shareholder's request the company must make copies of the documents specified in paragraph 2 of this Article available to him free of charge.

5. The Board of the company being reorganised must inform the General Meeting of the material changes in the assets, rights and liabilities in the period between the drawing up of the draft plan of reorganisation and the General Meeting. The Board of every company being reorganised must notify the Boards of other companies being reorganised of the material changes in the assets, rights and liabilities so that the latter would be able to notify thereof the General Meetings of the companies.

Article 70. Adoption and Announcement of the Resolution to Reorganise the Company

1. The draft plan of reorganisation may be approved and the resolution concerning the reorganisation of the company may adopted by the General Meeting by an at least 2/3 majority vote. Where there are several types and classes of shares, the decision shall be subject to a separate vote for each type and class of shareholders and the draft plan of reorganisation shall be adopted by a majority of not less than 2/3 of the votes of the holders of every type and class of shares (also of non-voting shares).

2. The approved draft plan of reorganisation of every company shall be submitted to the administrator of the Register of Enterprises of the Republic of Lithuania no later than within 10 days after the day of the Meeting which approved the draft plan.

3. The resolution on the reorganisation of the company shall be disclosed in the manner prescribed by law.

Article 71. Provision of Additional Safeguards for the Discharge of Obligations to Creditors of Companies being Reorganised

1. In the course of reorganisation the company must provide additional safeguards for the discharge of obligations to every creditor of the company who so requests, whose claims antedate the disclosure of the draft plan of reorganisation of the company.

2. The creditors of the company may file their claims within 2 months after the disclosure of the resolution to reorganise the company.

3. The company may dispense with the provision of additional safeguards for the discharge of obligations if the discharge of the company's obligations to creditors is adequately secured being protected by unfailing safeguards - pledge, suretyship or guarantee. Disputes concerning the provision of additional safeguards shall be settled in court.

4. Documents relating to the registration of the companies which will operate after the reorganisation or of their Articles of Association and documents concerning the cancellation from the register of the companies which will cease to exist after the reorganisation may not be submitted to the administrator of the Register of Enterprises until additional safeguards for the discharge of obligations have been provided to the creditors who so request or until the effective date of the court order that the creditors' claims for additional safeguards for the discharge of obligations must not be satisfied.

Article 72. Completion of Reorganisation

1. The Articles of Association of every company which will operate after the reorganisation shall be submitted to the administrator of the Register of Enterprises after the first General Meeting but not earlier than 3 months after the disclosure of the resolution to reorganise the company. The minutes of the General Meeting which approved the draft plan of reorganisation (or the minutes of these Meetings) shall be submitted for the registration of the company or its Articles of Association after the reorganisation instead of the Memorandum of Association.

2. The first General Meeting of the company which will operate after the reorganisation may be attended with the right to vote by both the current shareholders of the company and the shareholders of the reorganised company who have been allocated shares in the company under the draft plan or reorganisation.

3. The first General Meeting of the company which will operate after the reorganisation may amend or supplement the Articles of Association of the company and address other issues assigned to the competence of the General Meeting. The General Meeting of a new company formed through reorganisation must elect the management bodies of the company.

4. The minutes of the General Meeting which approves amendments to the Articles of Association of the company reorganised from the private limited liability company into a public limited liability company must also contain the following information:

1) the capital paid up before the day of the General Meeting;

2) where not more than 5 years have lapsed from the day of incorporation of the private limited liability company, the costs of incorporation of the private limited liability company.

5. In case of a merger, the Articles of Association of the company which will operate after the reorganisation may be registered only after all the companies which will cease to exist after the reorganisation have submitted to the administrator of the Register documents necessary in order to cancel the enterprises from the Register of Enterprises of the Republic of Lithuania. In this case it will be noted in the Register of Enterprises of the Republic of Lithuania that the enterprises which will cease their existence after the reorganisation will be cancelled from the Register as from the day of registration of the Articles of Association of the company which will operate after the reorganisation. Reorganisation by way of merger of companies shall be deemed completed as from the day.

