Version valid from 4 July 2015

REPUBLIC OF LITHUANIA

LAW

ON THE CENTRAL CREDIT UNION

18 May 2000 No VIII-1682 Vilnius

CHAPTER ONE

GENERAL PROVISIONS

Article 1. Purpose of the Law

1. This Law shall regulate the procedure for establishing, licensing, pursuing the business of, terminating, reorganising and supervising the Central Credit Union and its divisions with a view to ensure the stability and soundness of the activities of the Central Credit Union.

2. This Law shall implement the legal acts of the European Union listed in the Annex to this Law.

3. The provisions of this Law shall apply with regard to the provisions of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63) (hereinafter: 'Regulation (EU) No 1024/2013) and its implementing acts.

Article 2. Definitions

1. Heads of the administration shall mean the head of the Central Credit Union’s administration and his deputy.

2. Payments in proportion to turnover shall mean the payments to members of the Central Credit Union made from profit in proportion to turnover of interest of the members of the Central Credit Union within the Central Credit Union.

3. Central Credit Union shall mean a credit institution which is established in the Republic of Lithuania and holds a licence to engage, and which engages, in the receipt of deposits and other repayable funds from non-professional participants of the market specified by this Law and in the lending thereof, and which is authorised to engage in the provision of other financial services stipulated by this Law to the persons specified by this Law, assumes related risks and responsibility as well as performs other functions assigned to it by this Law.

4. European Banking Authority shall mean an institution established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ 2010 L 331, p. 12).

5. Credit union shall be interpreted as defined in the Law of the Republic of Lithuania on Credit Unions.

6. Licensed financial services shall mean:

1) receipt of deposits or other repayable funds from non-professional participants of the market;

2) payment services specified in Article 5 of the Law of the Republic of Lithuania on Payments;

3) issuance of electronic money;

4) other financial services subject to a licence issued in accordance with other laws of the Republic of Lithuania.

7. Major share shall mean a share acquired by a member in the Central Credit Union granting him a right to be entitled to one vote at the general meeting of the Central Credit Union when deciding on issues falling within the scope of competence of the general meeting of the Central Credit Union as well as granting him the right to receive dividends.

8. Share instrument to a named person (hereinafter: a 'share') shall mean a security attesting to a person’s participation in the Central Credit Union’s capital and granting the property and non-property rights to a member of the Central Credit Union.

9. Share contribution shall mean an amount of funds paid by a person to the Central Credit Union. Share contributions shall be used to form the share capital of the Central Credit Union.

10. Turnover of interest of a member of the Central Credit Union's in the Central Credit Union (hereinafter: 'turnover') shall mean the aggregate amount of income from the Central Credit Union’s interest earned by a member of the Central Credit Union and expenses for the interest paid to the Central Credit Union.

11. Additional share shall mean a share acquired by a member of the Central Credit Union which does not entitles him a vote at the general meeting of the Central Credit Union but entitles him to receive dividends.

12. Other concepts used in this Law shall be interpreted as they are defined in the Law on Financial Institutions and Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OL 2013 L 176, p. 1) (hereinafter: 'Regulation (EU) No 575/2013').

Article 3. Name, Legal Form of the Central Credit Union, Legal Acts Regulating its Activities

1. In the Republic of Lithuania the words “Central Credit Union” or other combinations or derivatives thereof may be used in its name, for advertising or other purposes by the Central Credit Union operating only in accordance with this Law, except where the use of these words is evidently unrelated to the provision of licensed financial services. The name of the Central Credit Union shall not be subject to the provision of Article 3(4) of the Law on Cooperative Societies (Cooperatives).

2. The legal form taken by the Central Credit Union as a legal person may only be a cooperative society.

3. In its activities, the Central Credit Union shall comply with its articles of association, the Civil Code , this Law, other laws of the Republic of Lithuania, regulating provision of financial services, the legal acts of the European Union and the supervisory authority. The Central Credit Union shall also act in compliance with the Law on Financial Institutions, the Law on Cooperative Societies (Cooperatives) and other legal acts, except where this Law provides otherwise.

Article 4. Financial Services and Other Activities of the Central Credit Union

1. The Central Credit Union shall have the right to provide licensed financial services and other financial services to persons specified in paragraphs 2 and 3 of this Article, including financial services in a foreign currency, provided these rights have not been restricted in accordance with the procedure laid down by this Law or other laws. The Central Credit Union must provide the licensed financial service indicated in Article 2(6)(1) of this Law.

2. The Central Credit Union shall have the right to provide financial services to:

1) its members;

2) members of credit unions which are members of the Central Credit Union;

3) members of another credit union whose claims and/or liabilities have been taken over by the Central Credit Union as specified in Article 651 of the Law of the Republic of Lithuania on Credit Unions, but no longer than until the expiry of contracts concluded by these members of the credit union regarding such claims and/or liabilities;

4) associations of credit unions established in the Republic of Lithuania;

5) other financial institutions established in the Republic of Lithuania.

3. In addition to the persons indicated in paragraph 2 of this Article, the Central Credit Union shall have the right to receive deposits and other repayable funds also from the associations, religious communities and societies, organisations of trade unions, public establishments whose stakeholders are not state institutions, charity and sponsorship foundations of the Republic of Lithuania as well as international or foreign charity and sponsorship foundations, institutions authorised by the Government of the Republic of Lithuania or municipalities, financial institutions of foreign states. The Central Credit Union shall also have the right to provide the payment services specified in Article 2(6)(2) of this Law to the persons referred to in this paragraph.

4. In addition to the provision of financial services and performance of functions specified in Article 5 of this Law, the Central Credit Union may pursue only such other activities as those in the absence of which financial services cannot be provided, which assist in the provision of financial services or are otherwise directly related to the provision of financial services.

5. Where the Central Credit Union itself decides not to carry out a certain activity in the absence of which financial services cannot be provided, which assists in the provision of financial services or is otherwise directly related to the provision of financial services and to conclude transactions with other persons on the provision of respective services to the Central Credit Union (hereinafter: 'the purchase of ancillary services of the Central Credit Union'), the Central Credit Union must notify thereof the supervisory authority and provide to it the information laid down by legal acts of the supervisory authority prior to the conclusion of the said transactions. The legal acts of the supervisory authority may set the requirements for the purchase of ancillary services of the Central Credit Union.

6. The Central Credit Union must carry out its activities with a view to ensuring the stability and soundness of its activities.

7. Prior to taking decisions which restrict the Central Credit Union’s freedom to dispose of the funds in its account or which otherwise restrict the right of the Central Credit Union to provide financial services to its clients, courts of the Republic of Lithuania and other institutions or officials stipulated by laws must obtain a conclusion of the supervisory authority on the impact of these decisions on the stability and soundness of the Central Credit Union and the whole system of credit unions.

Article 5. Functions and Rights of the Central Credit Union

1. In addition to provision of financial services, the Central Credit Union shall perform the following functions:

1) provide liquidity to credit unions which are members of the Central Credit Union in accordance with the procedure laid down in this Law;

2) provide liquidity to credit unions which are members of the Central Credit Union in accordance with the procedure laid down in this Law;

3) monitor activities of credit unions which are members of the Central Credit Union, and, if necessary, inspect these credit unions and provide information to the supervisory authority regarding established violations;

4) participate in the programmes and projects initiated by different institutions of the Republic of Lithuania and other countries intended for credit unions, accept funds and assets related to these programmes and projects, and accept liabilities;

5) organise training for staff of credit unions on the issues of cooperative banking and provide consultations to credit unions which are members of the Central Credit Union.

2. The Central Credit Union together with other rights provided for by laws shall have the right:

1) to act as a temporary representative for supervision of activities of credit unions, temporary administrator and liquidator of credit unions;

2) to delegate representatives to the general meetings of its members - credit unions in an advisory capacity;

3) to receive information from credit unions which are members of the Central Credit Union required for performance of the administration functions of the Central Credit Union and the stabilisation fund.

CHAPTER TWO

ESTABLISHMENT AND LICENSING OF THE CENTRAL CREDIT UNION

Article 6. The procedure for establishment of the Central Credit Union

1. The Central Credit Union shall be established according to the procedure set forth by the Civil Code, this Law and, except where this Law provides otherwise, the Law on Financial Institutions, and the Law on Cooperative Societies (Cooperatives).

2. Only one Central Credit Union may function in the Republic of Lithuania at a time.

3. The Central Credit Union may be established only for an indefinite period.

4. The Central Credit Union may be established only upon the obtaining of an authorisation of the supervisory authority to establish the Central Credit Union.

5. The articles of association of the Central Credit Union must be submitted to the Register of Legal Entities and this Union must be established within nine months from signing of the articles of association. In the event of a failure to do so within the specified time limit, the articles of association of the Central Credit Union shall become invalid and the share contributions paid earlier shall be reimbursed.

6. When establishing the Central Credit Union, all share contributions must be paid before the day of a statutory meeting.

7. The statutory meeting of members of the Central Credit Union shall have the right to decide on issues falling within the scope of remit of the general meeting of the Central Credit Union.

Article 7. Founders of the Central Credit Union

1. The founder of the Central Credit Union may be a credit union, as well as the State.

2. The Central Credit Union may be established by not less than 20 founders.

3. The persons who may not be founders of a financial institution pursuant to the Law on Financial Institutions and persons who may not be members of the Central Credit Union may not be founders of the Central Credit Union.

4. Each founder of the Central Credit Union must acquire a major share of the Central Credit Union.

Article 8. Authorisation to Establish the Central Credit Union

1. An authorisation to establish the Central Credit Union shall be granted by the supervisory authority according to the procedure set forth by laws and legal acts of the supervisory authority.

2. In order to obtain an authorisation to establish the Central Credit Union, founders of the Central Credit Union shall submit to the supervisory authority an application and the documents and data specified by legal acts of the supervisory authority, including:

1) the agreement of the establishment of the Central Credit Union;

2) the articles of association of the Central Credit Union;

3) the minutes of the statutory meeting;

4) framework for activities of the Central Credit Union;

5) a list of founders, documents and data on the identity of the founders of the Central Credit Union, also the amount of the share contribution of each of them, as well as the documents and data evidencing that the funds used for the share contributions have been obtained legitimately;

6) the documents evidencing the complete payment of the Central Credit Union’s share contributions;

7) a list of heads of the Central Credit Union elected by the statutory meeting whose election or appointment is subject to an authorisation of the supervisory authority.

3. The supervisory authority must examine submitted documents and take a decision on the granting of an authorisation to establish the Central Credit Union not later than within three months of the receipt of the application.

4. The supervisory authority shall refuse to grant an authorisation to establish a credit union where:

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

2) the provisions of the articles of association of the Central Credit Union do not ensure safe and sound activities of the Central Credit Union or are not in conformity with the relevant legal acts;

3) the legal form, the founders, the minimum capital of the Central Credit Union, and the heads of the Central Credit Union being established do not conform to the requirements set out in this Law.

5. The supervisory authority shall give written notice to the Register of Legal Entities about the decision whether or not to grant an authorisation to establish the Central Credit Union.

6. Following the granting of an authorisation to establish the Central Credit Union, and until a licence is issued to the Central Credit Union, the founder of the Central Credit Union shall be prohibited from selling or otherwise transferring the share acquired by him, as specified in the agreement of establishment, whereas the credit union shall be prohibited from altering the amounts of the share capital as specified in the agreement of establishment or the composition of the founders.

7. The supervisory authority shall have the right to withdraw an authorisation to establish the Central Credit Union prior to the establishment of the Central Credit Union where:

1) the authorisation has been obtained by fraud or otherwise violating laws;

2) the Central Credit Union was not established within the time limit specified in this Law.

8. The supervisory authority shall give written notice to founders of the Central Credit Union and the Register of Legal Entities about a decision adopted on the withdrawal of an authorisation to establish the Central Credit Union.

Article 9. Licence

1. Licence of the Central Credit Union (hereinafter: a 'licence') shall grant the right to engage in the provision of licensed financial services. When issuing a licence to the Central Credit Union, the supervisory authority may restrict its right to provide one or several licensed financial services where this is requested by the Central Credit Union or where it is not prepared to provide all licensed financial services. Restrictions on the provision of licensed financial services shall be removed where the Central Credit Union submits an application and the documents and data evidencing that the Central Credit Union is prepared to provide all licensed financial services.

2. A licence shall be issued for an indefinite period of time.

3. The Central Credit Union shall be prohibited from transferring the rights granted by a licence or otherwise permitting another person to provide licensed financial services not on behalf of the Central Credit Union and not for the benefit of this Union.

4. A licence shall be issued to the Central Credit Union registered in the Register of Legal Entities by the supervisory authority in accordance with the procedure set forth by laws and legal acts of the supervisory authority.

