REPUBLIC OF LITHUANIA

Law on

electronic money and electronic money institutions

22 December 2011 No XI-1868
Vilnius

CHAPTER ONE

GENERAL PROVISIONS

Article 1. Purpose of the Law

1. This Law shall specify the persons entitled to issue electronic money in the Republic of Lithuania, the conditions of issuance and redemption of electronic money, the procedure for licensing, pursuing of business, terminating and restructuring of electronic money institutions and foreign electronic money institutions, in order to ensure a stable, sound, efficient and safe system of electronic money institutions.

2. The provisions of this Law have been harmonised with the legal acts of the European Union referred to in the Annex to this Law.

Article 2. Definitions

1. Electronic money shall mean a monetary value as represented by a claim on the issuer which is issued on receipt of monetary funds (hereinafter referred to as “funds”) by the electronic money issuer from a natural or legal person and has the following characteristics:

1) stored electronically, including magnetically;

2) is issued for the purpose of making payment transactions;

3) is received by the persons other than electronic money issuers.

2. Electronic money institution shall mean a public limited liability company or a private limited liability company which has been issued a licence of an electronic money institution or a licence of an electronic money institution to engage in restricted activities, authorising to issue electronic money in the Republic of Lithuania and/or in other Member States (hereinafter in this Law the concept “licence” shall be used in respect of a licence of an electronic money institution and a licence of an electronic money institution to engage in restricted activities).

3. Branch of an electronic money institution (hereinafter referred to as a “branch”) shall mean a structural division of an electronic money institution which has no legal personality, but which has its own registered office and performs some or all of the functions of the electronic money institution. All the places of business set up in the same Member State by the electronic money institution with a head office in another Member State shall be regarded as a single branch.

4. Agent of an electronic money institution (hereinafter referred to as an “agent”) shall mean a natural or legal person which acts on behalf of on behalf of an electronic money institution in providing payment services.

5. Heads of an electronic money institution shall be the following persons within an electronic money institution:

a) the head of the company;

2) the deputy head of the company;

3) members of the board (where the board is formed);

4) the persons responsible for the management of the electronic money issuance activities (heads of structural divisions), where the electronic money institution issues electronic money and, at the same time, is engaged in other activities indicated in subparagraph 4 of paragraph 2 of Article 4 of this Law;

5) the persons responsible for the provision of payment services, if the electronic money institution provides payment services not relating to the issuance of electronic money;

6) heads of a branch established in another Member State.

6. Electronic money issuer shall mean a person referred to in Article 4 of this Law.

7. Electronic money holder shall mean a natural or legal person that has acquired and holds electronic money.

8. Close links shall be interpreted as defined in the Law of the Republic of Lithuania on the Supplementary Supervision of Entities in a Financial Conglomerate.

9. Another Member State shall mean a Member State, with the exception of the Republic of Lithuania.

10. Electronic money institution of another Member State shall mean a legal person established in another Member State to which an authorisation, licence or another document entitling to issue electronic money in all Member States has been granted.

11. Average outstanding electronic money shall mean the average total amount of financial liabilities related to electronic money in issue at the end of each calendar day over the preceding six calendar months, calculated on the first calendar day of each calendar month and applied for that calendar month.

12. Supervisory institution shall be the Bank of Lithuania.

13. Foreign state shall mean a non-Member State of the European Union or a state not belonging to the European Economic Area.

14. Electronic money institution of a foreign state shall mean a legal person established in a foreign state to which an authorisation, licence or another document entitling to issue electronic money in that state has been granted.

15. Branch of an electronic money institution of a foreign state shall mean a branch of an electronic money institution of a foreign state to which a licence of a branch of an electronic money institution of a foreign state has been issued.

16. Public list of electronic money institutions shall mean a publicly available list managed by the supervisory institution and including electronic money institutions, their branches and agents, branches of electronic money institutions of foreign states established in the Republic of Lithuania, their agents.

17. Other concepts used in this Law shall be interpreted as they are defined in the Law of the Republic of Lithuania on Financial Institutions (hereinafter referred to as the “Law on Financial Institutions”), the Law of the Republic of Lithuania on Banks (hereinafter referred to as the “Law on Banks”), the Law of the Republic of Lithuania on Payments (hereinafter referred to as the “Law on Payments”), and the Law of the Republic of Lithuania on Payment Institutions (hereinafter referred to as the “Law on Payment Institutions”).

Article 3. Exclusions from the Scope of the Law

This Law shall not apply to:

1) monetary value stored on instruments that can be used to acquire goods or services only in the premises used by the issuer or under a commercial agreement with the issuer either within a limited network of service providers or for a limited range of goods or services;

2) monetary value that is used to make payment transactions executed by means of any telecommunication, digital or IT device, where the goods or services purchased are delivered to and are to be used through a telecommunication, digital or IT device, provided that the telecommunication, digital or IT operator does not act only as an intermediary between the electronic money holder and the supplier of the goods or the service provider.

CHAPTER TWO

ELECTRONIC MONEY ISSUERS, TERMS OF ISSUANCE AND REDEMPTION OF ELECTRONIC MONEY

Article 4. Electronic Money Issuers

1. Electronic money issuers shall be:

1) credit institutions, including branches of foreign credit institutions established in the Republic of Lithuania;

2) electronic money institutions, electronic money institutions of another Member State and branches of electronic money institution of foreign states established in the Republic of Lithuania;

3) post office giro institutions which are entitled under national law to issue electronic money;

4) the European Central Bank and national central banks when the activities of electronic money issuance pursued by them are not related to their acting in the capacity of monetary authority or public authorities;

5) national, regional and local authorities of the Member States, when they issue electronic money in performing their functions.

2. The electronic money issuers indicated in subparagraphs 3, 4 and 5 of paragraph 1 of this Article shall have the right to issue electronic money without a licence entitling to issuance of electronic money.

Article 5. Prohibition from Issuing Electronic Money

The natural or legal persons who are not electronic money issuers shall be prohibited from issuing electronic money.

Article 6. Conditions of Issuance and Redemption of Electronic Money

1. Electronic money issuers shall issue electronic money at par value on the receipt of funds from natural or legal persons.

2. Electronic money issuers must, upon request by electronic money holders, redeem at any moment and at par value the electronic money held by them.

3. The conditions of redemption of electronic money, the period thereof and any additional fees relating thereto must be stated in a contract between the electronic money issuer and the electronic money holder. The conditions of redemption of electronic money shall be given in the Lithuanian language, in easily understandable words and in a clear form comprehensible for the average user. The electronic money holder must be informed of those conditions before being bound by any contract or offer.

4. Redemption of electronic money may be subject to an additional fee only if stated in the contract between the electronic money issuer and the electronic money holder and only in any of the following cases:

1) where redemption of electronic money is requested before the termination of the contract;

2) where the electronic money holder terminates the contract before the termination date provided for in the contract;

3) where redemption of electronic money is requested more than one year after the date of termination of the contract.

5. An additional fee for redemption of electronic money must be commensurate with the actual costs incurred by the electronic money issuer.

6. Where redemption of electronic money is requested before the termination of the contract, the electronic money holder may request redemption of the electronic money in whole or in part.

7. Where redemption of electronic money is requested by the electronic money holder on or up to one year after the date of the termination of the contract, the total monetary value of the electronic money held by the electronic money holder shall be redeemed.

8. Where redemption is requested by the electronic money holder on or up to one year after the date of the termination of the contract and where the electronic money institution carries out one or more of the activities listed in subparagraph 4 of paragraph 2 of Article 10 of this Law and it is unknown in advance what proportion of funds is to be used as electronic money, all funds requested by the electronic money holder shall be redeemed.

9. The contract concluded between the persons who accept electronic money (other than consumers) and electronic money issuers may stipulate the conditions of redemption of electronic money other than specified in paragraphs 4-8 of this Article.

Article 7. Prohibition of Interest

Electronic money issuers shall be prohibited from granting of interest or any other benefit related to the length of time during which an electronic money holder holds the electronic money.

Article 8. Liability for a Failure to Comply with the Conditions Provided for in Chapter Two of This Law and Procedure for Examining Requests (Complaints)

Provisions of Chapter Six of the Law on Payments shall apply mutatis mutandis to infringements of Chapter Two of this Law and infringements of the procedure for examining requests (complaints).

CHAPTER THREE

ELECTRONIC MONEY INSTITUTIONS AND LICENSING OF ACTIVITIES THEREOF

Article 9. Name and Registered Office of an Electronic Money Institution. Legal Acts Regulating the Activities of an Electronic Money Institution

1. The words “electronic money institution” or other combinations of these words or derivatives thereof may be used in the Republic of Lithuania solely by the persons referred to in subparagraph 2 of Article 4 of this Law in their name, for advertising or other purposes.

2. The legal form of an electronic money institution may be solely a public limited liability company or a private limited liability company.

3. An electronic money institution shall be required to have a registered office in the Republic of Lithuania.

4. In its activities, an electronic money institution shall comply with the Civil Code of the Republic of Lithuania, this Law, the Law on Payments, the legal acts adopted by the supervisory institution, other legal acts of the Republic of Lithuania and its articles of association. The Law on Financial Institutions, the Law of the Republic of Lithuania on Companies and other laws shall apply to an electronic money institution to the extent this Law does not provide otherwise.

5. An electronic money institution providing payment services hall be subject mutatis mutandis to the requirements of subparagraph 4 of paragraph 2 of Article 8 and Articles 10, 15, 16, 17, 18 and 20 of the Law on Payment Institutions.

6. An electronic money institution of another Member State providing payment services shall be subject mutatis mutandis to Article 11 of the Law on Payment Institutions.

7. The provisions of this Law regarding granting credit to consumers shall apply to the extent other laws regulating granting credit to consumers do not provide otherwise.

Article 10. Activities of an Electronic Money Institution

1. A licence issued by the supervisory institution to an electronic money institution entitles the latter to issue electronic money and provide the payment services referred to in Article 5 of the Law on Payments.