6. In case of a division, except when the division is effected by way of unbundling, the company which will cease to exist after the reorganisation may be cancelled from the Register of Enterprises of the Republic of Lithuania only after the administrator of the Register has been submitted the Articles of Association and other documents of all the companies which will operate after the reorganisation, necessary in order to register the companies and/or their Articles of Association and after the administrator of the register of each of the said companies states that the company and/or its Articles of Association may be registered. In this case it will be noted in the Register of Enterprises of the Republic of Lithuania that the registration of the companies which will operate after the reorganisation and/or of their Articles of Association shall come into force from the day the company being divided is cancelled from the Register of Enterprises of the Republic of Lithuania. The reorganisation of the companies by way of division shall be deemed completed as from the day.

7. In case of division by way of unbundling the amendments to the Articles of Association of the company being divided may be registered only after the administrator of the Register of Enterprises has been submitted the Articles of Association of the newly formed company and other documents necessary for registering the company. In this case it shall be noted in the Register or Enterprises of the Republic of Lithuania that the registration of the newly formed company and of its Articles of Association shall become effective as from the day of registration in the Register of Enterprises of the Republic of Lithuania of amendments to the Articles of Association of the company being divided. The reorganisation by way of unbundling of the companies shall be deemed completed as from the day.

8. Reorganisation by way of restructuring the company shall be deemed completed as from the day of registration of the amended Articles of Association of the company.

9. From the day of completion of reorganisation all the assets, rights and liabilities of the companies which will cease their existence shall be the assets, rights and liabilities of the companies which will operate after the reorganisation.

10. A notice about the completion of reorganisation of every company and of the formation of a new company through reorganisation shall be publicly announced in the manner prescribed by law.

11. Members of the management bodies of the company being reorganised and the firm of auditors which made the valuation of the draft plan of reorganisation must compensate, in the manner prescribed by law, for the damage caused during the reorganisation through their fault to the shareholders and creditors of the company being reorganised.

12. If the resolution of the General Meeting to reorganise the company is appealed to the court on the basis of provisions of Article 31 of this Law, the reorganisation must be suspended and may not be completed until the court order becomes effective. If the court vacates the resolution of the General Meeting to reorganise the company, the reorganisation shall be terminated after the court order becomes effective.

13. Upon its completion the reorganisation shall not be declared invalid.

Article 73. Merger by Acquisition by a Company which owns at least 90% of shares in the Company being Acquired

1. Subparagraphs 3-8 of paragraph 1 and paragraph 2 of Article 66, Articles 67 and 68, subparagraphs 4 and 5 of paragraph 2 of Article 69, paragraph 1 of Article 70 of this Law shall not be applicable to merger by acquisition, where the company which will continue its operations after the reorganisation holds all shares in the company being acquired.

2. Articles 67 and 68, subparagraphs 4 and 5 of paragraph 2 of Article 69 and paragraph 1 of Article 70 of this Law shall not be applicable to merger by acquisition where the company which will continue its operation after the reorganisation holds not less than 90% but not all the shares in the company being acquired. In this case, if other shareholders of the company being acquired so request, the company must purchase their shares before the completion of the reorganisation. The provisions of paragraph 3 of Article 64 shall apply with respect to the purchase of shares.

3. In the cases of reorganisation provided for in paragraphs 1 and 2 of this Article the resolution to reorganise the company which continues to operate after the reorganisation and the company being acquired may be adopted by a simple majority vote by the General Meeting of the company which continues to operate after the reorganisation. A notice of the reorganisation of every company being acquired must be communicated, as prescribed by paragraph 1 of Article 69 of this Law, not later than 30 days before the said General Meeting.

Article 74. Restructuring of the Company

1. Article 64, subparagraphs 3-8 of paragraph 1 of Article 66, Articles 68 and 71 of this Law shall not be applicable with respect to the company restructuring.

2. Unless demanded by the shareholders by simple majority vote, the assessment of the draft plan of reorganisation shall not be mandatory when the company is being restructured.

3. When the company is being restructured, the General Meeting which adopts the resolution on the reorganisation of the company shall at the same time be the first General Meeting of the company which will operate after the reorganisation.

4. When a private limited liability company is being restructured into a public limited liability company, its authorised capital must be not less than the amount prescribed for the public limited liability companies by paragraph 4 of Article 2 of this Law.