5. In order to obtain a licence, the Central Credit Union shall submit to the supervisory authority an application, as well as the documents and data specified by legal acts of the supervisory authority, including:

1) the articles of association of the Central Credit Union registered in the Register of Legal Entities;

2) the evidence that the size of the share capital of the Central Credit Union does not fall below the minimum amount of the capital of the Central Credit Union as specified by this Law;

3) a list of members of the Central Credit Union indicating main and additional shares paid in by each of them and the amounts of the share contributions;

4) upon the establishment of the Central Credit Union, a list of elected (appointed) heads of the Central Credit Union whose election or appointment is subject to an authorisation of the supervisory authority;

5) an operating plan for the first three years;

6) a description of the management and organisational structure;

7) a draft of the accounting policy and a detailed description of the accounting organisation;

8) documents and information evidencing that the Central Credit Union has internal control system, staff, technical, information and technological security means, premises and insurance of property ensuring safe and sound activities of the Central Credit Union;

9) conclusions, authorisations or other documents issued by other state institutions on the preparedness to provide licensed financial services where this is required by other laws.

6. The supervisory authority shall have the right to carry out on-the-spot verification of the preparedness of the Central Credit Union to provide financial services.

7. Upon the request of the supervisory authority, state and municipal institutions as well as other persons must forthwith supply available information on founders, members and heads of the Central Credit Union, their financial situation, activities, violations of laws and other legal acts, conclusions of verifications and examinations as well as other information requested by the supervisory authority in order to take a decision on the issuance of a licence.

8. The supervisory authority must examine submitted documents and take a decision on the issuance of a licence within three months of the receipt of the application. Where the supervisory authority requests additional documents or data, a decision must be taken within three months of the receipt of the additional documents and data. A decision on the issuance of a licence must, in any case, be taken within 12 months of the receipt of the application.

9. Articles of association, an operating plan, management and organisational structure, risk management system, remuneration policy and practice, accounting organisation, internal control system, technical, information and technological security means, premises, insurance of property of the Central Credit Union applying for a licence must ensure safe and sound activities of the Central Credit Union and comply with the relevant legal acts. The Central Credit Union must also meet the requirements set by this Law, including the requirements set for the legal form, minimum capital, requirements for the head office, members of the Central Credit Union, heads of the Central Credit Union, and be prepared for a safe and sound provision of financial services.

10. The supervisory authority shall refuse to issue a licence where:

1) submitted documents do not meet the requirements of the legal acts regulating credit institutions activities and their supervision, not all the data specified by the legal acts or additionally requested have been submitted or they are incorrect;

2) the Central Credit Union does not meet the requirements set forth in paragraph 9 of this Article.

11. A decision on whether or not to issue a licence shall be notified to the Register of Legal Entities according to the procedure set forth in the Regulations of this Register and published on the website of the supervisory authority.

12. The Central Credit Union shall have the right to commence financial services only upon the issuance of a licence.

13. The Central Credit Union holding a licence must always conform to the requirements set forth for the granting of an authorisation to establish the Central Credit Union and for the issuance of the licence. In the cases and according to the procedure set forth in this Law and legal acts of the supervisory authority, the Central Credit Union must notify the supervisory authority of any changes in the information submitted to obtain the licence.

Article 10. Withdrawal of a Licence

1. The grounds for the withdrawal of a licence shall be laid down by the Law on Financial Institutions. In addition to the grounds laid down in Article 10(2) of the Law on Financial Institutions, a licence may be withdrawn by a decision of the supervisory authority where:

1) the Central Credit Union does not meet the requirements set for the granting of an authorisation to establish the credit union or for the issuance of a licence;

2) the Central Credit Union ceases to exist due to reorganisation or a decision is taken on liquidation thereof;

3) the Central Credit Union does not pay in the first (advance) insurance premium in accordance with the Law on Insurance of Deposits and Liabilities to Investors where it must pay it or where insurance is terminated.

2. A decision on whether or not to issue a licence shall be notified to the Register of Legal Entities according to the procedure set forth in the Regulations of this Register and published on the website of the supervisory authority.

3. A decision of the supervisory authority on the withdrawal of a licence of the Central Credit Union must be accompanied by due reasoning.

4. A licence may also be withdrawn or suspended on the grounds and according to the procedure set forth in Chapter Nine of this Law.

5. Upon the withdrawal of a licence, the Central Credit Union shall not have the right to provide financial services, except to the extent it is necessary to settle with the Central Credit Union’s creditors, and a decision must be taken on the liquidation of the Central Credit Union or opening of bankruptcy proceedings against it according to the procedure set forth in Chapters Ten and Eleven of this Law.

Article 11. The Articles of Association of the Central Credit Union

1. Amendments to the articles of association of the Central Credit Union may be registered in the Register of Legal Entities only upon the obtaining of an authorisation of the supervisory authority, where the provisions of the articles of association are amended in respect of:

1) the name of the Central Credit Union;

2) rights granted by the major share;

3) the powers of the Central Credit Union’s bodies, procedure for electing and removing from office their members.

2. An authorisation to register amendments to the articles of association of the Central Credit Union shall be granted by the supervisory authority according to the procedure set forth by this Law and legal acts of the supervisory authority.

3. In order to obtain an authorisation to register amendments to its articles of association, the Central Credit Union shall submit to the supervisory authority an application, other documents, and data specified by legal acts of the supervisory authority.

4. The supervisory authority must examine submitted documents and take a decision on the granting of an authorisation to register the amendments to the articles of association of the Central Credit Union not later than within 30 days of the receipt of the application.

5. The supervisory authority shall refuse to grant an authorisation to register amendments to the articles of association of the Central Credit Union, where:

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

2) the amended provisions of the articles of association of the Central Credit Union will not ensure safe and sound activities of the Central Credit Union or the said provisions are not in conformity with the relevant legal acts.

Article 12. Branches and other Structural Divisions of the Central Credit Union

1. The Central Credit Union may set up branches and other establishments solely within the territory of the Republic of Lithuania.

2. Regulations of a branch of the Central Credit Union, management and organisational structure, accounting organisation, security means, premises and insurance of property of its branch and other establishments providing financial services must ensure their safe and sound activities and be in compliance with the relevant legal acts.

3. All branches and other establishments of the Central Credit Union providing financial services must have communication facilities to transmit information on the operations carried out to the head office of the Central Credit Union in real time.

4. Upon the setting-up of a branch or another establishment providing financial services, the Central Credit Union must, within 15 days of its setting-up, notify the supervisory authority about this and submit to it the information and documents specified by the legal acts of the supervisory authority. In the event of a change in any of the particulars communicated, the Central Credit Union must, within 15 days from the the change, notify the supervisory authority about this and submit to it the information and documents specified by the legal acts of the supervisory authority.

Article 13. Representative offices of the Republic of Lithuania

1. The central Credit Union may establish representative offices solely within the territory of the Republic of Lithuania.

2. A representative office of the Central Credit Union shall not have the right to provide financial services.

3. Upon the establishment of a representative office, the Central Credit Union must, not later than within 15 days of its establishment, notify thereof the supervisory authority and submit to the supervisory authority the information and documents specified by legal acts. In the event of a change in any of the particulars communicated, the Central Credit Union must, within 15 days from the the change, notify the supervisory authority about this and submit to it the information and documents specified by the legal acts of the supervisory authority.

CHAPTER THREE

MEMBERS OF THE CENTRAL CREDIT UNION

Article 14. Members of the Central Credit Union

1. The Central Credit Union may not comprise less then 20 members.

2. The member of the Central Credit Union may be a credit union, as well as the State.

3. The member of the Central Credit Union may only be a credit union having a licence of the supervisory authority. Upon withdrawal of the licence by the supervisory authority, a credit union must be expelled from the members of the Central Credit Union.

4. A credit union may not be a member of the Central Credit Union, where, in the cases, laid down by legal acts, it has failed to submit to the supervisory authority the data on its members, activities, financial situation, the heads, the legitimacy of the acquisition of the funds used for the share contributions, or where the submitted data do not prove that the funds used for the share contributions have been obtained legitimately.

5. The Central Credit Union must manage the list of its members according to the procedure set forth by the Law on Financial Institutions. The Central Credit Union must submit the data of the list of its members to the supervisory authority within 15 days from the ordinary general meeting of the Central Credit Union or upon the request of the supervisory authority as well as in other cases.

6. The Central Credit Union’s members must exercise the rights and perform the obligations of members in such a way as to ensure the stability and soundness of the Central Credit Union’s activities.

7. A member of the Central Credit Union shall not be entitled to vote at the general meeting of the Central Credit Union when the issue of his membership of the Central Credit Union is considered at this meeting, also in other cases provided for in the articles of association of the Central Credit Union, where he is directly concerned.

8. A member of the Central Credit Union shall have the right to authorise another person to vote on his behalf at the general meeting of the Central Credit Union or carry out other actions. At the general meeting of the Central Credit Union, the same person may represent not more than one member of the Central Credit Union or may obtain, under a contract, the voting right from not more than one member of the Central Credit Union. A representative of a member of the Central Credit Union may not be heads of the Central Credit Union or other members of the Central Credit Union.

9. In addition to other duties of a member laid down by law, credit unions which are members of the Central Credit Union must:

1) keep his funds under a deposit or account contract with the Central Credit Union only, except the cases, when an agreement of the board of the Central Credit Union is received to keep these funds with other credit institutions;

2) receive an agreement of the Central Credit Institution, when he wants to borrow from other credit institutions directly.

Article 15. Settlement with a Person whose Membership of the Central Credit Union has Expired

1. When repaying share contributions to a person whose membership of the Central Credit Union has expired, the Central Credit Union must reduce them in proportion to the amounts of the Central Credit Union’s losses recorded in the approved annual balance sheet of the Central Credit Union for the previous year.

2. The Central Credit Union shall settle with a person whose membership of the Central Credit Union has expired by paying his share contribution and other amounts relating to his participation in the share capital of the Central credit Union only when it identifies after making an assessment of the financial situation of the Central Credit Union that the settlement will not pose a threat to the stability and soundness of activities of the Central Credit Union. The Central Credit Union must forthwith give written notice to the supervisory authority about the decision to settle with a person whose membership of the Central Credit Union has expired and submit to it documentation and data related to the impact assessment of the settlement on the stability and soundness of activities of the Central Credit Union. The Central Credit Union shall settle with a person whose membership in the Central Credit Union has expired in case it does not receive a written instruction of the supervisory authority to suspend the settlement within 30 days after the notice to the supervisory authority, and if the Central Credit Union was requested to submit additional documents and data - within 30 days after the submission of all requested documents and data. The supervisory authority shall have the right to issue a written instruction to the Central Credit Union to suspend the settlement until the time limit indicated in the instruction, which may be defined by a specific date, or related to the rise of certain circumstances (disappearance of circumstances), where there are grounds for a conclusion that the settlement would pose a threat to the stability and soundness of activities of the Central Credit Union.

3. Upon the expiry of the membership of a credit union in the Central Credit Union or upon the adoption of a decision to liquidate the credit union, the Central credit Union shall return the funds from the stand-by liquidity facility taken into consideration the credit union's liabilities under contracts on the basis of which funds were received from the stand-by liquidity facility. Upon the expiry of the membership of a credit union in the Central Credit Union, contributions of the members of the Central Credit Union to the stabilization fund shall not be returned.

CHAPTER FOUR

MANAGEMENT OF THE CENTRAL CREDIT UNION

Article 16. Bodies of the Central Credit Union

1. The Central Credit Union must have the following bodies: the general meeting, the supervisory board, the board and the head of administration.

2. The management bodies of a credit union shall be the board of the Central Credit Union and the head of administration. The remit and functions of the Central Credit Union as specified in the articles of association of the Central Credit Union must be clearly separated from the remit and functions of the head of administration of the Central Credit Union .

3. The Central Credit Union’s articles of association, the Civil Code, this Law, the Law on Financial Institutions and the Law on Co-operative Societies (Co-operatives) shall set forth the procedure for the formation and operation of the bodies of the Central Credit Union and specify the powers, functions and liability thereof, except where this Law provides otherwise.

4. In case the general meeting of the Central Credit Union takes a decision to amend the articles of association regarding the number of the members of the supervisory board, the board or other bodies, the newly elected members of these bodies may start their activities not earlier than from the registration day of the amended articles of association in the Register of Legal Entities.

Article 17. General Meeting of Members of the Central Credit Union

1. The general meeting of the Central Credit Union may not be replaced with the meeting of representatives of members of the Central Credit Union.