2. In addition to issuance of electronic money and provision of the services referred to in Article 5 of the Law on Payments, an electronic money institution shall have the right:

1) to grant credit related to the payment services indicated in paragraphs 4, 5 or 7 of Article 5 of the Law on Payments, if the conditions indicated in paragraph 4 of this Article are me;

2) to provide the ancillary services closely related to issuance of electronic money and/or provision of payment services, such as foreign exchange, funds safekeeping activities, the storage and processing of data;

3) to operate payment systems in compliance with the requirements set forth in Article 8 of the Law on Payments;

4) in accordance with the procedure laid down by legal acts, to pursue business activities other than the issuance of electronic money, with the exception of the cases specified in paragraph 8 of Article 11 and paragraph 11 of Article 12 of this Law.

3. Any funds received by an electronic money institution from electronic money holders must be exchanged for electronic money without delay, as soon as it is technically possible. Such funds shall not constitute either a deposit or other repayable funds.

4. An electronic money institution may grant credit related to the payment services indicated in subparagraphs 4, 5 or 7 of Article 5 of the Law on Payments, only if the following conditions are met:

1) borrowed funds have been granted exclusively as an ancillary instrument in connection with the execution of a payment transaction;

2) the funds granted in connection with a payment and executed in accordance with Article 16 of this Law must be repaid within a period not exceeding twelve months;

3) the electronic money institution may not grant credit from the funds received and held for electronic money or for the purpose of executing a payment transaction;

4) the equity capital of an electronic money institution conforms to the requirements set forth in Article 21 of this Law and is adequate in accordance with the procedure laid down by legal acts of the supervisory institution.

5. An electronic money institution may not conduct the business of taking deposits or other repayable funds from non-professional participants of the market.

6. An electronic money institution may distribute and redeem, but may not issue electronic money through an agent of the electronic money institution acting on behalf of the electronic money institution or another natural or legal person.

7. Prior to taking decisions which restrict an electronic money institution’s freedom to dispose of the funds in its account or which otherwise restrict the right of the electronic money institution to issue electronic money or provide payment services, a court of the Republic of Lithuania and other institutions or officials stipulated by laws must obtain a conclusion of the supervisory institution on the impact of these decisions on the stability and soundness of the electronic money institution and the whole system of payment institutions, which the supervisory institution shall provide within three working days from the receipt of the request.

Article 11. Licence of an Electronic Money Institution

1. The licence of an electronic money institution shall be valid also in other Member States. The procedure for issuing and replacing the electronic money institution’s licence shall be laid down by this Law and the legal acts of the supervisory institution.

2. An electronic money institution being incorporated may be registered with the Register of Legal Entities, and where the licence of the electronic money institution is issued not to the electronic money institution being incorporated, appropriate amendments may be made in the Register of Legal Entities solely upon issue of the licence of the electronic money institution.

3. For the issuance of a licence of an electronic money institution, an application and the following documents as well as data shall be submitted to the supervisory institution:

1) articles of association;

2) a programme of operations;

3) a business plan, including a forecast budget for the first three financial years which demonstrates that the electronic money institution is able to operate soundly and employs the appropriate internal control systems, procedures and resources;

4) the evidence that the minimum size of the equity capital does not fall below the amount specified in paragraph 2 of Article 20 of this Law;

5) a description of the measures taken (to be taken) for safeguarding electronic money holders’ funds, and where payment services not relating to issuance of electronic money are to be provided, also a description of the measures taken (to be taken) for safeguarding payment service users’ funds;

6) a description of the governance arrangements and internal control mechanisms applied (intended to be applied), including administrative, risk management and accounting procedures;

7) a description of the internal control mechanisms established (intended to be established) in order to comply with obligations in relation to prevention of money laundering and terrorist financing under the Law of the Republic of Lithuania on Prevention of Money Laundering and Terrorist Financing (hereinafter referred to as the “Law on Prevention of Money Laundering and Terrorist Financing”) and Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds (OJ 2006 L 345, p. 1);

8) a description of the structural organisation, including the intended use of branches, agents, natural or legal persons through which the electronic money institution intends to distribute or redeem electronic money or other entities to which activities will be outsourced, and a description of participation in payment systems;

9) the data on the identity of persons holding qualifying holdings in the authorised capital and/or voting rights of the electronic money institution, the size of their holdings in the authorised capital and/or voting rights, also evidence of the suitability of these persons taking into account the need to ensure the sound and prudent management of an electronic money institution;

10) the identity of directors, including the persons responsible for the management of the electronic money issuance activities of the electronic money institution, where the electronic money institution intends to issue electronic money and, at the same time, to be engaged in other activities indicated in subparagraph 4 of paragraph 2 of Article 10 of this Law, and where the electronic money institution intends to provide payment services not relating to issuance of electronic money, also the persons responsible for the provision of payment services as well as evidence that they are of good repute and meet the requirements set forth in paragraph 2 of Article 14 of this Law for qualifications and experience;

11) data of an audit firm which performs (is to perform) audit or a certified auditor (hereinafter referred to as the “auditor”) independently performing audits (hereinafter, when referring in this Law jointly to an audit firm and an auditor independently performing audits the concept “audit firm” shall be used), where they meet the requirements set forth in the Law on Financial Institutions and the Law of the Republic of Lithuania on Audit;

12) the address of the registered office.

4. The information indicated in subparagraphs 5, 6 and 8 of paragraph 3 of this Article must be accompanied by a description of the internal audit procedure and the organisational arrangements specifying the steps to be taken to protect the interests of electronic money holders and to ensure continuity and reliability in the issuance of electronic money.

5. The supervisory institution shall have the right, on the grounds of risk assessment, to carry out an on-site inspection of preparedness of a legal person applying for the issuance of an electronic money institution licence to issue electronic money. The on-site inspection of preparedness to issue electronic money shall mutatis mutandis be subject to provisions of Article 32 of this Law.

6. The supervisory institution must consider the submitted documents and take a decision on the issuance of an electronic money institution licence and give a written notice thereof to the applicant not later than within three months of receipt of the application and having regard to provisions of paragraph 2 of Article 28 of this Law.

7. The supervisory institution shall submit a justified refusal to issue an electronic money institution licence where:

1) submitted documents do not meet the requirements set in this Law and the legal acts adopted by the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;

2) the electronic money institution does not have a registered office in the Republic of Lithuania, the legal form, heads, minimum equity capital of the electronic money institution do not meet the requirements set forth by laws and the legal acts adopted by the supervisory institution;

3) there is a reason to doubt whether the persons holding a qualifying holding in the electronic money institution’s authorised capital and/or voting rights meet the criteria set forth in paragraph 1 of Article 15 of this Law;

4) close links exist between the electronic money institution and another person, which would prevent the effective exercise by the supervisory institution of supervision of the electronic money institution;

5) close links exist between the electronic money institution and a person from a foreign state whose legal acts governing the activities of this person or difficulties in ensuring compliance with the said legal acts may prevent the supervisory institution from effectively exercising the supervision of the electronic money institution;

6) taking into account the need to ensure the sound and prudent management of the electronic money institution, the electronic money institution does not have robust governance arrangements for its business of electronic money issuance which would be comprehensive and proportionate to the nature, scale and complexity of the activities of the electronic money institution, including a clear organisational structure enabling to ensure separation of functions and vertical and horizontal responsibility relationships with well-defined, transparent and consistent lines of responsibility, the procedures to identify, manage, monitor and report the risks to which it is or might be exposed, and internal control mechanisms, including sound administrative and accounting procedures.

8. Where an electronic money institution intends to issue electronic money and, at the same time, intends to engage or is engaged in other activities indicated in subparagraph 4 of paragraph 2 of Article 10 of this Law, the supervisory institution may refuse the issuance of an electronic money institution licence until the establishment of a separate legal entity for the electronic money issuance business, where the non-electronic money issuance activities wherein the electronic money institution is to be engaged or is engaged impair or are likely to impair either the financial soundness thereof or the ability of the supervisory institution to monitor compliance with all obligations laid down by this Law.

9. An electronic money institution licence shall be valid for an indefinite period. A electronic money institution holding an electronic money institution licence must, at all times, comply with the requirements set forth for the issuance of the electronic money institution licence. In the cases and according to the procedure set forth in this Law and the legal acts adopted by the supervisory institution, the electronic money institution must notify the supervisory institution of any changes in the data submitted to obtain the electronic money institution licence.

Article 12. Electronic Money Institution Licence for Restricted Activity

1. An electronic money institution licence for restricted activity shall be valid solely in the Republic of Lithuania. The preceding 6 months’ average outstanding electronic money of the electronic money institution to which the payment institution licence for restricted activity has been issued (where no activities are carried out, projected in a business plan) may not exceed LTL 3 million per month, with the exception of the case specified in paragraph 7 of this Article. An electronic money institution to which an electronic money institution licence for restricted activity has been issued shall not be subject to provisions of Articles 15, 20 and 21 of this Law. The procedure for issuing and replacing an electronic money institution licence for restricted activity shall be laid down by this Law and the legal acts adopted by the supervisory institution.

2. An electronic money institution licence for restricted activity shall be issued to a legal person whose heads, including the persons responsible for management of the electronic money institution’s electronic money issuance business, where the electronic money institution issues electronic money and, at the same time, is engaged in other activities indicated in subparagraph 4 of paragraph 2 of Article 10 of this Law, meet the requirements set forth in paragraph 3 of Article 14 of this Law.