5. When a public limited liability company is being restructured into a private limited liability company, the number of its shareholders may not be larger than that set for the private limited liability companies by paragraph 5 of Article 2 of this Law.

6. A private limited liability company may be restructured into a public limited liability company provided that the contributions for shares made otherwise than in cash, received by the company within the 5-year period before the adoption of the resolution, have been valued in the manner prescribed by the laws and other legal acts of the Republic of Lithuania, which regulate assets valuation, and valuation reports have been drawn up. Requirements prescribed by paragraph 7 of Article 10 of this Law shall be set for the assets valuation reports.

7. Where not more than 5 years have elapsed after the incorporation of the private limited liability company, it may be restructured into a public limited liability company, provided that its assets, acquired within the period, which used to belong to its incorporators, where the sum of a separate transaction amounts to not less than 1/10 of the minimum amount of the authorised capital of the public limited liability company prescribed by this Law and not less than 1/10 of the amount of the company's authorised capital, has been valued in the manner prescribed by the laws and other legal acts of the Republic of Lithuania, regulating assets valuation and reports on the valuation of the assets have been drawn up. The requirements prescribed by paragraph 2 of Article 15 of this Law shall be set for the assets valuation reports.

8. The procedure established by law for disclosing relevant reports drawn up for public limited liability companies must be applied for disclosing reports provided for in paragraphs 6 and 7 of this Article.

9. If a public limited liability company which is being restructured into a private limited liability company has issued debentures which are not due for redemption before the day of completion of the restructuring, the debentures must be redeemed. The private limited liability company which will operate after the restructuring must redeem the debentures within 2 months after the completion of restructuring but not later than their redemption date fixed in the resolution to issue debentures.

CHAPTER EIGHT

LIQUIDATION OF A COMPANY

Article 75. Grounds for the Liquidation of a Company

1. A company may be liquidated on the following grounds:

1) the time period of the company's duration as specified in the Articles of Association has expired;

2) the court or the creditors' meeting has passed a resolution to liquidate a bankrupt company. In this case the company shall be liquidated in accordance with the procedure established by the Enterprise Bankruptcy Law of the Republic of Lithuania ;

3) the court has made an order to liquidate the company for the violations of law established by the laws of the Republic of Lithuania;

4) the court has ruled that the incorporation of the company is unlawful;

5) the General Meeting has adopted a resolution to liquidate the company.

2. The company may be ruled unlawfully founded if:

1) all the incorporators were legally incompetent at the moment of incorporation of the company;

2) there was a violation of the compulsory rules laid down in this Law for the setting up of a legal entity;

3) the objects of the company specified in the Articles of Association are unlawful or are against the public order;

4) the minimum authorised capital has not been formed in the manner and within the time limit prescribed by this Law;

5) the name of the company, the amount of the authorised capital are not specified in the Memorandum of Association or the Articles of Association, the objects of the company are not indicated in the Articles of Association.

3. The ruling that the company has been founded unlawfully shall be without prejudice for the validity of contracts entered into by the company.

4. Having established the violations specified in paragraph 2 of this Article, the court may by its order set the time limit for the elimination of violations. If the company fails to eliminate the violations within the set time limit, the company shall be liquidated by the order of the court.

5.The General Meeting may not adopt a resolution to liquidate an insolvent company.

Article 76. Liquidation of the Company

1. The General Meeting or the court, having decided, in the manner prescribed by this Law, to liquidate the company, shall elect(appoint) or remove from office (replace) the company liquidator. If, in the case established in subparagraph 1 paragraph 1 Article75 of this Law, the General Meeting fails to elect the liquidator by the date of termination of the company’s activities specified in the Articles of Association of the company, the liquidator shall be appointed as per court decision. In such an event the shareholders of the company shall have the right to apply to court. If case of failure by the shareholders to apply to court within 6 months from the date of termination of the company’s activities the company shall be deemed to have been set up as a company of unlimited duration.