2. An ordinary general meeting of the Central Credit Union shall be held each year, but not later than within three months after the close of the financial year. In addition to other grounds laid down in laws, the general meeting of the Central Credit Union shall be convened also on the instruction of the supervisory authority.

3. In addition to other rights and powers provided for in the articles of association and laws, the general meeting of the Central Credit Union shall:

1) shift the head office of the Central Credit Union;

2) elect members of the supervisory board, the board, committee of the stabilization fund, as well as chairs of these bodies, and audit service;

3) evaluate the work of the supervisory board, the board, management bodies of the Central Credit Union, and the audit service as well as consider and approve reports submitted by the board, the stabilisation fund committee and audit service;

4) elect and remove the audit firm;

5) establish the fundamental principles for maintaining liquidity of the credit union and approve implementation programme of these principles, as well as the ratio of deposits in euros and foreign currency in a credit union, according which the amount of funds to be kept as stand-by liquidity facility is identified;

6) establish the fundamental principles for setting up and use of the stabilization fund and the size of contributions to the stabilisation fund;

7) establish the principles for the payment of interest for funds kept with the Central Credit Union and principles for loan granting;

8) decides on the issues regarding the payment of incentives to the staff of the Central Credit Union and/or bonuses to the management of the Central Credit Union and members of the stabilization fund committee. The general meeting of the Central Credit Union may decide on these issues after the close of the financial year only;

9) decide on the issues regarding standard forms of documents of the credit unions and establishment of internal rules and requirements for information systems of credit unions;

10) decide on the issues regarding establishment and size of targeted contributions of credit unions which are members of the Central Credit Union.

4. The general meeting may adopt resolutions where it is attended by more than a half of all members of the Central Credit Union. If the meeting is not attended by the specified number of the members of the Central Credit Union, a repeat meeting concerning the same issues on the agenda must be convened. In the repeat meeting decisions may be taken at the presence of any number of the members of the Central Credit Union.

5. Members of the Central Credit Union not participating in the general meeting, who are nevertheless acquainted with the agenda and a draft resolution, may notify in writing the general meeting as to whether they are in favour of or against the draft resolution. These notifications shall be included in the quorum of the meeting and in the voting results.

Article 18. Supervisory Board of the Central Credit Union

1. The supervisory board shall be a collegial supervisory body of the central Credit Union, the activities of which are directed by the chair.

2. The number of members of the supervisory board – at least three and not more than nine – shall be determined by the articles of association of the Central Credit Union. The supervisory board and its chair shall be elected by the general meeting for a term of four years. The general meeting may remove from office the entire supervisory board or its individual members before the expiry of the term of office thereof. The entire supervisory board or its individual members shall be elected and removed by a simple majority vote. The number of the terms of office of a member of the supervisory board shall not be limited.

3. A member of the board of the Central Credit Union, a member of the committee of the stabilisation fund, heads of the administration may not be members of the supervisory board.

4. A member of the supervisory board may resign from office before the expiry of his term of office by giving written notice thereof to the supervisory board at least 14 calendar days in advance.

5.  If a member of the supervisory board is removed from office, resigns or discontinues the performance of his duties for other reasons and at least 1/10 of individual members of the supervisory board of the Central Credit Union object to the election, the operating supervisory board shall be removed, and the entire supervisory board shall be elected anew. Where individual members of the supervisory board are elected, they shall be elected only until the expiry of the term of office of the current supervisory board.

Article 19. Remit of the supervisory board of the Central Credit Union

1. In addition to other powers provided for in the articles of association of the Central Credit Union, the supervisory board shall:

1) follow and analyse activities of the Central Credit Union, its board and execution of decisions of the general meeting of the Central Credit Union;

2) approve activity plans of the Central Credit Union;

3) ensure that the Central Credit Union has an efficient internal control system;

4) submit to the general meeting its conclusions and proposals regarding a set of annual financial statements, draft procedure for appropriation of profit and/or compensation of losses and on the report on the activities of the Central Credit Union drawn up by the board, also on the violations and other shortcomings detected by the audit service and the auditor;

5) represent the Central Credit Union in court for the settlement of disputes between the Central Credit Union and members of the board, members of the committee of the stabilisation fund, the head of the administration;

6) propose to the board, the head of the administration to terminate violations of laws and other legal acts, articles of association of the Central Credit Union or other documents of the Central Credit Union or to revoke unlawful decisions;

7) consider or decide on the issues which must be considered or decided on by the Central Credit Union’s supervisory board under this Law.

2. The supervisory board of the Central Credit Union may refer the issues within its remit to the general meeting of the Central Credit Union only.

3. Minutes must be taken of meetings of the supervisory board. The minutes of a meeting must:

1) specify the venue and time of the meeting, members of the supervisory board attending the meeting, the chair of the meeting, information on whether the meeting has a quorum, the agenda of the meeting;

2) present the substance of every issue considered at the meeting, specify the documents and information on the basis whereof every issue is considered, include a report on speeches of the persons attending the meeting and on their proposals made on every issue considered at the meeting, a record of the results of voting and decisions taken and attach the individual opinions and protests of the persons attending the meeting.

4. The documents submitted when considering issues on the agenda of a meeting as well as the documents referred to in paragraph 5 of this Article must be attached to the minutes of the meeting.

5. All members of the Central Credit Union’s supervisory board, including those who did not attend a meeting, must be granted access to the minutes of the meeting of the Central Credit Union’s supervisory board within five days or, where this is impossible, as soon as the circumstances permit. A member of the Central Credit Union’s supervisory board must confirm that he has been granted access to the minutes of the meeting of the supervisory board and, where he does not agree with the decisions taken or is of the opinion that they have been executed in an inappropriate manner, forthwith declare his protest in writing to the supervisory board.

6. Every member of the Central Credit Union’s supervisory board must take all possible measures to ensure that the supervisory board decides on the issues within its remit and that the decisions meet the requirements set in legal acts, also perform the duties stipulated by other laws. A member of the Central Credit Union’s supervisory board shall be held liable for nonfeasance or misfeasance of this duty or other duties set forth by legal acts in the same manner as members of the management bodies are held liable under laws, the Central Credit Union’s articles of association and agreements concluded with the Central Credit Union.

7. A meeting of the supervisory board shall be valid if attended by at least a half of the members thereof. A resolution shall be considered to have been adopted where the number of votes of the members of the supervisory board attending the meeting cast in favour exceeds those cast against. Members of the supervisory board shall have equal rights. During voting, each member shall have one vote. In the event of a tie vote, the chair of the supervisory board shall have the casting vote. Where a member of the supervisory board is unable to attend a meeting, he may express his will by taking a written vote “for” or “against” the resolution put for vote, provided that he has familiarised himself with the draft resolution.

8. The supervisory board shall have the right to invite an expert or independent auditor for the purpose of checking and assessing the financial statements and accounting records of the Central Credit Union. The general meeting of the Central Credit Union may set the limit for funds to be allocated to pay for the services of an audit firm.

9. At the request of the supervisory board, the board and the heads of administration of the Central Credit Union must furnish the supervisory board with the documents relating to the activities of the Central Credit Union, also provide conditions for checking the activities of the Central Credit Union.

10. Working arrangement of the supervisory board shall be laid down in the rules of procedure of the supervisory board adopted by it.

11. Meetings of the supervisory board must be held at least quarterly. Ordinary meetings of the supervisory board shall be convened by the chair of the supervisory board. Extraordinary meetings of the supervisory board shall be convened at the request of at least 1/3 of members of the supervisory board or on the instruction of the supervisory authority. The procedure for convening meetings shall be established in the rules of procedure of the supervisory board.

Article 20. Board of the Central Credit Union

1. The board of the Central Credit Union shall:

1) elect (appoint) and remove from office the head of the administration and his deputy;

2) without a separate decision of the general meeting of the Central Credit Union, adopt decisions on disposal of the assets of the Central Credit Union and acquisition of fixed assets, taking and granting of long-term loans, offering of surety or guarantee for the discharge of obligations of third parties where the value of the assets or the amount of the transactions exceeds 1/10 of the equity capital of the Central Credit Union and where the general meeting of the Central Credit Union takes a decision by the majority of 2/3 votes to grant to the board such a right and such a right of the board is provided for in the articles of association of the Central Credit Union;

3) adopt decisions regarding admission of new members to the Central Credit Union;

4) decide on the issue whether to grant the credit unions loans for maintaining their liquidity, set interest rates;

5) consider applications of credit unions regarding allocation of funds from the stabilisation fund for restoring solvency as well as the plans for restoring their solvency, give opinions and proposals to the committee of the stabilisation fund;

6) monitor and control the payment of contributions to the stabilisation fund and the use of funds granted to credit unions or assign this task to the head of administration of the Central Credit Union, as well as deal with other issues on the use of the stabilisation fund provided for in the resolutions of the general meeting as well as committee of the stabilisation fund;

7) prepare the report regarding a set of annual financial statements of the Central Credit Union, draft procedure for appropriation of profit and/or compensation of losses and the activities of the Central Credit Union;

8) establish rates for the services provided by the Central Credit Union;

9) adopt decisions on the establishment of branches, representative offices, approval and amendment of the regulations thereof, termination of activities thereof, appointment of their management bodies, also on the establishment and termination of activities of the structural divisions providing financial services;

10) adopt decisions to become an incorporator, a member of other legal entities;

11) consider and decide on the issues which it must consider or decide on under this Law and other laws.

2. The board shall account for its activities to the general meeting and the supervisory board in accordance with the procedure laid down in the articles of association of the Central Credit Union at least once a year.

3. Minutes of meetings of the board of the Central Credit Union shall be taken and access thereto shall be granted in the manner stipulated in Article 19(3) to (5) of this Law.

4. Every member of the board of the Central Credit Union must take all possible measures to ensure that the board decides on the issues falling within its remit and that the decisions meet the requirements set in legal acts, also perform other duties stipulated by the law. A member of the board of the Central Credit Union shall be held liable under the law for nonfeasance or misfeasance of this duty or the duties set forth by other legal acts, the articles of association of the credit union and the agreements concluded with the credit union.

5. In addition to the cases provided for in the rules of procedure of the board, meetings of the board shall be convened also on the instruction of the supervisory authority.

6. A member of the supervisory board of the Central Credit Union, a member of the committee of the stabilisation fund, members of the audit service may not be members of the board.

Article 21. Head of the Administration of the Central Credit Union and his Deputy

1. The Central Credit Union must have the head of the administration of the Central Credit Union and his deputy.

2. The head of the administration of the Central Credit Union or his deputy must be the chair of the board.

3. The heads of the administration of the Central Credit Union shall lead activities of the Central Credit Union and implement resolutions of the supervisory board of the general meeting and the board.

4. The heads of the administration of the Central Credit Union may not perform the duties of the chief accountant, be members of the supervisory board of the Central Credit Union, a credit union or members of the bank board or heads of bank administration.

Article 22. Heads of the Central Credit Union and Employees

1. The heads of the Central Credit Union shall be:

1) members of the supervisory board;

2) members of the board;

3) heads of the administration;

4) head of the internal audit service;

5) heads of the branches and representative offices of the Central Credit Union as well as other employees of the Central Credit Union and other persons who, in accordance with the Central Credit Union’s articles of association, resolutions of the board, the rules of procedure of the administration or by a decision of the heads of the administration, have been authorised to independently take decisions on the provision of financial services and to conclude, on behalf of the Central credit Union, the transactions meeting the criteria set by legal acts of the supervisory authority and having risk characteristics.

2. The heads of the Central Credit Union must be of good repute and possess the qualification and experience in order to properly perform their duties. Requirements for the qualifications and experience of the heads of the Central Credit Union shall be set forth by legal acts of the supervisory authority. The persons who object that the supervisory authority manages, in the cases and according to the procedure set forth by laws and other legal acts, their data required for the issuance of the licences and granting of the authorisations and consents provided for under this Law, including their personal data and information on a person’s previous convictions and health cannot be heads of the Central Credit Union.

3. A person may not be regarded to be of good repute where he:

1) has been convicted of a serious or particularly serious crime provided for in the Criminal Code of the Republic of Lithuania or of a crime against property, property rights and property interests, 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;

2) abuses psychotropic, narcotic, toxic substances or alcohol.

4. The supervisory authority shall also have the right to recognise that a person is not of good repute by taking into consideration:

1) his conviction of a crime or a criminal offence not referred to in point 1 of paragraph 3 of this Article or of corresponding criminal acts under laws of foreign states;

2) the imposition of the sanctions provided for by laws on a legal person whose qualifying holding in the authorised capital and/or voting rights he holds or held or whose head he is or was or the winding up of the said legal person by reason of insolvency or by a court’s decision or judgement on the grounds of inappropriate activities or violations of legal acts;

3) while holding a qualifying holding in a financial institution’s authorised capital and/or voting rights, the suspension of his right to exercise the voting right at the general meeting of the financial institution according to the procedure set forth by laws;

4) in the absence of other important reasons why the person may not be regarded to be of good repute.