3. An electronic money institution holding a licence of an electronic money institution to engage in restricted activities and intending to provide payment services not relating to electronic money must also conform to provisions of paragraphs 1 and 2 of Article 6 of the Law on Payment Institutions

4. For the issuance of a licence of an electronic money institution to engage in restricted activities, an application and the following documents as well as data shall be submitted to the supervisory institution:

1) articles of association;

2) a business plan, presenting a forecast budget for the first three financial years which demonstrates that the electronic money institution is able to operate soundly and employs the appropriate internal control systems, procedures and resources;

3) the documents proving that the preceding 6 months’ average outstanding electronic money of the electronic money institution (where no activities are carried out, projected in a business plan) does not exceed (will not exceed) LTL 3 million per month, and where the electronic money institution intends to provide payment services not relating to issuance of electronic money, also the document referred to in subparagraph 3 of paragraph 3 of Article 6 of the Law on Payment Institutions;

4) a description of the measures taken (to be taken) under Article 22 of this Law for safeguarding electronic money holders’ funds, and where payment services not relating to issuance of electronic money are to be provided, also the documents referred to in subparagraph 5 of paragraph 3 of Article 5 of the Law on Payment Institutions;

5) a description of the internal control mechanisms established (intended to be established) in order to comply with obligations in relation to prevention of money laundering and terrorist financing under the Law on Prevention of Money Laundering and Terrorist Financing and Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds;

6) a description of the structural organisation, including the intended use of branches, agents, natural or legal persons through which the electronic money institution intends to distribute or redeem electronic money or other entities to which activities will be outsourced, and a description of participation in payment systems;

7) the identity of directors, including the persons responsible for the management of the electronic money issuance activities of the electronic money institution, where the electronic money institution intends to issue electronic money and, at the same time, to be engaged in other activities indicated in subparagraph 4 of paragraph 2 of Article 10 of this Law, and where the electronic money institution intends to provide payment services not relating to issuance of electronic money, also the persons responsible for the provision of payment services as well as evidence that they meet the requirements set forth in paragraph 3 of Article 14 of this Law;

8) the address of the registered office.

5. An electronic money institution being established shall be registered in the Register of Legal Entities solely upon issuance of an electronic money institution licence for restricted activity, and where the electronic money institution licence for restricted activity has been issued to the legal person which has already been established, appropriate amendments in the Register of Legal Entities shall be made.

6. An electronic money institution to which an electronic money institution licence for restricted activity has been issued must supply information to the supervisory institution in relation to compliance with the requirements set forth in paragraphs 1 and 2 of this Article in accordance with the procedure laid down by the supervisory institution.

7. Where an electronic money institution to which an electronic money institution licence for restricted activity has been issued no longer meets the requirements set forth in paragraph 1 of this Article and/or paragraph 1 of Article 6 of the Law on Payment Institutions, it must, within 30 days from emergence of the mentioned circumstances, apply to the supervisory institution for the issuance of an electronic money institution licence in accordance with the procedure laid down in Article 11 of this Law. Where no application is lodged for the issuance of an electronic money institution licence within the specified time limit or where the supervisory institution does not issue the electronic money institution licence within the time limits laid down in Article 11 of this Law, the electronic money institution licence for restricted activity shall be withdrawn.

8. The supervisory institution shall have the right, on the grounds of risk assessment, to carry out an on-site inspection of preparedness of an electronic money institution applying for the issuance of an electronic money institution licence for restricted activity to issue electronic money. The on-site inspection of preparedness to issue electronic money shall mutatis mutandis be subject to provisions of Article 32 of this Law.

9. The supervisory institution must consider the submitted documents and take a decision on the issuance of an electronic money institution licence for restricted activity and give a written notice thereof to the applicant not later than within three months of receipt of the application and having regard to paragraph 2 of Article 28 of this Law.

10. The supervisory institution shall refuse to issue an electronic money institution licence for restricted activity where:

1) submitted documents do not meet the requirements set in this Law and the legal acts adopted by the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;

2) the electronic money institution does not have a registered office in the Republic of Lithuania, the legal form, heads of the electronic money institution do not meet the requirements set forth by laws and the legal acts adopted by the supervisory institution;

3) the electronic money institution does not meet the requirements set forth in paragraphs 1 and 2 of this Law;

4) taking into account the need to ensure the sound and prudent management of the electronic money institution, the electronic money institution does not have robust governance arrangements for its business of electronic money issuance which would be comprehensive and proportionate to the nature, scale and complexity of the activities of the electronic money institution, including a clear organisational structure enabling to ensure separation of functions and vertical and horizontal responsibility relationships with well-defined, transparent and consistent lines of responsibility, and does not have internal control mechanisms, including sound administrative and accounting procedures.

11. Where an electronic money institution intends to issue electronic money and, at the same time, intends to engage or is engaged in other activities indicated in subparagraph 4 of paragraph 2 of Article 10 of this Law, the supervisory institution may refuse the issuance of an electronic money institution licence for restricted activity until the establishment of a separate legal entity for the electronic money issuance business, where the non-electronic money issuance activities wherein the electronic money institution is engaged impair or are likely to impair either the financial soundness thereof or the ability of the supervisory institution to monitor compliance with all obligations laid down by this Law.

12. A licence of an electronic money institution to engage in restricted activities shall be valid for an indefinite period. A electronic money institution holding an electronic money institution licence for restricted activity must, at all times, comply with the requirements set forth for the issuance of the electronic money institution licence for restricted activity. In the cases and according to the procedure set forth in this Law and the legal acts adopted by the supervisory institution, the electronic money institution must notify the supervisory institution of any changes in the data submitted to obtain the electronic money institution licence for restricted activity.

Article 13. Withdrawal of a Licence or Suspension of Validity Thereof

1. A licence shall be withdrawn in the cases specified in paragraph 1 and subparagraphs 1, 3-8 of paragraph 2 of Article 10 of the Law on Financial Institutions.

2. In addition to the grounds specified in paragraph 1 of this Article, a licence may also be withdrawn by a decision of the supervisory institution where:

1) the electronic money institution does not meet the requirements set forth for the issuance of the licence;

2) the electronic money institution would constitute a threat to the stability of payment systems by continuing its business of electronic money issuance;

3) the electronic money institution ceases to exist due to reorganisation where its rights and duties relating to the issuance of electronic money are transferred to a legal person not meeting the requirements set forth for the electronic money institution or a decision is taken on the winding up of the electronic money institution.

3. In the event of withdrawal of a licence on the grounds specified in subparagraph 3 of paragraph 2 of this Article or subparagraph 8 of paragraph 2 of Article 10 of the Law on Financial Institutions, a decision of the supervisory institution shall indicate the reasons for taking of the decision and a notice shall be given to an electronic money institution of the decision taken within five working days. In other cases, the licence shall be withdrawn in accordance with the procedure laid down by Articles 35 and 36 of this Law.

4. Validity of a licence shall be suspended on the grounds and in accordance with the procedure laid down by Articles 35 and 36 of this Law.

5. Upon withdrawal of a licence or suspension of validity thereof, an electronic money institution shall not have the right to issue electronic money and provide payment services, except to the extent it is necessary to settle with electronic money holders and payment service users.

6. Upon withdrawal of a licence and not later than within two months, bodies of an electronic money institution must take a decision on liquidation or reorganisation of the electronic money institution or take a decision on changing the type of business and effect appropriate amendments to the articles of association, the name and other relevant amendments relating to the change in the type of business. Appropriate amendments must be made to the Register of Legal Entities.

CHAPTER FOUR

MANAGEMENT OF AN ELECTRONIC MONEY INSTITUTION

Article 14. Bodies and Heads of an Electronic Money Institution

1. An electronic money institution must have the following bodies: the general meeting of shareholders, the head of the company and, if the electronic money institution is a financial undertaking, the supervisory board and the board.

2. The heads of an electronic money institution holding a licence of an electronic money institution must be of good repute and possess the qualification and experience necessary to properly perform their duties. Appraisal of the good repute of the heads shall mutatis mutandis be subject to provisions of paragraphs 12 and 13 of Article 34 of the Law on Banks. Requirements for the qualifications and experience of the heads shall be set by legal acts of the supervisory institution.

3. The heads of an electronic money institution holding a licence for restricted activity must meet the requirements of preparedness and suitability as set forth by the legal acts adopted by the supervisory institution, including the requirement that none of them may have be convicted of a crime or misdemeanour relating to money laundering or terrorist financing, a serious or grave crime or a crime or misdemeanour against property, property rights and property interests, the economy and business practice, the financial system or of corresponding criminal acts under criminal laws of foreign states, irrespective of whether the conviction has expired.

4. An electronic money institution must give a notice to the supervisory institution of the envisaged changes in heads of the electronic money institution and also supply the information specified by the supervisory institution and required for evaluating whether the heads meet the requirements set forth for them in paragraphs 2 or 3 of this Article. The newly elected (appointed) heads of the electronic money institution may assume office solely if the supervisory institution does not oppose their candidacies. The supervisory institution shall have the right to oppose the candidacies of the heads of the electronic money institution where they do not meet the requirements specified in paragraphs 2 or 3 of this Article.

5. Where the supervisory institution does not, within 30 calendar days from the receipt of a notice of the projected changes of heads and the entire required information, declare its opposition, it shall be considered that the supervisory institution does not oppose the candidacies of the heads to be elected (appointed).

6. Paragraphs 2, 3 and 4 of this Article shall also apply to heads of a branch of an electronic money institution of a foreign state.

Article 15. Qualifying Holding in an Electronic Money Institution’s Authorised Capital and/or Voting Rights

1. The supervisory institution shall assess the suitability of the person acquiring a qualifying holding in an electronic money institution’s authorised capital and/or voting rights according to the following criteria:

1)	1) the ability of the acquirer to ensure a sound and prudent management of the electronic money institution;

2)	the good repute of the acquirer as specified in paragraphs 12 and 13 of Article 34 of the Law on Banks;

3)	the financial soundness of the acquirer.

2. Acquisition and loss of a qualifying holding in an electronic money institution’s authorised capital and/or voting rights as well as suspension of the right to exercise a voting right shall mutatis mutandis be subject to provisions of Articles 24, 25 and 26 of the Law on Banks.

CHAPTER FIVE

RIGHTS OF AN ELECTRONIC MONEY INSTITUTION, ELECTRONIC MONEY INSTITUTION OF ANOTHER MEMBER STATE AND ELECTRONIC MONEY INSTITUTION OF A FOREIGN STATE

Article 16. Right of an Electronic Money Institution to Issue Electronic Money in Other Member States

1. An electronic money institution shall have the right to establish a branch in another Member State, issue electronic money without establishing a branch or distribute and redeem electronic money through natural or legal persons.