2 If the company is being liquidates in the manner laid down in this Law, the liquidator shall acquire his rights and obligations from the day of his appointment, whereas the management bodies of the company, except for the General Meeting, shall be divested, as of the day of the liquidator's appointment, of the powers to manage the company. The right to call the General Meeting according to the procedure established in Articles 26, 27 and 28 of this Law shall be vested in the liquidator, the court or the holders of shares carrying over 1/2 of all votes.

3. The liquidator shall notify the administrator of the Register of Enterprises of the decision to liquidate the company and submit his own personal particulars. The name of the company which has acquired the status of a company in liquidation shall be preceded by the words "in liquidation".

4. Every creditor of the company must be informed about the liquidation of the company against his signature or by a registered letter. In addition, a notice of the company liquidation must be announced in the periodical publications specified in the Articles of Association or communicated to every shareholder of the company against his signature or by a registered letter. The resolution to liquidate the company must be disclosed in the manner prescribed by law.

5. During the company liquidation the persons who have subscribed for shares but have not yet fully paid them up must pay up the shares according to the procedure laid down in the share subscription agreement. In case the court has ruled that the company being liquidated has been founded unlawfully, provided that the company is in the position to discharge its liabilities to creditors, the persons who subscribed for shares may be released from payment of the amount of unpaid contributions which they would be repaid in the course of the distribution of assets of the company in liquidation.

6. Before the liquidated company is cancelled from the Register, mandatory payments into the budgets and funds must be made and settlement with the company creditors and workers must be effected in accordance with the sequence of satisfaction of claims established by law, thereafter the accrued dividend to the holders of cumulative preference shares shall be paid. Before the company is cancelled from the Register, the remaining assets of the company in liquidation shall be distributed to the shareholders pro rata to the nominal value of the shares owned by them. The assets of the company which come to be known later shall also be distributed in an analogous manner. If the shares of the company carry different rights, this must be taken into account when distributing the assets.

7. The distribution of the company's assets to the shareholders may be carried out only upon the expiry of two months after the performance of all actions prescribed by paragraph 4 of this Article.

8. If disputes arise about the payment of the company's debts, the assets of the company may not be distributed to the shareholders until the disputes are decided by the court and settlement with creditors is effected.

9. After the company liquidator effects settlements with at least one shareholder (allocates and transfers to the shareholder part of the remaining assets of the company), the General Meeting of the company in liquidation shall forfeit the right to discontinue the liquidation of the company.

Article 77. Powers of the Liquidator

1. The liquidator shall have the rights and obligations of the company's Board and head of the Administration. The liquidator shall represent the company in liquidation in the court, in the company's relations with the institutions of State government and administration, other natural and legal persons. The same requirements as those established for the head of the Administration shall also be applied with regard to the liquidator.

2. The liquidator of the company shall:

1) make a stock-taking of material and financial valuables and draw up the act of receiving same, draw up the company’s financial statements as of the beginning of the liquidation period (the liquidation balance sheet);

2) complete the discharge of the obligations under contracts concluded previously and enter into new transactions according to his competence. The General Meeting or the court, who elected (appointed) the liquidator may specify the contracts unrelated to liquidation which may be entered into by the liquidator;

3) fulfil contracts with the creditors and debtors of the company;

4) sell the assets of the company;

5) terminate the contracts of employment with the company workers and settle with them;

6) distribute the remaining assets of the company to and among the shareholders;

7) draw up the company liquidation act; and

8) apply to the Securities Commission with a request to strike the shares off the Register (annul the registration of the shares) if a public limited liability company is put in liquidation;

9) transfer the documents of a liquidated company for safekeeping in accordance with the procedure established in the Law on Archives;

10) submit the documents required in order to have the liquidated company struck off the Register of Enterprises of the Republic of Lithuania to the administrator of the Register of Enterprises.

3. If the liquidation of the company lasts for several years, within 3 months of the end of each business year the liquidator shall draw up the annual financial statement and the liquidation report. The report shall be subject to approval by the General Meeting. These documents shall be open for review to all the shareholders and creditors.

4. The liquidator shall be liable to the company, the shareholders and the third persons for the losses incurred through his fault.

5. Shareholders who own shares the total nominal value whereof amounts to at least 1/10 of the authorised capital shall have the right to appeal to court to replace the liquidator.