5. The chair of the board of the Central Credit Union must speak the Lithuanian language and permanently reside in the Republic of Lithuania.

6. Only the persons holding an authorisation of the supervisory authority may be heads of the Central Credit Union. Legal acts of the supervisory authority may provide for the cases where the requirement for the authorisation of the supervisory authority may be waived.

7. When under this Law and legal acts of the supervisory authority, a person may become the head of the Central credit Union provided he has an authorisation of the supervisory authority, the Central Credit Union (until the establishment of the Central Credit Union - its founders), at least 30 days prior to the election or appointment of such person or granting the powers to him (hereinafter in this Article: 'election or appointment') shall notify about this the supervisory authority and submit the documents and data specified by legal acts of the supervisory authority and evidencing that the person meets the requirements set by the legal acts.

8. Where the Central Credit Union does not receive within 30 days of the receipt of submitted documents and data by the supervisory authority a request of the supervisory authority to submit additional information or is not notified of a decision not to grant an authorisation to elect the head of the Central Credit Union , the authorisation shall be considered to have been granted. Where additional information is requested, the time limit of 30 days shall be counted from the receipt of additional information.

9. The supervisory authority shall refuse to grant an authorisation to elect or appoint the heads of the Central Credit Union where:

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

2) the heads of the Central Credit Union do not comply with the requirements set forth in this Article;

3) a person whose election or appointment is subject to an authorisation is prohibited from holding this position under other laws.

10. The supervisory authority shall withdraw an authorisation to elect or appoint the head of the Central Credit Union where:

1) the authorisation has been obtained by fraud or otherwise violating laws;

2) the authorisation has been granted to elect or appoint a person who no longer meets the requirements set by this Law or other laws for the granting of an authorisation.

11. The Central Credit Union shall be notified of a decision taken on the withdrawal of an authorisation. Upon taking by the supervisory authority of the decision on the withdrawal of the authorisation and at the request of the supervisory authority, the Central Credit Union must, according to the procedure set forth by laws, forthwith remove the head from office and/or terminate the contract concluded therewith.

12. Requirements for the qualifications, experience and repute of employees of the Central Credit Union may be set forth by legal acts of the supervisory authority.

Article 23. Internal Control of Activities of the Central Credit Union and Notification of Violations

1. The Central Credit Union must ensure that measures are in place which would allow its staff to report internally potential or actual violations of this Law, its implementing regulations or Regulation (EU) No 575/2013 through a specific, independent, and autonomous channel. In order to implement this requirement, the Central Credit Union may engage third parties. Requirements established in points 2,3, and 4 of Article 511 shall apply to these measures.

2. Other requirements for the internal control of the activities of the Central Credit Union shall be set by the Law on Financial Institutions and legal acts of the supervisory authority.

Article 24. Committees of the Central Credit Union

1. The Central Credit Union must have in place a standing internal audit committee. The Central Credit Union’s supervisory board shall form the internal audit committee and control activities thereof. For the Central Credit Union that is significant in terms of its size, internal organisation and the nature, scope and the complexity of its activities, the risk, nomination and reward committees must be formed. Members of the supervisory board only may be members of the risk, nomination and reward committees. The supervisory authority shall set criteria according which the Central Credit Union shall be considered significant because of its size, internal organisation and the nature, scope and the complexity of its activities.

2. The Central Credit Union shall have the right to have other committees specified in the internal documents of the Central Credit Union.

3. Procedure for formation and operation of the committees of the Central Credit Union as well as remit shall be specified in the documents of the bodies of the Central Credit Union. Requirements for the procedure for the formation and operation of the committees of the Central Credit Union and powers thereof shall be set by legal acts of the supervisory authority.

CHAPTER FIVE

MAINTAINING LIQUIDITY OF THE CREDIT UNIONS

AND RESTORING SOLVENCY

Article 25. Maintaining Liquidity of the Members of the Central Credit Union

1. Members of credit unions which are members of the Central Credit Union shall accumulate in an account opened for this purpose funds which would amount to a percentage from total deposits in euros and foreign currency in a credit union and this percentage would be not lower than that established by the the general meeting of the Central Credit Union. The board of the Central Credit Union shall establish procedure for keeping, supplementing and repayment of funds as well as the interest rate in accordance with the requirements of for maintaining liquidity of the credit unions approved by the general meeting of the Central Credit Union.

2. Funds specified in paragraph 1 of this Article shall make the stand-by liquidity facility for credit unions.

3. The central Credit Union shall issue loans to credit unions which are members of the Central Credit Union to maintain their liquidity for a period not longer than half a year. The board of the Central Credit Union may decide to extend the loan maturity for no longer than another half a year. Conditions for maturity extension and repayment of this loan as well as loan security shall be specified in the agreement.

4. Loans for maintaining credit union liquidity may be issued when liquidity of a credit union become lower than the established liquidity ratio and when the composition of assets and liabilities of the credit union according to maturities for the coming months shows certain imbalance which may hinder fulfilment of the obligations.

5. The loan is issued in the total amount or in instalments as appropriate. When submitting an application for loan for maintaining liquidity, a credit union must include calculations substantiating the loan repayment.

Article 26. Stabilisation Fund

1. Stabilisation fund shall be the fund formed by the members of the Central Credit Union in a Central Credit Union for restoring credit union solvency which is formed from funds paid in by credit unions which are members of the Central Credit Union and other assets.

2. Credit unions which are members of the Central Credit Union shall pay contributions to the stabilisation fund the amount of which is established by the general meeting of the Central Credit Union. Contributions of a credit union which is a member of the Central Credit Union to the stabilisation fund shall be considered expenses of a credit union.

3. The assets of the stabilisation fund shall consist of:

1) contributions of the members of the Central Credit Union;

2) income received from investments of free funds of the stabilisation fund;

3) targeted contributions from the profit of the Central Credit Union;

4) assets taken over for unfulfilled liabilities regarding repayment of funds received from the stabilisation fund;

5) funds received from credit unions' associations, sponsorship funds or other persons.

4. Free funds of the stabilisation fund may be invested into Government securities of the Republic of Lithuania, securities of the Bank of Lithuania and government securities of foreign countries with the highest rating (Group A countries).

5. The stabilisation fund shall be separated from other assets of the Central Credit Union and its accounting must be kept separately.

6. Funds of the stabilisation fund may be granted to a credit union as loans having all characteristics of a subordinated loan, by buying out long-term non-equity securities of the credit union or by granting the credit union non-repayable funds that must be transferred to the reserve capital of the credit union.

7. A credit union willing to receive funds from the stabilisation fund to restore the solvency shall submit to the Central Credit Union an application as well as a plan for restoration of solvency.

8. In the plan for restoration of solvency of a credit union it shall be given, inter alia:

1) the reason for the loss of solvency of a credit union indicated and the assessment of the present condition of solvency as well as its perspectives made;

2) strategy and actions foreseen ensuring a way out of solvency crisis, estimate of funds for implementation of the plan of solvency restoration based on calculations made;

3) possibilities of credit union's reorganisation or liquidation foreseen as well as the amount of expenses related thereto;

4) justification for the amount of funds foreseen to be received from the stabilisation fund given as well as for the use of these funds.

Article 27. Committee of the Stabilisation Fund

1. The committee of the stabilisation fund shall deal with issues of the use of the stabilisation fund. The committee of the stabilisation fund shall be accountable to the general meeting.

2. The general meeting of the Central Credit Union shall establish the number of members of the committee of the stabilisation. The number must be uneven. The committee of the stabilisation fund and its chair must be elected by the general meeting of the Central Credit Union for not more than three years from the representatives delegated by the members of the Central Credit Union.

3. The member of the supervisory board or board of the Central Credit Union, as well as the member of the audit service may not be the member of the committee of the stabilisation fund. The member of the committee of the stabilisation fund may not delegate or transfer his functions to other persons.

4. A meeting of the committee of the stabilisation fund shall be valid if attended by at least a half of the members thereof. Resolutions shall be adopted by a simple majority present at the meeting. Members of the committee of the stabilisation fund shall have equal rights. During voting, each member shall have one vote. In the event of a tie vote, the chair of the commission shall have the casting vote.

5. The working procedure of the committee of the stabilisation fund shall be laid down in the rules of procedure adopted by it.

6. Every member of the committee of the stabilisation fund must take all possible measures to ensure that the committee decides on the issues within the limits of its powers and that the decisions meet the requirements set in legal acts. A member of the committee of the stabilisation fund shall be held liable for nonfeasance or misfeasance of this duty or other duties set forth by legal acts.

7. The committee of the stabilisation fund shall consider applications of credit unions regarding allocation of funds from the stabilisation fund for restoration of solvency as well as the plans for restoration of their solvency, conclusions and proposals submitted by the board of the Central Credit Union and decide on issues regarding the use of funds from the stabilisation fund for restoration of the solvency of a credit union which is a member of the Central Credit Union.

8. The committee of the stabilisation fund shall have the right to obtain from the bodies of the Central Credit Union and credit unions which are members of the Central Credit Union information required for the performance of their functions.

CHAPTER SIX

CAPITAL OF THE CENTRAL CREDIT UNION

AND PROFIT DISTRIBUTION

Article 28. Repealed as of 1 May 2015.

Article 29. Repealed as of 1 May 2015.

Article 30. Repealed as of 1 May 2015.

Article 31. Minimum Capitalof the Central Credit Union

1. The total amount of the constituent parts of the equity capital specified in items a-e of Article 26(1) of the Regulation (EU) No 575/2013 must be not less than EUR 1 million.

2. Where it transpires that the sum total of the constituent parts of the Central Credit Union’s equity capital as specified in paragraph 1 of this Article has fallen below the minimum capital of the Central Credit Union, the board of the Central Credit Union must notify about that the supervisory authority and immediately convene an extraordinary general meeting. The general meeting of the Central Credit Union must take decisions which would allow to restore the Central Credit Union’s capital to the minimum amount of the Central Credit Union’s capital as quickly as possible. The board of the Central Credit Union shall notify the supervisory authority of the decisions taken at the general meeting of the Central Credit Union’s members on the restoration of the capital not later than within three working days.

Article 32. Share Capital and Shares of the Central Credit Union

1. The share capital of the Central Credit Union shall consist of the value of all share contributions of the Central Credit Union received for main and additional shares. Share contributions shall be made solely in cash, except the cases provided for in this Law.

2. At the moment of the establishment of the Central Credit Union, members shall pay the contribution for the main share in cash, and for additional shares to be acquired they may pay by contributions in cash and/or in property. Contributions in property may not exceed 10 per cent of the total value of all shares acquired.

3. Minimum amount of the main share of the member of the Central Credit Union is EUR 289.62. A member may have only one main share.

4. The amount of the additional share of the member of the Central Credit Union shall be set by the articles of association of the Central Credit Union. The number of additional shares acquired by the members shall not be limited. These shares shall be acquired by the members of the Central Credit Union only.

5. The Law on Securities shall not apply to shares of the Central credit Union. Shares of the Central Credit Union shall be uncertificated.

Article 33. Repealed as of 1 May 2015.

Article 34. Procedure of Formation and Use of Capitals and Reserves

1. The reserve capital of the Central Credit Union shall comprise additional contributions of members of the Central Credit Union and/or deductions from the profit of the Central Credit Union. The purpose of the Central Credit Union’s reserve capital shall be to guarantee the financial stability of the Central Credit Union. By a decision of the ordinary general meeting of the Central Credit Union’s members, the reserve capital of the credit union may be used solely to cover the operating losses of the Central Credit Union.

2. The tangible fixed assets revaluation reserve shall be the amount of the increase in the value of tangible fixed assets resulting after the revaluation of the assets. The tangible fixed assets revaluation reserve shall be reduced in the event the revaluated assets are written off, depreciated, written down or transferred into the ownership of third parties. A part of the reserve which is left unused after the writing off, depreciating or transferring into the ownership of third parties of the tangible fixed assets may be included in the profit available for appropriation at the close of the financial year. The tangible fixed assets revaluation reserve may not be directly used to cover operating losses of the Central Credit Union.

3. The financial assets revaluation reserve shall be changes in the value of available-for-sale financial assets which have been appreciated and revaluated at their fair value.