2. Prior to establishing a branch in another Member State or if planning to distribute and redeem electronic money in another Member State through an established legal or natural person, an electronic money institution must give a notice thereof to the supervisory institution indicating its name, address, the contact person and the Member State wherein it intends to establish the branch or distribute and redeem electronic money through the established natural or legal person and also supply information on the organisational structure of the branch, the heads thereof, and where electronic money is to be distributed and redeemed through an established natural or legal person, the name of the person (name, surname), the registered office (address), the organisational structure, contact data must be indicated.

3. The supervisory institution must forward the information supplied by an electronic money institution within one month from the receipt of the information to the supervisory institution of another Member State. The supervisory institution shall have the right to refuse the forwarding of the information to the supervisory institution of another Member State where the organisational structure, heads of a branch or the financial situation of the electronic money institution do not meet the requirements set forth by this Law. Reasons must be given for the refusal of the supervisory institution to forward the information, and a decision thereon must be taken within one month of the receipt of the information referred to paragraph 2 of this Article. The electronic money institution must be forthwith notified of the forwarding of the information or refusal to forward it to the supervisory institution of another Member State.

4. Where an electronic money institution has already established at least one branch in another Member State, the procedure set forth in this Article shall not apply to the establishment of other branches thereof in that Member State.

5. An electronic money institution wishing to issue electronic money in another Member State without establishing a branch or to distribute and redeem electronic money through a natural or legal person operating in another Member State must give a notice thereof to the supervisory institution. The notice must indicate the name of the electronic money institution providing the notice, the address thereof, the contact person. The supervisory institution must, within one month, forward this information to the supervisory institution of another Member State or refuse to forward it where the financial situation of the electronic money institution does not meet the requirements set forth by this Law, and give a notice thereof to the electronic money institution.

6. Where the supervisory institution of another Member State informs that it has reasonable grounds to suspect that, in connection with the establishment of a branch by an electronic money institution, money laundering and/r terrorist financing has taken, is taking or will take place, or that the establishment of such branch could increase the risk of money laundering and/or terrorist financing, the supervisory institution shall have the right to refuse, on these grounds, to enter the branch or agent in the public list of electronic money institutions or to remove them from this list.

7. In exercising supervision and imposing sanctions on a branch established by an electronic money institution in another Member State or another entity to which activities are outsourced, the supervisory institution shall co-operate with the supervisory institution of another Member State.

8. The supervisory institution shall provide the supervisory institution of another Member State with requested information, in particular in the case of infringements or suspected infringements by a branch established by an electronic money institution in another Member State or another entity to which activities are outsourced and, on its own initiative, all other relevant information.

Article 17. Right of an Electronic Money Institution of Another Member State to Issue Electronic Money in the Republic of Lithuania

1. An electronic money institution of another Member State may establish a branch in the Republic of Lithuania, issue electronic money without establishing a branch or distribute and redeem electronic money through natural or legal persons.

2. An electronic money institution of another Member State may, in the Republic of Lithuania, establish a branch and issue electronic money which it is entitled to issue under an authorisation granted by the supervisory institution of another Member State where the supervisory institution receives from the supervisory institution of another Member State a notice indicating the name and address of the electronic money institution and information on the organisational structure of the branch, the heads of the branch.

3. An electronic money institution of another Member State may commence issuance and redemption of electronic money in the Republic of Lithuania through a natural or legal person where the supervisory institution receives from the supervisory institution of another Member State a notice containing the name (name, surname) of the natural or legal person, the registered office (address) thereof in the Republic of Lithuania, the contact data, the contact person of the electronic money institution.

4. Where an electronic money institution of another Member State has already established at least one branch in the Republic of Lithuania, the procedure set forth by this Article shall not apply to the establishment of other branches thereof.

5. An electronic money institution of another Member State may commence issuance of electronic money in the Republic of Lithuania without establishing a branch from the receipt, by the supervisory institution from the supervisory institution of another Member State, a notice indicating the name of the electronic money institution and the date of commencing the issuance of electronic money.

6. Where the supervisory institution has reasonable grounds to suspect that, in connection with the establishment of a branch of an electronic money institution of another Member State, money laundering and/or terrorist financing has taken, is taking or will take place, or that the establishment of such branch could increase the risk of money laundering and/or terrorist financing, it shall so inform the supervisory institution of another Member State.

7. The supervisory institution shall co-operate with the supervisory institution of another Member State exercising supervision of and imposing sanctions on a branch established by an electronic money institution of another Member State in the Republic of Lithuania or another entity to which activities are outsourced.

Article 18. Activities of Branches of Electronic Money Institutions of Foreign States in the Republic of Lithuania

1. A branch of an electronic money institution of a foreign state may commence the issuance of electronic money and provision of payment services related to the issuance of electronic money in the Republic of Lithuania only upon obtaining a licence of a branch of an electronic money institution of a foreign state. A licence of a branch of an electronic money institution of a foreign state shall be valid for an indefinite period.

2. A licence of a branch of an electronic money institution shall be valid only in the Republic of Lithuania and shall not entitle to issuance of electronic money in other Member States, also to provision of payment services not related to issuance of electronic money in the Republic of Lithuania and other Member States.

3. The procedure for issuing and replacing the licence of a branch of an electronic money institution of a foreign state shall be laid down by this Law and the legal acts of the supervisory institution.

4. The activities, supervision and termination of a branch of an electronic money institution of a foreign state shall be subject to the same requirements as applicable to electronic money institutions, having regard to the specific nature of the legal status and activities of the branch and to the exceptions specified in the legal acts of the supervisory institution.

5. Branches of an electronic money institution of a foreign state, activities and termination thereof shall not be subject to the requirements set forth for electronic money institutions in paragraphs 2 and 6 of Article 9, Articles 11, 12, 15, 16, 17, 20, 21, 42 and 44 of this Law.

6. Where a branch of an electronic money institution of a foreign state holds a licence, other branches established in the Republic of Lithuania by the electronic money institution of the foreign state shall have the right to issue electronic money without obtaining a licence. In this case, the electronic money institution of the foreign state must specify one branch which would provide the supervisory institution with the information on all branches established in the Republic of Lithuania as specified in this Law and legal acts of the supervisory institution.

7. In order to obtain a licence, an electronic money institution of a foreign state shall submit to the supervisory institution an application and the following documents and data:

1) a certificate issued by a register of the foreign state wherein the electronic money institution is established, a licence or other documents supporting the identification data of the electronic money institution of the foreign state and the right to issue electronic money;

2) articles of association of the electronic money institution of the foreign state and a description of activities carried out in the foreign state;

3) data on members of the management and supervisory bodies of the electronic money institution of the foreign state, the persons holding qualifying holdings in the authorised capital and/or voting rights thereof and the persons having close links with the electronic money institution of the foreign state;

4) financial statements of the electronic money institution of the foreign state for the last three years along with an auditor’s opinion;

5) decision of a body of the electronic money institution of the foreign state to establish a branch in the Republic of Lithuania and appoint heads of the branch;

6) a written confirmation that the supervisory institution of a foreign state under whose jurisdiction the electronic money institution falls does not object to the establishment of the branch in the Republic of Lithuania and information of this supervisory institution on the procedure for supervising the electronic money institution of the foreign state in that state, including branches thereof in foreign states, and the requirements set for electronic money institutions as well as the obligation to exercise supervision of the branch established in the Republic of Lithuania and to provide information to the Lithuanian supervisory institution;

7) the written information at the disposal of the supervisory institution of a foreign state under whose jurisdiction the electronic money institution of the foreign state falls relating to the financial situation of the electronic money institution of the foreign state applying for the licence and information on the sanctions imposed against it over the last three years;

8) the identity of heads of the branch and evidence that they are of good repute and meet the requirements set forth in paragraph 2 of Article 14 of this Law for qualifications and experience;

9) the documents and data specified in subparagraphs 1, 2, 3, 5, 6, 7 of paragraph 3 of Article 11 of this Law and relating to activities of the branch;

10) the address of the registered office.

8. The supervisory institution shall have the right, on the grounds of risk assessment, to carry out an on-site inspection of preparedness of a branch of an electronic money institution of a foreign state applying for the issuance of a licence to issue electronic money. The on-site inspection of preparedness shall mutatis mutandis be subject to provisions of Article 32 of this Law.

9. The supervisory institution must consider the submitted documents and take a decision on the issuance of a licence to a branch of an electronic money institution of a foreign state and give a written notice thereof to the applicant not later than within three months of receipt of the application and having regard to provisions of paragraph 2 of Article 28 of this Law.

10. The supervisory institution shall submit a justified refusal to issue a licence to a branch of an electronic money institution of a foreign state where:

1)	submitted documents do not meet the requirements set in this Law and the legal acts adopted by the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect;

2)	there is reason to doubt whether the electronic money institution of the foreign state establishing the branch will be capable of ensuring the sound and prudent management of the branch established in the Republic of Lithuania;

3) heads of the branch of the electronic money institution of the foreign state do no meet the requirements set forth by legal acts;

4) the supervisory institution of a foreign state under whose jurisdiction the electronic money institution falls objects to the establishment of the branch in the Republic of Lithuania or where the procedure for supervising an electronic money institution of a foreign state in that state and the requirements set for electronic money institutions do not adequately ensure safe and sound activities of the branch or may prevent the supervisory institution from exercising its functions;

5) the supervisory institution of a foreign state under whose jurisdiction the electronic money institution falls does not undertake to supervise the activities of the branch of the electronic money institution of the foreign state in the Republic of Lithuania and provide information to the supervisory institution under the terms acceptable to it;

6) taking into account the need to ensure the sound and prudent management of the branch of the electronic money institution of the foreign state, the branch of the electronic money institution of the foreign state does not have robust governance arrangements for its electronic money issuance business, which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, the procedures to identify, manage, monitor and report the risks to which it is or might be exposed, and internal control mechanisms, including sound administrative and accounting procedures. Those arrangements, risk management procedures and internal control mechanisms must be comprehensive and proportionate to the nature, scale and complexity of the electronic money issuance business of the branch of the electronic money institution of the foreign state.