6. The resolution concerning temporary substitution for the liquidator when he is on vacation or at the time of his temporary disability shall be adopted by the General Meeting or the court which have taken a decision, in accordance with the procedure laid down in this Law, to liquidate the company.

CHAPTER NINE

FINAL PROVISIONS

Article 78. Entry into Force of the Law

1. This Law shall enter into force as of 1 January 2001.

2. From the moment of entry into force of this Law the Companies Law of the Republic of Lithuania (Žin., 1994, Nr. 55-1046, Nr.102-2050; 1995, Nr. 21-492, Nr.41-993, Nr. 107-2393; 1996, Nr.1-4, Nr.100-2257, Nr. 126-2947; 1997, Nr. 69-1739; 1998, Nr. 36-961, Nr. 115-3246; 1999, Nr. 86-2562; 2000, Nr. 28-760) shall apply only for:

1) incorporation of the companies the Memoranda of Association whereof were drawn up before the date of entry into force of this Law;

2) increasing, decreasing the authorised capital of the companies, also when reorganising and liquidating the companies, if the resolutions on the increase, decrease of the authorised capital of the companies, or the resolutions on the reorganisation or liquidation of the company were adopted prior to the entry into force of this Law.

Article 79. Final Provisions

1. The public limited liability companies and private limited liability companies must amend their Articles of Association according to this Law and have them registered according to the procedure established by the Law on the Register of Enterprises within 24 months of the effective date of this Law. In the companies in which judicial or extrajudicial bankruptcy procedure is applied the time period specified above shall run from the day of termination of the bankruptcy proceedings or the completion of the extrajudicial bankruptcy procedure.

2.Public limited liability companies the authorised capital whereof is below the minimum authorised capital prescribed by this Law must increase their authorised capital to the required amount within 24 months from the date of entry into force of this Law. Public limited liability companies which fail to comply with this requirement shall be reorganised or liquidated in the manner prescribed by the laws of the Republic of Lithuania.

3. From the date of entry into force of this Law former shares of the agricultural producers shall be considered as ordinary registered shares.

4. From the date of entry into force of this Law, it shall be prohibited to newly grant the special share status to the share(shares) owned by the State or municipality, except in the cases where the granting of the special share status before the effective date of this Law has been announced in the privatisation programme.

5. Seeking to avoid the institution of bankruptcy proceedings, the company shall be entitled to offer, in the manner prescribed by the Government of the Republic of Lithuania, their shares and assets in order to settle their debts to the State, municipal or state social security budgets. The Government, municipality or state social insurance board shall have the right to consider the issue of settlement in shares and assets until 31 December 2001.

6. The company may reduce the authorised capital until 31 December 2001 in order to rectify, in the manner prescribed by the Government of the Republic of Lithuania, the errors of made in the course of authorised capital formation or increase (provided that the shareholders, the number of whose shares is being reduced, give their written consent), also for the purpose of transferring production and engineering infrastructure facilities, social objects, buildings (parts thereof) into the ownership of the State or municipality for discharging their functions. In such case the number of shares owned by the State or municipality shall be reduced accordingly, except if upon the reduction of the authorised capital the State or municipality which had over 1/2 of all votes would as a result have 1/2 or less than 1/2 of all votes. In such case paragraph 5 of Article 54 of this Law shall not be applicable.

7. The Securities Commission shall have the right to adopt legal acts specifying a detailed procedure for the issue, offering for subscription and redemption of debentures issued by public limited liability companies, having established additional requirements for the bank or brokerage firm representing the interests of debenture holders, also providing additional regulation of the terms of issuing convertible debentures and debentures granting their holders the right to exchange them for other securities issued by the public limited liability company.

Article 80. Proposals to the Government

1. The Government shall, by 1 January 2001:

1) submit to the Seimas a draft law providing for the responsibility of companies for violations specified in paragraphs 1 and 2 of Article 79 of this Law;

2) establish the procedure of representing the shares owned by the State.

2. The Government or the institution authorised by it shall lay down the procedure of accounting of shares in private limited liability companies by 1 December 2000.

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

PRESIDENT OF THE REPUBLIC	VALDAS ADAMKUS