4. The mandatory reserve or reserve capital shall be formed from the Central credit Union’s net profit. Allocations to the mandatory reserve or reserve capital shall be compulsory and may not be less than 20 per cent of the Central Credit Union’s net profit, until the mandatory reserve or reserve capital reaches 1/5 of the Central Credit Union’s equity capital. The mandatory reserve or the reserve capital may, by a decision of the ordinary or extraordinary general meeting of the Central Credit Union, be used solely to cover operating losses of the Central Credit Union. Upon using a part of the mandatory reserve or reserve capital to cover the Central Credit Union’s operating losses, deductions from the net profit to the mandatory reserve or reserve capital shall be repeated until it reaches the specified amount.

5. Other reserves of the Central Credit Union shall be the reserves the formation of which has been provided for in the articles of association of the Central Credit Union and which may be used in accordance with the procedure provided for in the articles of association of the Central Credit Union and/or Regulation 575/2013 (EC).

Article 35. Distribution of profit/loss

1. The profit or loss of the Central Credit Union shall be the financial result of the Central Credit Union’s annual activities, which are calculated by deducting the Central Credit Union’s costs of the financial year from the Central Credit Union’s earnings of that year.

2. Net profit or loss shall be the net financial result of annual activities of the Central Credit Union. It shall be calculated by deducting taxes for the reporting period from the financial result of the Central Credit Union’s annual activities.

3. The net financial result (profit or loss) of annual activities for the financial year must be appropriated not later than within three months of the close of the financial year. The ordinary general meeting of the Central Credit Union shall approve the set of the annual financial statements.

4. Where, after the close of the financial year, the total sum of the Central Credit Union’s unappropriated result and net result of annual activities at the beginning of the next financial year is positive (profit), the general meeting of the Central credit Union’s members shall adopt a decision on appropriation of profit. The decision must indicate:

1) retained earnings (loss) at the beginning of the financial year;

2) net financial result (profit or loss) of annual activities;

3) deductions to the mandatory reserve or reserve capital;

4) the share of profit to replenish the stabilisation fund;

5) deductions to other capitals and reserves formed in the Central Credit Union;

6) the share of profit allocated for the payment of bonuses in proportion to turnover and/or dividends;

7) the use of profit for other purposes indicated in the articles of association of the Central Credit Union;

8) retained earnings.

5. Profit may be allocated for the payments referred to in point 6 of paragraph 4 of this Article solely upon effecting the compulsory deductions to the capitals and reserves formed in the Central Credit Union and covering the Central Credit Union’s losses.

6. Where, after the close of the financial year, the total sum of the Central Credit Union’s unappropriated result and net result of annual activities at the beginning of the next financial years is negative (loss), the Central Credit Union’s members shall adopt a decision to cover this loss. The loss shall be covered:

1) by transfers from the mandatory reserve or from the reserve capital;

2) by transfers from the reserve capital.

7. Where the amounts transferred from reserves are insufficient for the covering of a loss:

1) the remaining retained loss may be covered by the share contributions of members of the Central Credit Union or brought forward to the beginning of the next financial year, where the Central Credit Union’s equity capital does not fall below the specified minimum capital of the Central Credit Union as a result of the incurred loss;

2) the remaining retained loss must be covered by the share contributions of members of the Central credit Union when the Central Credit Union’s equity capital falls below the specified minimum capital of the Central Credit Union as a result of the incurred loss.

8. Where it transpires, upon performance of assessment of the Central Credit Union’s activities, that as a result of the loss incurred in the Central Credit Union the Central Credit Union’s equity capital falls bellows the specified minimum capital of the Central Credit Union, members of the Central Credit Union must make additional contributions to the Central Credit Union's reserve capital or make additional share contributions. Members of the Central Credit Union must also make additional share contributions or additional contributions to the reserve capital at the request of the supervisory authority, when, in its opinion, there is a threat to safe, stable, and reliable operation of the Central Credit Union.

CHAPTER SEVEN

THE CENTRAL CREDIT UNION’S OPERATIONAL RISK AND PRUDENTIAL TREATMENT THEREOF, PROTECTION OF THE INTERESTS OF THE CENTRAL CREDIT UNION’S CLIENTS

Article 36. Taking of Operational Risk and Prudential Treatment Thereof

1. Requirements for the taking of the Central Credit Union’s operational risk and prudential treatment thereof shall be set by the Law on Financial Institutions.

2. The Central credit Union must make provisions to reduce its operational risk on the basis of legal acts of the supervisory authority and taking account of the risk of every transaction it concludes on the provision of financial services, the financial and economic condition of a client, the performance of the obligations related to the transactions on the provision of financial services, the available means of ensuring the performance of these obligations as well as other circumstances influencing the value of the Central Credit Union’s assets.

Article 37. Prudential Requirements and Capital Reserves of the Central Credit Union

1. Prudential Requirements for the Central Credit Union shall be set in the Regulation 575/2013 (EC).

2. The Central Credit Union shall calculate and form the following capital buffers:

1) a capital conservation buffer;

2) a countercyclical capital buffer;

3) global systemically important institutions' buffer;

4) other systemically important institutions' buffer;

5)systemic risk buffer.

3. The ratios of prudential requirements and capital buffers, their calculation methodology shall be set in accordance with Regulation 575/2013 (EC) and legal acts of the supervisory authority.

4. Limits on allocations from capital buffers shall be established by the supervisory authority in accordance with the legal acts of the European Union.

Article 38. Repealed as of 1 May 2015.

Article 39. Repealed as of 1 May 2015.

Article 40. Lending

1. In Articles 41 and 43 of this Law, lending shall be considered to be the conclusion of transactions wherefrom a monetary claim of the Central Credit Union or irrevocable monetary commitment of the credit union arises.

2. The following limits shall be set on the Central Credit Union lending:

1) internal lending;

2) lending to the persons related to the Central Credit Union;

3) lending for making share contributions to the Central Credit Union.

Article 41. Limits on Internal Lending

1. Lending to the heads of the Central Credit Union and to the persons related to the heads of the Central Credit Union by blood as well as by marriage may not exceed the amounts set by the Central Credit Union’s supervisory board. The terms of and the procedure for lending shall be established by the supervisory board.

2. The terms of lending set for the persons referred to in paragraph 1 of this Article may not be more favourable than the terms of lending set for other clients of the Central Credit Union.

Article 42. Limits on Lending to the Persons Related to the Central Credit Union

1. Persons related to the Central Credit Union shall be:

1) legal persons whose qualifying holding in the authorised capital and/or voting rights is held by the Central Credit Union, heads of these legal persons as well as natural persons related them by blood or by marriage;

2) heads of credit unions which are members of the Central Credit Union and natural persons related to them by blood or by marriage.

2. The Central credit Union may lend to the persons related to the Central Credit Union not more than 20 per cent of its own funds.

3. If the supervisory authority performs consolidated supervision of the whole financial group of the Central Credit Union according to the procedure established, then, the supervisory authority shall have the right to set other lending requirements for the persons related to the Central Credit Union which are enterprises controlled by the Central Credit Union.

4. The terms of and the procedure for lending to the persons related to the Central Credit Union must be approved by the Central Credit Union’s supervisory board.

Article 43. Limits on Lending for Making Share Contributions to the Central Credit Union

The Central Credit Union shall not have the right to lend its share being acquired for making of a share contribution or granting of a subordinated loan to itself and the acquisition of the non-equity securities issued by the Central Credit Union and having all characteristics of a subordinated loan.

Article 44. Secret of the Central Credit Union

x Protection of the Central Credit Union's secret shall be subject mutatis mutandis to provisions of Article 55 of the Law of the Republic of Lithuania on Banks.

x

x

x

x

2. x

3. x

4. x

5. x

Article 45. Protection of the Interests of Clients

1. At the places where the Central Credit Union provides financial services to clients, the Central Credit Union’s name and the financial services which the Central Credit Union has the right to provide must be indicated, in an easily accessible place, to every prospective client; conditions must also be provided for public access to the information referred to in Paragraph 2 of this Article.

2. Prior to concluding a contract on the provision of financial services, the Central Credit Union must provide a client with detailed information on the terms of the provision of the financial services, price of the services, duration of the provision of the services, possible consequences thereof and other information which may influence the client’s decision to enter into the contract.

3. The Central Credit Union must provide to each current or prospective client, upon his request, its sets of annual financial statements and an auditor’s report, which, under legal acts, the Central Credit Union must make publicly available.

CHAPTER EIGHT

ACCOUNTING, SETS OF FINANCIAL STATEMENTS AND AUDIT OF THE CENTRAL CREDIT UNION

Article 46. Accounting

1. The Central Credit Union must keep accounts in compliance with laws of the Republic of Lithuania and other legal acts as well as the accounting policy selected by the Central Credit Union, which is implemented by taking account of specific circumstances and in conformity with the international accounting standards.

2. Accounting policy must cover general accounting principles, accounting methods and regulations designed to keep the accounts of the Central Credit Union and to draw up and submit sets of financial statements.

3. The accounting system of the Central Credit Union must be such that:

1) the sets of financial statements reflect the actual financial position and results of operations;

2) it provides conditions for the heads of the Central Credit Union to safely and soundly use and manage the Central Credit Union’s assets and to dispose thereof;

3) it provides conditions for the members of the Central Credit Union and institutions authorised by law to get access to the financial condition of the Central Credit Union.

4. Repealed as of 3 May 2011.

Article 47. Sets of Financial Statements

1. The Central Credit Union and the financial group of the Central Credit Union shall draw up sets of interim financial statements and sets of annual financial statements.

2. A set of interim financial statements shall be a set of financial statements drawn up after summarising the data of a time period shorter than the financial year. The composition and periodicity of submitting of interim financial statements to the supervisory authority shall be established by the legal acts of European Union and of the supervisory authority.

3. A set of annual financial statements shall consist of:

1) balance sheet;

2) profit and loss account;

3) cash flow statement;

4) statement of changes in equity capital;

5) explanatory note.

4. At the close of the financial year, the Central Credit Union must:

1) not later than ten days prior to the ordinary general meeting, provide access for the members of the Central Credit Union and the supervisory authority to the set of annual financial statements checked by an audit firm, a draft decision on the appropriation of profit and the auditor’s report;

2) within four months of the close of the financial year, approve a set of annual financial statements by a decision of the general meeting and take a decision on the appropriation of profit;

3) within four months of the close of the financial year, make available to the public a set of annual financial statements of the financial group of the Central Credit Union (if there is such) and an auditor’s report.

5. A general meeting of the Central Credit Union may not consider and approve a set of annual financial statements which have not been audited.

6. A general meeting of the Central Credit Union may not take a decision on the appropriation of profit where a set of annual financial statements has not been audited.

Article 48. Audit

1. An audit firm must audit sets of annual financial statements of the Central Credit Union and of the financial group of the Central Credit Union (if there is such), on the basis of the audit, provide an auditor’s opinion on these sets and an auditor’s report. In an auditor’s report, an auditor must present information as to whether the Central Credit Union and the financial group of the Central Credit Union:

1) have accurately and in a qualified manner valued the assets in compliance with the legal acts currently in force in the Republic of Lithuania;

2) has made mandatory adjustments of the value of the assets and performed write-offs;

3) has formed mandatory and required capitals, reserves and provisions to reduce the operational risk;

4) comply with capital requirements set by legal acts of the Republic of Lithuania;

5) meet the requirements set by legal acts of the Republic of Lithuania for the efficient and sound management of assets and for safe and sound activities;

6) has adequate internal control and information systems.

2. A general meeting of the Central Credit Union shall select an audit firm to perform audit of sets of annual financial statements of the current year and not more than two coming years.

3. The Central Credit Union must, until the end of the first half of the current financial year, conclude an agreement with the audit firm selected at the general meeting to perform the audit of sets of annual financial statements and submit it to the supervisory authority.

Article 49. Requirements for an Auditor and an Audit Firm, Duties and Liability Thereof

The requirements set for an auditor and an audit firm, duties and liability thereof shall be set by the Law on Financial Institutions.

CHAPTER NINE

SUPERVISION OF THE CENTRAL CREDIT UNION

Article 50. Supervisory Authority

1. The European Central Bank and the Bank of Lithuania shall be the supervisory authorities when performing supervision of the Central Credit Union and consolidated supervision of the financial group of the Central Credit Union, according to the distribution of functions specified in the Regulation (EU) No 1024/2013. The Bank of Lithuania shall perform the function provided for the supervisory authority and exercise the rights granted to it to the extent it has not been assigned to the European Central Bank according to the provisions of Regulation (EU) No 1024/2013.

2. Supervision shall be exercised in compliance with this Law, the Law on Financial Institutions, the Law on the Bank of Lithuania and legal acts of the European Union and other legal acts regulating activities of credit institutions and supervision thereof. Supervision of the financial group of the Central Credit Union shall mutatis mutandis be subject to provisions regulating consolidated supervision of financial groups stipulated in the Law on Banks and other legal acts regulating activities of credit institutions and supervision thereof.