11. A branch of an electronic money institution of a foreign state holding a licence issued by the supervisory institution must, at all times, comply with the requirements set forth for the issuance of the licence. In the cases and according to the procedure set forth in this Law and the legal acts adopted by the supervisory institution, the branch of the electronic money institution of the foreign state must notify the supervisory institution of any changes in the data submitted to obtain the licence of the branch of the electronic money institution of the foreign state.

12. In addition to the grounds specified in Article 13 of this Law, a licence issued to an electronic money institution of a foreign state shall also be withdrawn when a licence issued to the electronic money institution of the foreign state which has established a branch is withdrawn or a decision is adopted on the winding up of the electronic money institution of the foreign state which has established the branch or bankruptcy proceedings are initiated against it.

Article 19. Public List of Electronic Money Institutions

1. The electronic money institutions holding a licence of the supervisory institution and registered in the Register of Legal Entities, their branches and agents as well as branches of electronic money institutions of foreign states established in the Republic of Lithuania and their agents shall be entered in a public list of electronic money institutions.

2. Electronic money institutions and branches of electronic money institutions of foreign states established in the Republic of Lithuania shall be entered in the public list of electronic money institutions within five working days of receiving a licence and entering in the Register of Legal Entities, the branches of electronic money institutions – within five working days of submitting all required documents, and the branches and agents of electronic money institutions operating in other Member States and agents – within one month of submitting all required documents.

3. The electronic money institutions holding a licence of an electronic money institution shall be entered in the public list of electronic money institutions separately from the electronic money institutions holding a licence of an electronic money institution to engage in restricted activities.

4. The manager of the public list of electronic money institutions, namely, the supervisory institution, shall publish any entry in the list of an electronic money institution, its branch, a branch of an electronic money institution of a foreign state, a change in the data or information thereon and shall update this information on the website of the supervisory institution.

5. The public list of electronic money institutions shall be managed in accordance with the procedure laid down by the legal acts adopted by the supervisory institution.

CHAPTER SIX

ELECTRONIC MONEY INSTITUTION’S EQUITY CAPITAL AND SAFEGUARDING REQUIREMENTS

Article 20. Elektroninių pinigų įstaigos minimalus nuosavas kapitalas

1. The minimum equity capital of an electronic money institution shall be comprised of the following items:

1) paid-up authorised capital (reduced by the value of bought-up own shares) excluding the value of preference shares;

2) reserve capital;

3) capital reserves (share premium) excluding the amount related with the issue of preference shares;

4) mandatory reserve or reserve capital;

5) retained earnings (upon deducting the amount of interim retained earnings of the current year or retained earnings of the last previous year whereon no decision has been passed yet by the annual general meeting of shareholders, provided that an audit firm has not yet performed the audit of the set of financial statements of the respective period and the supervisory institution has not been provided with the data evidencing that the amount of the profit is correct and is net of all expected taxes or dividends) or loss;

6) other reserves.

2. An electronic money institution must possess a minimum equity capital not less than EUR 350000 (expressed in euros in accordance with the official rate of the litas against the euro set by the Bank of Lithuania).

Article 21. Elektroninių pinigų įstaigos nuosavas kapitalas

1. The equity capital of an electronic money institution shall at no time be less than the larger of the following amounts:

1) the minimum equity capital indicated in paragraph 2 of Article 20 of this Law;

2) the equity capital requirement calculated according to the methods specified in the legal acts adopted by the supervisory institution.

2. An electronic money institution may not make the multiple use of elements eligible for the equity capital where it belongs to the same as another electronic money institution, credit institution, payment institution, financial brokerage firm, management company, insurance undertaking or reinsurance undertaking. This provision shall also apply where the electronic money institution carries out activities other than the issuance of electronic money.

3. The rules on the size, calculation and application of the equity capital of an electronic money institution shall be established by the supervisory institution.

4. The supervisory institution may, based on an evaluation of the risk-management processes, risk loss data base and internal control mechanisms, establish an individual size of the equity capital for an electronic money institution, which shall be up to 20 per cent lower or higher than the equity capital requirement calculated in accordance with one of the methods as specified in the legal acts adopted by the supervisory institution.

Article 22. Safeguarding Requirements for Funds Received from Electronic Money Holders in Exchange for Electronic Money that Has Been Issued

1. An electronic money institution must safeguard funds that have been received from electronic money holders in exchange for electronic money that has been issued:

1) by not commingling these funds at any time with the funds of any natural or legal person other than electronic money holders. The funds must be deposited in a separate account in a credit institution of the Republic of Lithuania (including a branch of a foreign credit institution established in the Republic of Lithuania) or a credit institution of another Member State or invested in secure, liquid low-risk assets in accordance with the procedure laid down by the legal acts adopted by the supervisory institution. The electronic money institution must, while safeguarding the funds which have been received from the electronic money holders, take measures to ensure the protection of the rights of ownership of the electronic money holders, in particular in the event of insolvency of the electronic money institution. The electronic money holders shall hold ownership of the funds transferred to the electronic money institution, and no execution may be levied according to arrears of the electronic money institution;

2) by covering these funds by an insurance policy or a guarantee, a warranty statement from an insurance company or a credit institution of the Republic of Lithuania (including a branch of a foreign insurance company or a credit institution established in the Republic of Lithuania) or an insurance company or a credit institution of another Member State which does not belong to the same group as the electronic money institution itself, for an amount equivalent to that which would have been segregated in the case of application of the method indicated in subparagraph 1 of paragraph 1 of this Article, payable in the event that the electronic money institution is unable to meet its obligations.

2. Where a portion of the funds received by an electronic money institution from electronic money holders is to be used as electronic money or for future payment transactions with the remaining amount to be used for non-payment services, that portion of the funds to be used as electronic money or for future payment transactions shall also be subject to the requirements under paragraph 1 of this Article. Where that portion is variable or unknown in advance, the electronic money institution may calculate this portion on the basis of a representative portion assumed by the electronic money institution to be used as electronic money or for payment services provided such a representative portion can be reasonably estimated on the basis of historical data to the satisfaction of the supervisory institution.

3. Funds of electronic money holders received to an electronic money institution’s account in the form of payment by any payment instrument must be safeguarded as from crediting them to the electronic money institution’s account or are otherwise made available to the electronic money institution in accordance with the execution time requirements laid down in the Law on Payments. In any event, such funds shall be safeguarded by no later than five working days after the issuance of electronic money.

4. An electronic money institution must, one month in advance, give a notice to the supervisory institution of major changes in the safeguarding requirements stipulated by this Article and applicable to funds received by electronic money holders in exchange for electronic money that has been issued.

CHAPTER SEVEN

OTHER REQUIREMENTS SET FORTH FOR AN ELECTRONIC MONEY INSTITUTION

Article 23. Requirements for an Electronic Money Institution Outsourcing its Operational Functions of Issuance of Electronic Money

1. An electronic money institution intending to outsource the operational functions of issuance of electronic money which are inseparable from and assist in the issuance of electronic money must accordingly inform the supervisory institution one month in advance.

2. Outsourcing of important operational functions of issuance of electronic money may not be undertaken in such way as to impair materially the quality of the electronic money institution’s internal control and the ability of the supervisory institution to monitor the electronic money institution’s compliance with all obligations laid down in this Law and the legal acts adopted by the supervisory institution. For the purposes of this Law, an operational function shall be regarded as important if a defect or failure in its performance would materially impair the continuing compliance of an electronic money institution with the requirements of its licence or its other obligations under this Law an/or the legal acts adopted by the supervisory institution, or the stability and soundness of operation of the electronic money institution, or the continuity of the activities of issuance of electronic money carried out by it.

3. When an electronic money institution outsources its important operational functions, the electronic money institution must comply with the following conditions:

1) the outsourcing may not result in the delegation by senior management of the electronic money institution of its responsibility;

2) the relationship of the electronic money institution towards its electronic money holders may not be altered and their obligations under this Law and the Law on Payments must be met;

3) the conditions as specified in Chapters Three, Four and Five of this Law with which the electronic money institution is to comply may not be modified or undermined.

4. Requirements for the outsourcing of an electronic money institution’s operational functions of issuance of electronic money shall be set forth by legal acts of the supervisory institution.

Article 24. Additional Duties of an Electronic Money Institution

1. Issuance of electronic money upon establishment of a branch and outsourcing of all or a part of important operational functions of issuance of electronic money shall not release the electronic money institution from compliance with this Law.

2. An electronic money institution outsourcing all or a part of important operational functions of issuance of electronic money must take all necessary steps to ensure that the requirements of this Law are complied with.

3. An electronic money institution must ensure that the branches acting on its behalf inform electronic money holders that electronic money is issued through a branch of the electronic money institution.

Article 25. Accounting, Financial Statements and Audit of an Electronic Money Institution

1. An electronic money institution must keep accounts in accordance with the Accounting Law of the Republic of Lithuania and other legal acts.

2. Electronic money institutions must draw up sets of interim financial statements and annual financial statements.

3. The content of the sets of an electronic money institution’s interim and annual financial statements, the forms of other reports, the procedure for drawing up and submitting the statements shall be specified by laws and the legal acts adopted by the supervisory institution.

4. Requirements for performance of audit of a set of financial statements of an electronic money institution, the auditor and the audit firm, duties and responsibilities thereof shall be set forth by the Law of the Republic of Lithuania on Audit and other legal acts.

5. The electronic money institutions which are subject to the mandatory audit of financial statements must, together with the audited financial statements, also submit to the supervisory institution an auditor’s report, which must contain a justification of separation of issuance of electronic money, provision of payment services and other activities.

Article 26. Storage of Information

Electronic money institutions shall be required to keep the data relating to implementation of provisions Chapter Three, Chapter Four, Chapter Five, Chapter Six and Chapter Seven of this Law for five years, unless the Law on Prevention of Money Laundering and Terrorist Financing and other legal acts establish longer periods for the keeping of such data.