3. Supervision of the Central Credit Union shall be subject to the provisions of Article 64(5) of the Law on Banks.

Article 51. Protection of the Information Obtained for Supervision Purposes

Protection of the information obtained for supervision purposes of the Central Credit Union shall be subject mutatis mutandis to provisions of Article 65 of the Law on Banks.

Article 511. Notification of Violations

The supervisory authority shall establish the measures which would encourage to report violations of the provisions of this Law, its implementing regulations or Regulation (EU) No 575/2013. These measures must meet the following requirements:

1) special procedures are in place for receipt and assessment of the said violations;

2) confidentiality of a person reporting the actual violations is ensured, except the cases, when such information must be disclosed in the cases and according to the procedure provided by the law;

3) personal data are managed in accordance with the procedure provided for in the legal acts regulating personal data protection;

4) appropriate protection from revenge, discrimination or other unlawful or unfair conduct of the staff members of the Central Credit Union who report the violations is guaranteed.

Article 52. Consideration of Applications for the Issuance of a Licence, Granting of an Authorisation or Consent or for Other Actions; and Decisions of the Supervisory Institution

1. Detailed terms of and the procedure for submitting and examining applications for the issuance of the licences, granting of the authorisations, or consents provided for under this Law or for other actions (hereinafter referred in this Article: “application for authorisation”) and issuing authorisations as well as detailed requirements for the submitted documents shall be set by Regulation (EU) No 1024/2013, its implementing legislation, and legal acts of the supervisory authority.

2. An application for authorisation shall be examined 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 of the supervisory authority. The supervisory authority shall have the right to request additional documents and information necessary to take the decision. Where the supervisory authority requests additional documents and information, the time limit for the examination of the application and adoption of the decision shall be counted from the receipt of the additionally requested documents and information.

3. The supervisory authority shall notify applicants of a decision to grant an authorisation within five working days of the adoption of such decision. Reasons must be given whenever the supervisory authority refuses to grant an authorisation.

Article 53. 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 authority shall have the right:

1) to issue to the Central Credit Union the mandatory instructions specified in paragraph 2 of this Article, and the Central Credit Union must implement them within the time limit laid down by the supervisory authority and forthwith give written notice thereof to the supervisory authority;

2) where the decisions taken by bodies of the Central Credit Union pose a threat to the stability and soundness of activities of the Central Credit Union, to apply, according to the procedure set forth by laws, to court to declare them void on the basis prescribed by the Civil Code;

3) to conclude with audit firms, property appraisers or other persons holding appropriate qualifications agreements on the carrying out of an inspection of the Central Credit Union in order to determine the value of the Central Credit Union’s assets, financial position of the Central Credit Union, to assess the risks taken or inspect other areas of the Central Credit Union’s activities. The persons acting in accordance with the agreements concluded with the supervisory authority and referred to in this point shall have the rights referred to in Article 55(2) and (3) of this Law. Where, upon completion of the inspection, it is established that the Central Credit Union has supplied incorrect information to the supervisory authority or where other violations of legal acts are established, the expenses in connection with organisation of the inspection as incurred by the supervisory authority shall be covered by the Central Credit Union;

4) to demand that an audit firm auditing the Central Credit Union’s sets of financial statements is changed, where it or the auditor does not meet (comply with) the requirements set forth by laws;

5) to demand in accordance with Article 541 of this Law to provide information necessary for the performance of supervisory function and carry out investigations necessary for the performance of supervisory function as well as conduct inspections (verifications) in accordance with Article 55 of this Law;

6) to appoint a permanent representative of the supervisory authority for the supervision of activities of the Central Credit Union. The permanent representative of the supervisory authority shall mutatis mutandis have the rights provided for in Article 55 of this Law.

2. The supervisory authority, upon discovering violations of legal acts or shortcomings in the activities of the Central Credit Union or where activities of the Central Credit Union pose a threat to the stability and soundness of activities of the Central Credit Union, or having data that legal acts may be violated within the period of the coming 12 months, shall have the right to issue to the Central Credit Union the following instructions:

1) to eliminate the violations of the legal acts or operational shortcomings of the Central Credit Union within the time limit laid down by the supervisory authority;

2) to have capital that would exceed the capital ratios provided for in this Law and Regulation 575/2013 (EC) and/or form appropriate capital buffers;

3) to improve the processes of internal controls and/or risk management ;

4) to make proper assessment of the reduction of loans' value and to form additional special provisions or to improve the procedure for assets' management;

5) not to carry out certain activities, not to conclude certain transactions or to reduce the scope of such activities or transactions, including transactions on the purchase of ancillary services of the Central Credit Union, acquisition of holdings in other legal persons’ authorised capital and/or voting rights or real estate, or to reduce investments in the activities that cause excessive risk to the reliability of the Central Credit Union;

6) to reduce the risks related to the activities of the Central Credit Union, products and systems;

7) to limit a variable component of remuneration paid to the heads and staff of the Central Credit Union when it is inconsistent with the maintenance of a sound capital base;

8) to use the net profit to strengthen the Central Credit Union's own capital;

9) to limit or terminate the payment of dividends to the shareholders of the Central Credit Union or the payment of interest to the holders of non-equity securities issued by the Central Credit Union that are included into the capital of the Central Credit Union if such limitation does not mean default on obligations of the Central Credit Union;

10) to provide to the supervisory authority additional information or provide information on a more frequent basis that is necessary for the performance of the supervisory function;

11) to meet special requirements for liquidity;

12) to publicly disclose additional information;

13) to perform an audit of the set of interim financial statements of the Central Credit Union within the time limit laid down by the supervisory authority;

14) to prepare and implement, within the time limit laid down by the supervisory authority, an acceptable action plan for the restructuring of activities of the Central Credit Union and/or the elimination of discovered violations and/or shortcomings;

15) to convene the general meeting of the Central Credit Union or a meeting of the supervisory board or the board and to discuss thereat the issues proposed by the supervisory authority;

16) for the heads of the Central Credit Union to appear before the supervisory authority and provide clarifications. The supervisory authority shall have the right to publicly announce its instruction for the heads of the Central Credit Union to appear before the supervisory authority;

17) to meet additional prudential requirements for activities of the Central Credit Union or carry out other actions or not to carry out certain actions in order to bring violations of legal acts to an end or to eliminate shortcomings in activities of the Central Credit Union or to ensure the stability and soundness of activities of the Central Credit Union.

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

4. In accordance with paragraph 2 of this Article, when imposing adequate capital requirement for the Central Credit Union or adequate capital reserve requirements, as well as special liquidity requirements the supervisory authority shall take into consideration the quantitative and qualitative criteria for supervisory review and evaluation, evaluation of systemic risk, management structure of the Central Credit Union, processes of risk identification, management, and internal control.

5. The employees of the supervisory authority shall have the right, according to the procedure set forth by the supervisory authority, to participate in the work of bodies of the Central Credit Union and committees of the Central Credit Union – to attend meetings or sittings in the capacity of observers or otherwise observe activities of the bodies of the Central Credit Union, the committees of the Central Credit Union and heads of the Central Credit Union.

6. The supervisory authority, according to the procedure set forth by it and in compliance with the legal acts regulating the protection of personal data, shall have the right to store and otherwise process data on debtors of the Central Credit Union. The Central Credit Union must provide to the supervisory authority data on its debtors and shall have the right to use these data according to the procedure set forth by legal acts of the supervisory authority.

7. The supervisory authority shall exercise the rights provided for in this law:

1) directly;

2) in collaboration with other supervisory authorities;

3) with the assistance of other persons to carry out certain actions;

4) with the assistance of law enforcement institutions.

Article 54. Appeal against Decisions, Acts (Omissions) of the Supervisory Authority

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 authority according to the procedure set forth by laws.

2. Filing of an appeal to court shall not have suspensory effect on a decision or an action appealed against until its resolution.

Article 541. The Right to Require to Submit Information and the Right to Carry out Investigations

1. The supervisory authority shall have the right to require that all information necessary for the performance of the supervisory function is submitted by:

1) the Central Credit Union;

2) financial holding companies established in the Republic of Lithuania;

3) the mixed-activity financial holding companies established in the Republic of Lithuania;

4) the mixed-activity holding companies established in the Republic of Lithuania;

5) persons controlled by the entities specified in points 1–4 of this paragraph;

6) persons with whom the Central Credit Union has concluded transactions regarding the purchase of the Central Credit Union’s ancillary services, as well as other persons whom the entities indicated in points 2,3, and 4 have transferred their functions or activities.

2. Persons indicated in points 1–4 of paragraph 1 of this Article must submit the information requested by the supervisory authority even in those cases when such information constitutes secret of the Central Credit Union, commercial secret or is treated confidentially due to other reasons.

3. The supervisory authority shall have the right to carry out any investigation necessary for the performance of the supervisory function on the persons indicated in Paragraph 1 of this Article, including the right:

1) to require to submit the documentation;

2) to check accounting registers, documents, information stored in computers and on any other media, other sources of information needed for the carrying out of the inspection of the persons indicated in points 1–4 of paragraph 1 of this Article, to obtain copies of and extracts from such documents;

3) to interview and receive oral or written clarifications from any person indicated in points 1–4 of paragraph 1 of this Article or their representatives or staff;

4) to interview all other persons not indicated in point 3 of this paragraph who agree to be interviewed in order to obtain information related to the subject of investigation.

Article 55. Inspection (Verification) of the Central Credit Union

1. The Central Credit Union shall be inspected (verified) by the employees of the supervisory authority.

2. The Central Credit Union must provide the following facilities to carry out an inspection (verification):

1) to supply to inspecting (verifying) persons all information and documents requested by them;

2) to provide an opportunity for the persons conducting the inspection (verification) to make use of data of the Central Credit Union’s information systems;

3) to provide the inspecting (verifying) persons with separate premises equipped with a telephone network.

3. Inspecting (verifying) persons shall have the right:

1) to have unhindered access to the premises of the Central Credit Union and divisions thereof during the office hours of the Central Credit Union under inspection (verification);

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 staff members of the credit union;

3) to require to make copies of the documents submitted or make copies themselves at the expense of the Central Credit Union;

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

4. Upon completion of an inspection (verification), its results shall be provided to the Central Credit Union in writing. Members of the Central Credit Union’s supervisory board and the board, heads of the administration thereof must familiarise themselves against their signature with the results of the inspection (verification).

5. Legal acts of the supervisory authority shall set forth a detailed procedure for inspecting (verifying) and recording results thereof.

6. In accordance with the procedure specified in this Article, the supervisory authority shall have the right to inspect (verify) persons indicated in Article 541(1)(2–6) and members of the financial group of the Central Credit Union, if it performs consolidated supervision of a financial group.

Article 56. Co-operation with the European Commission, the European Banking Authority and the Supervisory Authorities of the Member States of the European Union

1. The supervisory authority shall notify the European Banking Authority of the licences issued according to the procedure set forth by this Law, sanctions imposed and complains lodged regarding those sanctions as well as their proceedings, the European Commission and the European Banking Authority – of the licences withdrawn and provide them and the supervisory authorities of the Member States of the European Union with other information. The cases of and procedure for providing notifications and information shall be set forth by legal acts of the supervisory authority.

2. The supervisory institution shall co-operate with the European Banking Authority and provide the latter with all the information necessary for the achievement of its tasks under Regulation (EU) No 1093/2010.

Article 57. Sanctions

1. The supervisory authority shall have the right to impose on persons the following sanctions:

1) to make public the information about the person who has violated this Law and other legal acts;

2) to warn regarding the violation of this Law and other legal acts and instruct to bring this violation to an end within the specified time limit and ensure that it is not repeated;

3) to impose penalties provided for under this Law;

4) to suspend from office a member (members) of the Central Credit Union’s supervisory board, a member (members) of the board, the head (heads) of the Central Credit Union’s administration, or to remove from office a member (members) of the Central Credit Union’s supervisory board, a member (members) of the Central Credit Union’s board, the head (heads) of the Central Credit Union’s administration, a member (members) of the loan committee and to require that they be removed from office and/or a contract concluded therewith be terminated or they be divested of their powers;

5) to temporarily prohibit the provision of one or several financial services;

6) to temporarily or permanently prohibit activities of one or several branches or other divisions of the Central Credit Union. Where the supervisory authority takes a decision on the temporary prohibition of activities of a branch or other establishment, the branch or other establishment shall not have the right to provide financial services, and where a decision is taken to permanently prohibit activities of a branch or other establishment, the Central Credit Union must forthwith take a decision on the termination of activities of the branch or other establishment;

7) to suspend (limit) the voting right of the member of the Central Credit Union;

8) to temporarily restrict the right to dispose of the funds in accounts in the Bank of Lithuania and in other credit institutions and of other assets;

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

2. The supervisory authority shall have the right to impose sanctions specified in points 1-4 of paragraph 1 of this Article on financial holding companies, the mixed-activity financial holding companies and/or their heads for the violation of the consolidated supervision requirements of a financial group specified in this Law and the violation of other legal acts regulating the consolidated supervision requirements of a financial group.