CHAPTER EIGHT

SUPERVISION OF ELECTRONIC MONEY INSTITUTIONS

Article 27. Supervisory Institution

1. The supervisory institution shall exercise supervision of the electronic money institutions holding a licence issued according to the procedure set forth by this Law, including branches thereof in other Member States, as well as supervision of the branches of the electronic money institutions of foreign states holding a licence issued according to the procedure set forth by this Law. This supervision shall not cover the supervision of activities provided for in subparagraphs 3 and 4 of paragraph 2 of Article 10 of this Law.

2. Supervision shall be exercised in compliance with this Law, the Law of the Republic of Lithuania on the Bank of Lithuania, the Law on Financial Institutions and legal acts adopted by the supervisory institution.

3. Supervision of the electronic money institutions of other Member States which issue electronic money without establishing a branch in the Republic of Lithuanian and of the branches established in the Republic of Lithuania by the electronic money institutions of other Member States and their agents shall be exercised in compliance with the provisions of Article 33 of this Law.

Article 28. Consideration of Applications for the Issuance of an Authorisation and Decisions of the Supervisory Institution

1. Detailed rules and procedure for filing, considering applications for the issuance of the licences specified by this Law or carrying out of other actions established in Articles 11, 12, 14, 15, 16, 18, 41 of this Law and other articles of this Law (hereinafter referred to in this Law as the “application for the granting of an authorisation”) and issuing the licences as well as requirements for the documents submitted shall be determined by the legal acts adopted by the supervisory institution.

2. An application for the granting of an authorisation shall be considered and a decision thereon shall be taken within the time limits laid down in this Law or, where the time limits have not been laid down in this Law, within the time limits laid down by legal acts adopted by the supervisory institution. Where the documents submitted contain form or content shortcomings or not all documents required for the decision have been submitted, the supervisory institution shall require to eliminate the shortcomings and/or submit the missing documents. Moreover, the supervisory institution shall have the right to request additional documents and information required for the decision. Where the supervisory institution requests additional documents and information or the applicant submits additional documents or information at his own initiative, the time limit of consideration of the application and taking of the decision shall be calculated from the receipt of the additionally requested documents and information or the documents and information additionally submitted by the applicant.

3. The supervisory institution shall have the right to refuse the granting of an authorisation where there is a sufficient ground to believe that the granting of the authorisation will violate the property interests of electronic money holders or will pose a threat to the stability and soundness of an electronic money institution, a branch of an electronic money institution of a foreign state or the entire system of electronic money institutions, also on other statutory grounds.

4. The supervisory institution shall notify applicants of a decision taken on the granting of an authorisation within five business days of the taking of the decision. Reasons must be given whenever the supervisory institution refuses to grant an authorisation.

5. Upon the request of the supervisory institution, state and municipal institutions as well as other persons must forthwith provide the supervisory institution with the available information on founders, shareholders and heads of an electronic money institution, an electronic money institution of a foreign state, their financial situation, activities, discovered infringements of laws and other legal acts, conclusions of conducted inspections and examinations as well as other information required by the supervisory institution for a decision on the issuance of an authorisation to the electronic money institution or a branch of the electronic money institution of the foreign state.

Article 29. Protection of the Information Obtained for Supervision Purposes

Protection of the information obtained for the purpose of supervision of electronic money institutions and branches of electronic money institutions of foreign states shall be subject mutatis mutandis to provisions of Article 65 of the Law on Banks.

Article 30. Duties and Rights of the Supervisory Institution

1. In addition to other duties and rights laid down in this Law and other legal acts, the supervisory institution shall have the right:

1) to issue legal acts and recommendations on the activities and supervision of the electronic money institutions under its supervision;

2) for supervision purposes, to require and to obtain from the electronic money institution subject to supervision the entire information as well as documents about the establishment, shareholders, heads, management, activities, prudential treatment and financial situation of the electronic money institution, branches and agents of the electronic money institution, the natural and legal persons distributing and redeeming electronic money and other persons to which activities are outsourced and debtors;

3) to carry out an inspection (check) of the electronic money institution, a branch, agent thereof and another entity whereto activities are outsourced, including a branch, agent and another entity whereto activities are outsourced in another Member State;

4) to issue to the electronic money institution the instructions specified in paragraph 2 of this Article, and the electronic money institution must implement them within the time limit laid down by the supervisory institution and forthwith give written notice thereof to the supervisory institution;

5) where the decisions taken by bodies of the electronic money institution pose a threat to the stability and soundness of activities of the electronic money institution, to apply, according to the procedure set forth by laws, to court to declare them void;

6) where the electronic money institution’s non-electronic money issuance activities impair or are likely to impair either the financial soundness of the electronic money institution or the ability to monitor the electronic money institution’s compliance with all obligations laid down by this Law, to require the establishment of a separate legal entity for the electronic money issuance business;

7) to conclude agreements on the carrying out of an inspection of the electronic money institution with audit firms or other persons holding appropriate qualifications in order to determine the value of the electronic money institution’s assets, financial situation of the electronic money institution, to assess the risks taken or inspect other areas of the electronic money institution’s activities. The persons acting in accordance with the agreements concluded with the supervisory institution and referred to in this subparagraph shall have the rights referred to in paragraphs 2 and 3 of Article 32 of this Law;

8) to demand that an audit firm auditing the electronic money institution’s financial statements be changed, where the audit firm or the auditor does not meet (carry out) the requirements set forth by laws.

2. The supervisory institution, upon discovering infringements of legal acts or shortcomings in activities of an electronic money institution or upon establishing where activities of the electronic money institution pose a threat to the stability and soundness of activities of the electronic money institution, shall have the right to issue to the electronic money institution the following written instructions:

1) to eliminate the infringements of the legal acts or shortcomings in the activities of the electronic money institution within the time limits laid down by the supervisory institution;

2) not to conclude certain transactions or to reduce the scope of such transactions, including transactions on the outsourcing of operational functions;

3) to carry out an audit of interim financial statements of the electronic money institution within the time limit laid down by the supervisory institution;

4) to prepare and implement, within the time limits laid down by the supervisory institution, an acceptable action plan for the restructuring of activities of the electronic money union and/or the elimination of discovered infringements and/or shortcomings;

5) to convene the general meeting of the electronic money institution’s shareholders, a meeting of the supervisory board or of the board (where it has been formed) and to discuss thereat the issues proposed by the supervisory institution;

6) for the heads of the electronic money institution to appear before the supervisory institution and provide clarifications. The supervisory institution shall have the right to publicly announce its instruction for the heads of the electronic money institution to appear before the supervisory institution;

7) to carry out other actions or not to carry out certain actions in order to bring infringements of legal acts to an end or to eliminate shortcomings in activities of the electronic money institution or to ensure the stability and soundness of the activities of the electronic money institution.

3. The supervisory institution, upon discovering infringements of legal acts or shortcomings in activities of an electronic money institution or where activities of the electronic money institution pose a threat to the stability and soundness of activities of the electronic money institution, shall have the right to temporarily set for the electronic money institution individual prudential or additional prudential requirements. Such a decision of the supervisory institution must be substantiated and taken in accordance with the provisions of paragraph 2 of Article 36 of this Law.

4. The instructions referred to in paragraphs 2 and 3 of this Article may also be given by simultaneously imposing sanctions.

5. Employees of the supervisory institution shall, in accordance with the procedure laid down by legal acts, have the right to participate in the work of bodies of an electronic money institution – to attend meetings or sittings in the capacity of observers or otherwise observe activities of the electronic money institution.

6. The supervisory institution shall also have the rights referred to in this Article in respect of a branch of an electronic money institution of a foreign state holding a licence issued according to the procedure set forth by this Law.

Article 31. Appeal against Decisions, Acts (Omissions) of the Supervisory Institution

1. The persons whose rights or interests protected under the law have been violated shall have the right to file an appeal to court against decisions, acts (omissions) of the supervisory institution according to the procedure set forth by laws.

2. Filing of an appeal to court shall not have suspensory effect on a decision, with the exception of a decision on imposition of the penalties specified by this Law, or an action appealed against until its resolution.

Article 32. Inspection of Electronic Money Institutions

1. Inspections of electronic money institutions, their branches and agents and other entities to which activities are outsourced, including branches, agents and other entities to which activities are outsourced in another Member State, shall be carried out by employees of the supervisory institution. The supervisory institution may engage also other persons in the process of inspecting an electronic money institution, its branch and agent and another entity to which activities are outsourced, including a branch, agent and another entity to which activities are outsourced in another Member State.

2. An electronic money institution, its branch and agent and another entity to which activities are outsourced, including a branch, agent and another entity to which activities are outsourced in another Member State must provide the following conditions for the carrying out of an inspection:

1) to supply to the persons conducting the inspection all the information and documents requested by them;

2) to provide an opportunity for the persons conducting the inspection to make use of data of the electronic money institution’s information systems;

3) to provide the persons conducting the inspection with a workstation.

3. The persons conducting an inspection shall have the right:

1) to have unimpeded access to the premises of an electronic money institution subject to the inspection, its divisions, branches and agents and other entities to which activities are outsourced during the office hours of the electronic money institution, its branch and agent and another entity to which activities are outsourced, including the branches, agents and other entities to which activities are outsourced in another Member State;

2) to request and obtain the information and documents (originals or certified copies thereof) required to carry out the inspection, oral or written clarifications of the heads and other employees of the electronic money institution;

3) to request copies of submitted documents or to make copies thereof themselves at the expense of the electronic money institution;

4) to have other rights laid down by legal acts.

4. Upon completion of an inspection, its results shall be provided to an electronic money institution in writing. The head of the electronic institution’s administration and members of the board must familiarise themselves with the results of the inspection by affixing their signature thereto.

5. Legal acts of the supervisory institution shall set forth a detailed procedure for conducting an inspection and recording results of the inspection.

6. On the instruction of the supervisory institution of another Member State, the supervisory institution shall, upon giving prior notice to the supervisory institution of another Member State and acting in compliance with provisions of this Article, have the right to carry out, in the Republic of Lithuania, an inspection of a branch of an electronic money institution of another Member State, its agent and another entity to which activities are outsourced. The supervisory institution of another Member State must notify the supervisory institution of its intention to carry out, in the Republic of Lithuania, an inspection of the branch of the electronic money institution of another Member State, its agent and another entity to which activities are outsourced.

7. In performing its functions relating to application of provisions of the Law on Prevention of Money Laundering and Terrorist Financing and Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds as well as acting in compliance with provisions of this Article, the supervisory institution shall have the right, on its own initiative, to carry out an inspection of a branch of an electronic money institution of another Member State, its agent and another entity to which operational functions are outsourced in the Republic of Lithuania.

8. The supervisory institution may delegate to the supervisory institution of another Member State the task of carrying out an inspection of a branch of an electronic money institution, its agent or another entity to which activities are outsourced in another Member State.

9. The supervisory institution shall have the right, in accordance with the procedure laid down in this Article, to inspect branches of electronic money institutions of foreign states, agents thereof in the Republic of Lithuania.

Article 33. Supervision of the Electronic Money Institutions of Other Member States which Issue Electronic Money in the Republic of Lithuanian without Establishing a Branch and of the Branches Established in the Republic of Lithuania by the Electronic Money Institutions of Other Member States

1. Supervision of the electronic money institutions of other Member States which issue electronic money in the Republic of Lithuania without establishing a branch and supervision of the branches established in the Republic of Lithuania by the electronic money institutions of other Member States and their agents shall be exercised by the supervisory institution of another Member State, however this shall not restrict the right of the supervisory institution to exercise supervision thereof in compliance with provisions of this Article.

2. Where the supervisory institution discovers that an electronic money institution of another Member State issuing electronic money in the Republic of Lithuania without establishing a branch or a branch established in the Republic of Lithuania by an electronic money institution of another Member State does not comply with this Law, the legal acts adopted by the supervisory institution, the supervisory institution shall instruct the electronic money institution and/or the branch of the electronic money institution in writing to bring the infringements of the legal acts to an end within the time limit laid down by the supervisory institution.

3. Where the instructions issued pursuant to paragraph 2 of this Article are ignored, the supervisory institution shall notify thereof the supervisory institution of another Member State requesting to take all possible measures to bring the infringements to an end.

4. Where, disregarding actions of the supervisory institution of another Member State, an electronic money institution or a branch of the electronic money institution persists in not carrying out the requirements of legal acts of the Republic of Lithuania referred to in paragraph 2 of this Article, the supervisory institution shall, upon giving prior notice thereof to the supervisory institution of another Member State, have the right to impose the sanctions provided for by this Law.

5. In cases of urgency, the supervisory institution shall have the right to impose sanctions disregarding the provisions of paragraphs 2, 3 and 4 of this Article.

Article 34. Co-operation with the European Central Bank, the European Commission, the National Central Banks and Supervisory Institutions of Other Member States

1. In performing the functions assigned to it under this Law, the supervisory institution shall co-operate with the supervisory institutions of other Member States, the European Central Bank and the national central banks of other Member States, the supervisory institutions of other electronic money issuers.

2. The supervisory institution shall, by 1 July every year, notify the European Commission of the number of licences issued to braches of electronic money institutions of foreign states and the number of electronic money institutions which have been issued licences to engage in restricted activities, their average outstanding electronic money as on 31 December of the previous calendar year.

CHAPTER NINE

SANCTIONS

Article 35. Sanctions

1. The supervisory institution shall have the right to impose the following penalties on licensed electronic money institutions or branches of electronic money institutions of foreign states:

1) to warn of infringement of this Law and other legal acts implementing this Law or of a failure to carry out instructions of the supervisory institution;

2) to impose the penalties specified by this Law;

3) to temporarily prohibit the issuance of electronic money and provision of one or several payment services;

4) to temporarily or permanently prohibit activities of one or several branches or agents of the electronic money institution. Where the supervisory institution takes a decision on the temporary prohibition of activities of a branch or agent, the branch shall not have the right to issue electronic money and provide payment services, the agent – to provide payment services, and where a decision is taken to permanently prohibit activities of a branch or agent, the branch or agent shall be removed from the public list of electronic money institutions, and the electronic money institution must forthwith take a decision on the termination of the activities of such a branch or agent;

5) to temporarily suspend from office the head (heads) of an electronic money institution or a branch of an electronic money institution of a foreign state or to suspend from office the head (heads) of the electronic money institution or the branch of the electronic money institution of the foreign state and to require that he (they) be removed from office and/or a contract concluded with him (them) be terminated or he (they) be divested of his (their) powers;

6) to appoint a temporary representative for the supervision of the activities of an electronic money institution or a branch of an electronic money institution of a foreign state (hereinafter referred to as a “representative for the supervision of activities”);

7) to temporarily restrict the right to dispose of the funds in accounts opened with credit institutions and of other assets;

8) to withdraw the issued licence or to temporarily suspend validity thereof.

2. The supervisory institution shall have the right to impose the following sanctions on an electronic money institution of another Member State issuing electronic money without establishing a branch, on a branch established by an electronic money institution of another Member State or on an agent:

1) to warn of infringement of this Law and other legal acts regulating safe and sound activities of electronic money institutions;

2) to temporarily restrict the right of the branch established by the electronic money institution of another Member State or its agent to dispose of the funds in accounts opened with credit institutions and of other assets;

3) to temporarily or permanently prohibit the issuance of electronic money in the Republic of Lithuania.

3. The supervisory institution must take a decision on the imposition of the sanctions referred to in subparagraphs 2 and 3 of paragraph 2 of this Article on an electronic money institution of another Member State issuing electronic money in the Republic of Lithuania without establishing a branch or on a branch established by an electronic money institution of another Member State in the Republic of Lithuania or an agent if the supervisory institution of that Member State so requests.

4. The supervisory institution shall have the right to impose one or several sanctions.

5. When taking a decision on the imposition of a sanction and selecting a specific sanction (sanctions), the supervisory institution shall take account of the content, scope, recurrence of discovered infringements and shortcomings in activities, influence thereof on the interests of electronic money holders, the financial situation of a person who is subject to the sanction, the preparedness and possibilities of shareholders and heads of an electronic money institution to bring the infringements to an end and to eliminate the shortcomings, also consequences of the discovered infringements and shortcomings in the activities as well as of the sanction (sanctions) to be imposed for the stability and soundness of the person who is subject to the sanction and the system of electronic money institutions.

6. A decision of the supervisory institution on the imposition of a sanction shall come into force on the day following that of taking of the decision, except where this Law or the decision provides otherwise.

7. Reasons must be given for a decision of the supervisory institution on the imposition of a sanction.

8. A temporarily imposed sanction shall remain in force until the expiry of the time limit referred to in a decision of the supervisory institution on the imposition of the sanction. This time limit may be defined by a specific date, period or related to the rise of certain circumstances (disappearance of circumstances), except where the supervisory institution takes a decision on the lifting of the sanction before the expiry of the fixed time limit.

Article 36. Basic Principles of and Procedure for Imposing Sanctions

1. The supervisory institution shall have the right to impose the sanctions specified by this Law in the presence of any of the following grounds:

1) the information which is specified by this Law or legal acts of the supervisory institution or which has been requested is not supplied within the fixed time limits or incorrect information is supplied;

2) the instructions given by the supervisory institution in compliance with this Law are not carried out in the prescribed manner;

3) the requirements set forth for obtaining the licence of an electronic money institution or a branch of an electronic money institution of a foreign state are no longer met;

4) the requirements of the laws regulating the safe and sound activities of electronic money institutions as well as of the legal acts adopted by the supervisory institution are violated or activities or the financial situation of an electronic money institution or a branch of an electronic money institution of a foreign state constitute a threat to the public interest and/or interests of electronic money holders or impair the functioning of the system of electronic money institutions of the Republic of Lithuania.

2. The supervisory institution, prior to considering the imposition of a sanction, shall give notice, not later than ten days prior to consideration of this issue, to a person subject to the sanction of the venue and time of the consideration of the issue and supply him with information on the discovered facts forming the basis for the imposition of the sanction or grant the head (heads) of a person subject to the sanction access to the said facts. The person who has received the notification shall have the right to provide written clarifications prior to the consideration of the issue. The issue of the imposition of the sanction shall be considered in the presence of the heads of a person who is subject to the sanction (the chairman of the board, the head of the company or the head of a branch). A failure of the heads to appear or to provide clarifications shall not preclude the consideration of the imposition of the sanction. In cases of urgency, the supervisory institution shall have the right to resolve the issue on the imposition of the sanction disregarding the provisions of this paragraph.

3. A decision on the imposition of a sanction must be taken without delay, but not later than within three months of establishment of an infringement or a ground for imposition of the sanction. Sanctions may be imposed after the lapse of not more than two years from the day of the commission of an infringement, in the event of a continuous infringement – from the day of the commission of the last acts of the continuous infringement.

4. A decision on the imposition of a sanction shall, within five days, be posted (delivered) to a person subject to the sanction. Information on the sanction imposed shall be announced in accordance with the procedure set forth by the legal acts adopted by the supervisory institution, however, the supervisory institution may take a decision not to announce such information publicly, where announcing thereof publicly may have a detrimental effect on the stability and soundness of an electronic money institution or a branch of an electronic money institution of a foreign state or the system of electronic money institutions of the Republic of Lithuania.

Article 37. Penalties

1. The supervisory institution shall have the right to impose the following penalties on an electronic money institution or a branch of an electronic money institution of a foreign state:

1) for a failure to supply within the fixed time limits the information or documents which are specified by this Law or legal acts of the supervisory institution or which have been requested or for the supply of incorrect information – up to 0.5 per cent of average outstanding electronic money;

2) for a failure to carry out the instructions given by the supervisory institution in accordance with this Law or for an improper carrying out thereof – up to 1 per cent of average outstanding electronic money or up to LTL 1 000 for each day of the failure to carry out an instruction or improper carrying out thereof;

3) for a failure to give notice of the envisaged changes in heads of the electronic money institution or the branch of the electronic money institution of the foreign state and for the carrying out of the actions which it has the right to carry out only upon obtaining of an authorisation of the supervisory institution without the authorisation of the supervisory institution – up to 1.5 per cent of average outstanding electronic money;

4) for the actions or activities prohibited by this Law or for the issuance of electronic money where such a right is restricted under this Law – up to 2 per cent of average outstanding electronic money;

5) for other infringements of legal acts regulating safe and sound activities of the electronic money institution or the branch of the electronic money institution of the foreign state – up to 0.1 per cent of average outstanding electronic money.