3. When taking a decision on the imposition of a sanction and selecting a specific sanction (sanctions), the supervisory authority shall take account of the gravity of the shortcomings of activities, duration, recurrence thereof, their influence on the interests of depositors and other creditors, the guilt, financial standing, the previous violations and sanctions imposed on the person whom the sanction is imposed, cooperation with the supervisory authority, the amount of income received as a result of the violation, other pecuniary advantage, the amount of losses avoided or damage incurred, where it is possible to establish, preparedness of the members and heads of the Central Credit Union as well as to eliminate violations found and activity shortcomings, consequences of the violations found as well as activity shortcomings and sanction (sanctions) to be imposed on the on the stability and soundness of the system of credit unions and other important circumstances.

4. The supervisory authority shall have the right to impose one or several sanctions. A decision of the supervisory authority 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.

5. A decision of the supervisory authority on the imposition of a sanction (sanctions) must be substantiated and may be, according to the procedure set forth by laws, appealed against to court. An appeal against the decision, with the exception of a decision on the imposition of the penalties provided for under this Law, shall not have suspensory effect on the decision. A court shall not give its opinion on and resolve a dispute over the selection of the type of a sanction and appropriateness of imposition thereof.

6. Temporarily imposed sanctions shall remain in force until the expiry of the time limit referred to in a decision of the supervisory authority 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 authority takes a decision on the lifting of the sanctions before the expiry of the fixed time limit.

7. Having regard to the circumstances indicated in Paragraph 3 of this Article and acting in compliance with the criteria of fairness, reasonableness, transparency, and proportionality the supervisory authority shall not impose any sanctions where a violation is minor and no substantial damage to the interests protected by law and other legal acts is made or where there are grounds for believing that supervisory purpose may be achieved by other measures, not only by imposing sanctions.

Article 58. Basic Principles of and Procedure for Imposing Sanctions

1. The supervisory authority shall impose the sanctions specified by this Law in the presence of any of the following grounds:

1) there is engagement in receiving of deposits and other repayable funds from non-professional participants of the market, other financial services are provided without the powers granted in accordance with the procedure laid down by this Law or where such power is restricted under this Law, or other acts or activities prohibited by this Law are performed;

2) the Central Credit Union has been issued a licence or other authorisation provided for by this Law after it has submitted misleading information or by other irregular means;

3) management requirements established by this Law and other legal acts are not met or only partly met;

4) the information defined by this Law or other legal acts or requested by the supervisory authority is not submitted within the specified time limits or incomplete, inaccurate information is submitted;

5) there is a failure to execute or properly execute the compulsory instructions of the supervisory authority in accordance with Article 53 of this Law;

6) the requirements set for the granting of an authorisation to establish the Central Credit Union or for the issuance of a licence are not met;

7) the Law on the Prevention of Money Laundering and Terrorist Financing and the Law on Insurance of Deposits and Liabilities to Investors are violated;

8) one or several persons are appointed or hold the position of the heads of the Central Central Union who do not meet the requirements of qualification, repute, and experience set in this Law and other legal acts for holding such position.

9) other violations of laws, other legal acts, which compliance supervision is within the remit of the supervisory authority, are made or or activities or the financial situation of the Central Credit Union constitute a threat to the public interest and/or interests of clients.

2. The supervisory authority, prior to considering the imposition of a sanction, shall give notice, within a reasonable time limit, to the Central Credit Union of the venue and time of the consideration of the issue and supply it with information on the discovered facts forming the basis for the imposition of the sanction or grant access with the said actual facts to the heads of the Central Credit Union subject to the sanction. The Central Credit Union shall have the right to provide written clarifications prior to the consideration of the issue. The issue of the imposition of a sanction shall be considered at the presence of the heads of the Central Credit Union. 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 authority shall have the right to resolve the issue on the imposition of the sanction despite the provisions of this paragraph. After the imposition of the sanction, the Central Credit Union which is subject to such sanction submits in writing motivated clarifications that there was no basis for the imposition of the sanctions, the supervisory authority shall consider the lifting of the sanction.

3. Sanctions may be imposed after the lapse of not more than two years from the date of the violation, and in the event of a continuous violation from the date of the last acts of the continuous violation or from the day of the termination of the continuous violation.

4. The decision to impose the sanction not later than within three working days from its adoption shall be communicated to the Central Credit Union. Information about the sanctions imposed, including the information about the nature of the violation of the legal act and the identity of the person who made it shall be made public on the website of the supervisory authority without delay after the person whom the sanction has been imposed is informed about the decision to impose the sanction. If a decision on imposition of a sanction is appealed, the information about the appeals submitted regarding the imposed sanctions and their proceedings is also made public on the website of the supervisory authority. Where announcing of the sanctions imposed publicly may have a detrimental effect on the stability of financial market, pre-trial investigation or would incur disproportionate damage to natural or legal persons, disclosure of such information shall be suspended until these circumstances cease to exist or it is made public without disclosing the information about the person who committed the violation. The supervisory authority shall ensure access to the published information for at least five years after its disclosure.

5. The supervisory authority shall adopt a decision on imposition of a sanction which, according to the Law on Insurance of Deposits and Liabilities to Investors, is considered to be an insured event, not later than within five working days from the day when it establishes that the Central Credit Union holding a licence issued by the supervisory authority is unable to settle a reasonable claim to return a deposit and there are grounds for believing that it will not be able to settle it soon.

6. Application of sanctions against legal persons shall not release heads or employees thereof from civil, administrative and criminal liability.

Article 59. Penalties

1. The supervisory authority shall have the right to impose:

1) a fine to the Central Credit Union in the amount of up to ten per cent from aggregate annual revenue;

2) a fine to natural persons of up to five million euros.

2. Where the violations listed in Article 58(1) result in illegally received income, other pecuniary advantage, losses avoided or damage incurred, and the amount of such income, other pecuniary advantage, losses avoided or damage incurred, where it is possible to establish, exceeds the amounts of fines referred to in paragraph 1 of this Article, the supervisory authority shall have the right to impose a pecuniary penalty in the amount up to the double amount of the illegally received income, other pecuniary advantage, losses avoided or damage incurred.

3. Penalties shall be paid into the State budget not later than within one month of receiving by the Central Credit Union of a decision of the supervisory authority on the imposition of a penalty. Where the penalty is not paid within the fixed time limits or, where the decision of the supervisory authority has been appealed against to court, within ten days from entering into force of the decision, it shall be recovered upon a decision of the supervisory authority, without suit (without an instruction of the Central Credit Union which is subject to the penalty to debit funds) from the funds held in credit institutions by the Central Credit Union which is subject to the penalty or the decision of the supervisory authority shall be implemented according to the procedure set forth by the Code of Civil Procedure.

Article 60. Removal from Office of a Member (Members) of the Central Credit Union’s Supervisory Board, a Member (Members) of the Central Credit Union’s Board, the Head (Heads) of the Central Credit Union’s Administration

1. As of the day of the delivery to the Central Credit Union of a decision by the supervisory authority to temporarily remove from office a member (members) of the Central Credit Union’s supervisory board, a member (members) of the Central Credit Union’s board, the head (heads) of the Central Credit Union’s administration, the person removed from office shall not have the right to exercise his functions and all decisions taken by him after entering into force of the said decision shall be void.

2. Where the supervisory authority takes a decision to remove from office of a member (members) of the Central Credit Union’s supervisory board, a member (members) of the Central Credit Union's board, the head (heads) of the Central Credit Union’s administration, a member (members) of the loan committee and to require that they be removed from office and/or a contract concluded therewith be terminated or they be divested of their powers, a body of the Central Credit Union which has such a right must, within the time limit laid down in the decision of the supervisory authority, remove the person from office and/or terminate the contract concluded therewith or divest him of his powers.

3. The decision to remove from office a member (members) of the Central Credit Union’s supervisory board, a member (members) of the Central Credit Union's board , the head (heads) of the Central Credit Union’s administration shall be communicated to the Central Credit Union, the Register of Legal Entities and published on the website of the supervisory authority.

Article 61. Temporary Restriction on the Right to Dispose of Funds and Other Assets

1. Where the supervisory authority imposes the sanction referred to in Article 57(1)(8) of this Law, the Central Credit Union shall not have the right to dispose of funds in its accounts opened with the Bank of Lithuania and other credit institutions and of other assets specified in the decision of the supervisory authority.

2. The supervisory authority shall have the right to temporarily restrict the right to dispose of all funds in accounts in the Bank of Lithuania and in other credit institutions and of all other assets or of part of the funds and other assets.

3. A decision of the supervisory authority to temporarily restrict the right to dispose of the funds held with the Bank of Lithuania and other 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 authority must include the data required to register the decision of the supervisory authority 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 authority may be temporarily registered in the Register of Property Seizure Acts.

CHAPTER TEN

TERMINATION OF THE CENTRAL CREDIT UNION

Article 62. Legal Regulation of the Procedure for Reorganisation and Winding up of the Central Credit Union, Restructuring of the Central Credit Union

1. The Central Credit Union shall be reorganised and wound up according to the procedure set forth by the Civil Code, the Law on Financial Institutions, this Law, and, except where this Law provides otherwise, the Law on Cooperative Societies (Cooperatives).

2. The Central Credit Union may not be restructured.

Article 63. Reorganisation of the Central Credit Union

1. When reorganising the Central Credit Union by way of merger, another entity participating in the reorganisation or undergoing reorganisation may only be a financial institution.

2. When reorganising the Central Credit Union by way of division, at least one of the legal persons whereto the Central Credit Union’s rights and obligations are transferred or who are established must be the Central Credit Union or a bank.

3. Where a new Central Credit Union is established in the course of reorganisation of the Central Credit Union, it must obtain a licence in accordance with the procedure laid down by this Law. In such a case, an application for the issuance of the licence and the documents as well as data required to issue licence shall be submitted to the supervisory authority together with the application for the granting of an authorisation to reorganise the Central Credit Union. Alongside a decision on the granting of an authorisation to reorganise the Central Credit Union, a decision on the issuance of the licence shall be taken.

4. The Central Credit Union participating in a reorganisation or undergoing reorganisation must, in the cases specified by this Law, obtain the consent of the supervisory authority to reorganise and an authorisation of the supervisory authority to reorganise the Central Credit Union.

Article 64. Consent to Reorganise the Central Credit Union

1. Where the Central Credit Union is to be reorganised by way of merger, the supervisory authority must be notified of the planned reorganisation, and its consent to reorganise the Central Credit Union must be obtained.

2. In order to obtain a consent to reorganise, a financial institution participating in the reorganisation or undergoing reorganisation as well as the Central Credit Union must submit to the supervisory authority an application and the documents specified by legal acts of this authority. A consent to reorganise a bank shall be granted by the supervisory authority according to the procedure set forth by this Law and legal acts of the supervisory authority. A decision on the granting of a consent shall be taken by taking account of criteria for the assessment of the systemic risk level laid down by legal acts of the supervisory authority.

3. The supervisory authority shall take a decision on the granting of a consent within one month of the receipt of an application for the granting of the consent.

Article 65. Authorisation to Reorganise the Central Credit Union

1. Reorganisation of the Central Credit Union may be completed only upon the obtaining of an authorisation of the supervisory authority to reorganise the Central Credit Union.

2. An authorisation to reorganise the Central Credit Union shall be granted by the supervisory authority according to the procedure set forth by laws and legal acts of the supervisory authority.

3. Upon taking a decision on the reorganisation of the Central Credit Union, the financial institution participating in the reorganisation or undergoing reorganisation as well as the Central Credit Union shall submit to the supervisory authority an application and the documents and data specified by legal acts of the supervisory authority, including:

1) the terms of reorganisation;

2) a report of the board of the Central Credit Union;

3) assessment of the terms of reorganisation;

4) a decision of a body of the Central Credit Union on the reorganisation of the Central Credit Union;

5) the documents and data evidencing that the Central Credit Union meets the requirements set for obtaining of an authorisation to establish a central credit union where a new central credit union is to be established as a result of the reorganisation;

6) the documents and data evidencing that the Central Credit Union meets the requirements set for obtaining a licence where the Central Credit Union is to continue its activities after the reorganisation.