2. The specific amount of a penalty to be imposed shall be determined by taking account of the nature of an infringement, duration thereof and previously imposed sanctions.

3. Penalties shall be paid into the State budget not later than within one month of receiving, by a person, a decision of the supervisory institution on the imposition of a penalty. A penalty imposed in accordance with subparagraph 2 of paragraph 1 of this Article for each day of a failure to carry out or improper carrying out of an instruction must be paid into the State budget each day of the failure to carry out or improper carrying out of such an instruction. Where the penalty is not paid within the fixed time limits or, where the decision of the supervisory institution has been appealed against to court, within ten calendar days from the entry into force of the decision, it shall be recovered, by a decision of the supervisory institution, without suit (without an instruction of a person subject to the penalty to debit funds) from the funds held in credit institutions by the person subject to the penalty, or the decision of the supervisory institution shall be enforced according to the procedure set forth by the Code of Civil Procedure of the Republic of Lithuania.

Article 38. Suspension of the Head (Heads) of an Electronic Money Institution or a Branch of an Electronic Money Institution of a Foreign State from Office

1. As of the delivery of a decision of the supervisory institution on suspension of the head (heads) of an electronic money institution or a branch of an electronic money institution of a foreign state from office to the electronic money institution, the person who has been suspended from office shall not have the right to perform his functions and all the decisions taken by him (them) following the delivery of such a decision of the supervisory institution to the electronic money institution or the branch of the electronic money institution of the foreign state shall be null and void.

2. Where the supervisory institution takes a decision on suspension of the head (heads) of an electronic money institution or a branch of an electronic money institution of a foreign state from office and requires that he (they) be removed from office and/or a contract concluded with him (them) be terminated or he (they) be divested of his (their) powers, a body of the electronic money institution which has such a right or the electronic money institution of the foreign state which has established the branch of the electronic money institution of the foreign state must, within the time limit laid down in the decision of the supervisory institution, remove such a person (persons) from office and/or terminate the contract concluded with him (them) or divest him (them) of his (their) powers.

3. A notice of a decision taken on suspension of the head (heads) of an electronic money institution or a branch of an electronic money institution of a foreign state from office shall be given to the electronic money institution or the electronic money institution of the foreign state which has established the branch of the electronic money institution of the foreign state and the Register of Legal Entities, also published on the website of the supervisory institution.

Article 39. Representative for the Supervision of Activities

1. In urgent cases, when possessing data about a threat to the safe and sound activities of an electronic money institution or a branch of an electronic money institution of a foreign state, the supervisory institution shall have the right to appoint a representative for the supervision of activities for the purpose of protection of the funds received from electronic money holders or transferred to the electronic money institution or to the branch of the electronic money institution of the foreign state.

2. A legal or natural person may be appointed a representative for the supervision of activities. A natural person or the head of a legal person appointed as a representative for the supervision of activities shall be subject mutatis mutandis to the requirements of good repute as well as qualification and experience as set forth in paragraph 2 of Article 14 of this Law. Where a natural person is appointed as a representative for the supervision of activities, an assistant of the representative for the supervision of activities may be appointed. Salaries of the representative for the supervision of activities and his assistant, taking account of their scope of activities, qualifications and duration of the activities, shall be determined by the supervisory institution. Salaries shall be paid from funds of an electronic money institution or a branch of an electronic money institution of a foreign state. An employee of the supervisory institution may not be appointed as a representative for the supervision of activities and his assistant.

3. The board and heads of an electronic money institution or heads of a branch of an electronic money institution of a foreign state must obtain the consent of a representative for the supervision of activities concerning each decision relating to the activities of the electronic money institution or the branch of the electronic money institution of the foreign state. All decisions of the board and heads of the electronic money institution or heads of the branch of the electronic money institution of the foreign state taken without the consent of the representative for the supervision of activities after the entry into force of a decision on appointment of the temporary representative for the supervision of activities shall be null and void.

4. A representative for the supervision of activities shall disagree with the decisions taken by the board and heads of an electronic money institution or heads of a branch of an electronic money institution of a foreign state where they, in his opinion, are not in conformity with the legal acts regulating the safe and sound activities of electronic money institutions or constitute a threat to the stability and soundness of activities of the electronic money institution or the branch of the electronic money institution of the foreign state for other reasons. In performing his functions, a representative for the supervision of activities shall be subject mutatis mutandis to provisions of paragraphs 2 and 3 of Article 32 of this Law. A representative for the supervision of activities must supply to the supervisory institution the information specified by it.

5. A notice of a decision taken to appoint a representative for the supervision of activities or to remove from office him shall be given not later than the next working day after the taking of the decision to an electronic money institution or an electronic money institution of a foreign state which has established a branch of the electronic money institution of the foreign state and the Register of Legal Entities, also published on the website of the supervisory institution.

6. A representative for the supervision of activities shall be removed from office when:

1) it is established that an electronic money institution or a branch of an electronic money institution of a foreign state is capable of operating in a stable and sound manner or, in the opinion of the supervisory institution, application of such a measure is no longer expedient for other reasons;

2) a licence issued to an electronic money institution or a branch of an electronic money institution of a foreign state is withdrawn.

Article 40. Temporary Restriction on the Right to Dispose of Funds and Other Assets

1. Where the supervisory institution imposes the sanctions referred to in subparagraph 7 of paragraph 1 and in subparagraph 2 of paragraph 2 of Article 35 of this Law, a person who is subject to a sanction shall not have the right to dispose of funds in his accounts opened with credit institutions and of other assets specified in the decision of the supervisory institution.

2. A decision of the supervisory institution to temporarily restrict the right to dispose of the funds held with the credit institutions established in the Republic of Lithuania and of other assets located in the territory of the Republic of Lithuania shall be considered as a property seizure act and shall be registered in the Register of Property Seizure Acts in the cases and in accordance with the procedure laid down by legal acts. The decision of the supervisory institution must include the data required to register the decision of the supervisory institution in the Register of Property Seizure Acts. In the cases specified by the legal acts regulating the Register of Property Seizure Acts, the decision of the supervisory institution may be temporarily registered in the Register of Property Seizure Acts.

CHAPTER TEN

TERMINATION AND BANKRUPTCY OF AN ELECTRONIC MONEY INSTITUTION

Article 41. Reorganisation and Winding up of an Electronic Money Institution

1. An electronic money institution may be reorganised or wound up by a decision of the general meeting of its shareholders solely upon obtaining of a prior authorisation of the supervisory institution.

2. Where a decision on reorganisation or winding up of an electronic money institution is taken by a court, it must, prior to taking such a decision, obtain a conclusion of the supervisory institution regarding the impact of such a decision on the stability and soundness of the electronic money institution and the entire system of electronic money institutions.

3. An electronic money institution may not be reorganised where its rights and duties relating to the issuance of electronic money are transferred to a legal person not authorised to issue electronic money in the Republic of Lithuania. Where a new electronic money institution is established in the course of reorganisation of the electronic money institution, it must obtain a licence in accordance with the procedure laid down by this Law.

4. An electronic money institution may be wound up by a decision of the general meeting of shareholders solely after it discharges all obligations in respect of electronic money holders, the persons receiving electronic money, and the licence issued to it is withdrawn.

5. A court shall take a decision on the winding up of an electronic money institution in the event of a failure to take action referred to in paragraph 6 of Article 13 of this Law within the specified time limits. The court must take a decision on the winding up of the electronic money institution not later than within 15 days of the receipt of an application. The right to apply to the courts on the winding up of the electronic money institution shall be vested in the supervisory authority and the head of the company of the electronic money institution.

6. An electronic money institution or a court, upon taking a decision on the reorganisation or winding up of the electronic money institution, must notify thereof the supervisory institution within three working days of the taking of the decision.

7. Paragraphs 1 and 4 of this Article shall not apply where a decision on the winding up of an electronic money institution is taken in compliance with paragraph 6 of Article 13 of this Law.

Article 42. Peculiarities of the Bankruptcy Proceedings of Electronic Money Institutions

1. Electronic money institution bankruptcy procedures shall also be regulated by the Enterprise Bankruptcy Law of the Republic of Lithuania, except where this Law and the Law on Financial Institutions provide otherwise.

2. An electronic money institution’s bankruptcy proceedings may be conducted only in court.

3. The supervisory institution shall have the right to file with a court a petition to initiate bankruptcy proceedings against an electronic money institution. Where a petition on initiating bankruptcy proceedings is filed with the court by other persons in accordance with the procedure prescribed by laws, the court must obtain a conclusion of the supervisory institution on the insolvency of the electronic money institution, which the supervisory institution shall issue within five working days of receiving the request, before taking a decision to initiate bankruptcy proceedings against the electronic money institution.

4. The administrator of an electronic money institution shall repay the funds which may not be the object of recovery according to Article 22 of this Law according to obligations of the electronic money institution to electronic money holders.

CHAPTER ELEVEN

FINAL PROVISIONS

Article 43. Implementation of the Law

The supervisory institution shall adopt the legal acts implementing this Law.

Article 44. Entry into Force of the Law

This Law, except for Article 43, shall enter into force on 1 January 2012.

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

PRESIDENT OF THE REPUBLIC	DALIA GRYBAUSKAITĖ

Annex to

the Law of the Republic of Lithuania

on Electronic Money and Electronic Money Institutions

EUROPEAN UNION LEGAL ACTS IMPLEMENTED BY THIS LAW

1. Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (OJ 2009 L 267, p.7).