4. The supervisory authority must examine submitted documents and take a decision on the granting of an authorisation to reorganise the Central credit Union not later than within three months of the receipt of the application.

5. The supervisory authority may refuse to grant an authorisation to reorganise the Central Credit Union where:

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

2) there are grounds specified in Article 8(4) and Article 9(10) of this Law.

6. The supervisory authority shall give written notice to the Register of Legal Entities about the decision whether or not to grant an authorisation to reorganise the Central Credit Union.

Article 66. Winding up of the Central Credit Union

1. The Central Credit Union may be wound up by a decision of members of the Central credit Union or on other statutory grounds.

2. The general meeting of the Central Credit Union may take a decision on the termination of activities and winding up of the Central Credit Union only upon the obtaining of an authorisation of the supervisory authority to wind up the Central Credit Union.

3. An authorisation to wind up the Central Credit Union shall be granted by the supervisory authority according to the procedure set forth by laws and legal acts of the supervisory authority.

4. In order to obtain an authorisation to wind up the Central Credit Union, it shall submit to the supervisory authority an application and the documents and data specified by legal acts of the supervisory authority, including a plan prepared by the Central Credit Union’s board on the winding up of the Central Credit Union and settlement with creditors and setting out, inter alia, the time limits and sources of settlement with the creditors as well as conclusions of experts on the value of the Central Credit Union’s assets. An application to withdraw a licence must be attached thereto.

5. The supervisory authority must examine submitted documents and take a decision on the granting of an authorisation to wind up the Central Credit Union not later than within three months of the receipt of the application.

6. The Central Credit Union may be wound up by a decision of the general meeting of the Central Credit Union only where it is able to fully settle with its creditors.

7. The supervisory authority may refuse to grant an authorisation to wind up the Central Credit Union where:

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

2) a conclusion may be made that the Central Credit Union is unable to fully settle with creditors (the Central Credit Union’s assets are insufficient to satisfy all claims of the creditors).

8. The supervisory authority shall give written notice to the Register of Legal Entities about the decision whether or not to grant an authorisation to wind up the Central Credit Union.

9. The Central Credit Union must, within three working days, notify the supervisory authority of a decision taken at the general meeting of the Central Credit Union on the winding up of the Central Credit Union and the appointment of the liquidator of the Central Credit Union.

10. Where a licence is withdrawn by a decision of the supervisory authority, the general meeting must take a decision on the termination of activities of the Central Credit Union. In this case, paragraph 2 of this Article shall not apply.

11. The Central Credit Union shall be wound up upon a decision of court, where the general meeting of the Central Credit Union whose licence is withdrawn does not take a decision on the termination of activities of the Central Credit Union within the time limit laid down by the supervisory authority. The right to apply to court on the winding up of the Central Credit Union shall be vested in the supervisory authority, the supervisory board of the Central Credit Union, the board or at least one member of the Central Credit Union. The court must take a decision on the winding up of the Central Credit Union within 15 days of the receipt of an application.

12. Prior to taking a decision on the winding up of the Central Credit Union on the grounds other than those referred to in paragraph 11 of this Article, the court must notify the supervisory authority about this and obtain its conclusion on the winding up of the Central Credit Union.

13. In all cases, a court, upon taking a decision on the winding up of the Central Credit Union, must notify the supervisory authority about this within three working days of the taking of the decision.

CHAPTER ELEVEN

BANKRUPTCY OF THE CENTRAL CREDIT UNION

Article 67. Legal Regulation of the Central Credit Union’s Bankruptcy Procedure

Bank bankruptcy procedures of the Central Credit Union shall be regulated by this Law, the Law on Financial Institutions and the Enterprise Bankruptcy Law, except where this Law and the Law on Financial Institutions provide otherwise.

Article 68. Conditions for the Recognition of the Central Credit Union as Insolvent

1. The conditions under which the Central Credit Union may be recognised as insolvent as well as the procedure for calculating and assessing the insolvency of the Central Credit Union shall be set forth by legal acts of the supervisory authority.

2. The Central Credit Union’s bankruptcy proceedings shall be opened by the court only where there is a conclusion of the supervisory authority on the insolvency of the Central Credit Union.

Article 69. The Central Credit Union’s Bankruptcy Proceedings

1. Upon the handing down of a ruling on the opening of the Central Credit Union’s bankruptcy proceedings, creditors of the Central Credit Union shall be forthwith notified thereof in the manner prescribed in the court’s ruling, and the court hearing the bankruptcy case, case number, requisites of the Central Credit Union in bankruptcy and time limits for the acceptance of creditors’ claims shall be published in the two daily national newspapers with the largest circulation. The court or a judge may authorise the Central Credit Union’s administrator to carry out the actions referred to in this paragraph.

2. The time limit laid down by court for the lodging of claims by the Central Credit Union’s creditors shall not exceed three months of the entering into force of the court’s ruling on the opening of bankruptcy proceedings.

3. Upon the handing down of a ruling on the opening of the Central Credit Union’s bankruptcy proceedings:

1) the administrator shall commence performing his functions, and powers of bodies of the Central Credit Union shall be suspended. Where the court of appeals reverses the ruling on the opening of the Central Credit Union’s bankruptcy proceedings, the bodies of the Central credit Union shall continue to exercise their functions. In such a case, the court shall notify the Register of Legal Entities of a change in the legal status of the Central Credit Union;

2) performance of all financial obligations not performed prior to the opening of bankruptcy proceedings, including the payment of interest, penalties, taxes and other mandatory payments, recovery of debts from the Central Credit Union in bankruptcy through court or without suit shall be prohibited;

3) calculation of penalties and interest on all obligations of the Central Credit Union including on a default in payments related to employment relationship, shall be terminated. Judicial mortgage may not be imposed.

4. The prohibitions referred to in point 2 of paragraph 3 of this Article shall not be applied in the cases specified by the laws regulating the functioning of the payment and securities settlement systems and by other laws where the Central Credit Union has been directly instructed to perform its obligations upon the handing down of a court’s ruling on the opening of bankruptcy proceedings.

5. The administrator of the Central Credit Union must, not later than within five days of the handing down of a court’s ruling to open the Central Credit Union’s bankruptcy proceedings, submit to the court for approval the amount of the Central Credit Union’s funds which the administrator shall have the right to use to cover administration expenses pending the approval of an estimate of administration costs.

6. Where the number of creditors of the Central Credit Union against which bankruptcy proceedings have been opened, according to the list approved by court, exceeds 50, the creditors’ committee shall alone enjoy all the rights granted by the Enterprise Bankruptcy Law to the creditors’ meeting, with the exception of the right to form and change the composition of the creditors’ committee. The creditors’ committee shall have not more than 15 members. The state undertaking “Deposit and Investment Insurance” must be one of the members of the creditors’ committee.

7. The administrator must regularly provide the supervisory authority, according to the procedure and within the time limits laid down by it, with information on the progress of the Central Credit Union’s bankruptcy proceedings.

8. Upon the opening of the Central Credit Union’s bankruptcy proceedings, a settlement agreement may not be concluded.

Article 70. Winding up of the Bankrupt Central Credit Union

1. A court shall declare the Central Credit Union bankrupt and hand down a ruling on the winding up of the Central Credit Union within three months of the entering into force of a ruling to satisfy creditors’ claims.

2. The Central Credit Union’s rights of claim not sold in the prescribed manner and not taken over by creditors shall be gratuitously transferred to the institution specified by the Government.

3. Prior to each settlement with creditors, the liquidator of the Central Credit Union shall submit to court for approval a plan of settlement with the creditors. The plan shall indicate the dates when a payment is due, amounts to be paid and the scope of the satisfaction of the creditors’ claims in respect of transferring to the creditors assets, including rights of claim.

4. The claims of the Central Credit Union's creditors in a foreign currency shall be satisfied in euros according to the indicative exchange rate of the euro and the foreign currency on the day of a ruling by court on the opening of the Central Credit Union’s bankruptcy proceedings, and when the indicative exchange rate of the euro and the foreign currency is not announced by the European Central Bank, then, according to the last indicative exchange rate of the euro and the foreign currency announced by the Bank of Lithuania.

Article 71. Order of Satisfaction of Creditors’ Claims

1. The claims of employees related to employment relationship, the claims to compensate for damage done due to mutilation or other bodily injury, contraction of an occupational disease or death as a result of an accident at work shall be satisfied first.

2. The claims of the state undertaking “Deposit and Investment Insurance” on the expenses related to the payment of insurance benefits to the depositors or investors of the Central Credit Union referred in the Law on Insurance of Deposits and Liabilities to Investors shall be satisfied second.

3. The claims related to the payment of taxes and making other payments to the budget and benefits of compulsory state social insurance and compulsory health insurance as well as to the granted loans received on behalf of the State and with the guarantee of the State shall be satisfied third.

4. Other claims of the Central Credit Union’s creditors, with the exception of the claims referred to in paragraphs 1, 2, 3, 5, 6 and 7 of this Article, shall be satisfied fourth.

5. The claims of creditors related to subordinated loans granted to the Central Credit Union and non-equity securities issued by the Central Credit Union which have all characteristics of a subordinated loan, excluding claims specified in paragraph 6 of this Article, shall be satisfied fifth.

6. The claims of creditors related to non-equity securities issued by the Central Credit Union which have all characteristics of a subordinated loan and whose acquisition transactions provide that claims in respect of them shall be satisfied only after the claims of other Central Credit Union creditors, including claims over subordinated loans granted to the Central Credit Union and other non-equity securities issued by the Central Credit Union which have all characteristics of a subordinated loan, shall be satisfied sixth.

7. The claims of the Central Credit Union’s supervisory board, the board and the heads of the administration of the Central Credit Union shall be satisfied seventh.

CHAPTER TWELVE

FINAL PROVISIONS

Article 72. Entry into force of the Law

This Law shall enter into force from the day of the accession of the Republic of Lithuania to the European Union.

Article 73. Scope of the Law in Respect of the Operating Central Credit Union

1. Where this Law sets stricter or additional requirements for the Central Credit Union (hereinafter in this Article: 'the operating Central Credit Union') established prior to the entering into force of this Law as compared with the legal acts in force prior to the entering into force of this Law and where, on the basis of these requirements, activities of the operating Central Credit Union must be restructured, these requirements must be complied with not later than within one year of the entering into force of this Law.

2. The provisions of this Law regulating the reorganisation, establishment, restructuring, winding up and bankruptcy of the Central Credit Union shall be applied to the proceedings opened after the entering into force of this Law. The Law on the Central credit Union in force prior to the entering into force of this Law shall be applied to the Central Credit Union reorganisation, winding up and bankruptcy procedures where decisions on winding up or bankruptcy of the Central Credit Union were taken prior to the entering into force of this Law.

3. Where prior to the entering into force of this Law the supervisory authority has received applications for the granting of authorisations, they shall be examined and decisions shall be taken according to the procedure set forth by the legal acts in force at the time of submitting of the application.

4. When this Law enters into force, it shall be considered that the Central Credit Union holding the licence has the right to provide financial services as specified in this Law, unless this right is restricted by the issued licence or unless this right is otherwise restricted prior to the entering into force of this Law. Upon entry into force of this Law, the licence of the operating Central Credit Union shall be replaced by a licence of a new format according to the procedure set forth and the time limits laid down by the supervisory authority.

5. If the State has at least one share in the operating Central Credit Union, a newly admitted member to the Central Credit Union must buy out the share belonging to the State for its nominal value and this share becomes the major share of the new member of the Central Credit Union.

6. The membership of the State in the operating Central Credit Union shall expire, when all shares belonging to the State are bought out. First all additional shares belonging to the State are bought out.

7. Repealed as of 1 January 2015

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

RESPUBLIKOS PREZIDENTAS	VALDAS ADAMKUS

Annex to

the Republic of Lithuania

Law on the Central Credit Union

LEGAL ACTS OF THE EUROPEAN UNION IMPLEMENTED BY THIS LAW

1. Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (OJ, 2004 Special Edition, chapter 6, volume 1, p 157) with the latest amendments done by Directive 2003/51/EC of the European Parliament and of the Council of 18 June 2003 (OJ, 2004 Special Edition, chapter 17, volume 1, p 273).

2. Repealed as of 1 January 2012.

3. Repealed as of 1 May 2015

4. Repealed as of 1 May 2015

5. Directive 2009/14/EC of the European Parliament and of the Council of 11 March 2009 amending Directive 94/19/EC on deposit-guarantee schemes as regards the coverage level and the payout delay (OJ 2009 L 68, p. 3).

6. Directive 2013/36/EC of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ 2013 L 176, p.338).