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Law on Insurance of Deposits and Liabilities to - iidraudimaslt .rtf

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					                 Rūšis: Aktuali redakcija anglų kalba Numeris: IX-975 Data: 2008-10-14 Kalba: Anglų
                 Publikavimas:                                       Statusas:
                 2008-10-14 Teisės aktą priėmė - Lietuvos Respublikos Seimas




                                                                                    OFFICIAL TRANSLATION


                                      REPUBLIC OF LITHUANIA
       LAW ON INSURANCE OF DEPOSITS AND LIABILITIES TO INVESTORS




                                         20 June 2002 No IX-975
                            (As last amended on 21 July 2009 – No XI-376)
                                                     Vilnius


                                              CHAPTER ONE
                                       GENERAL PROVISIONS


       Article 1. Purpose of the Law
       1. This Law shall lay down the procedure for insuring the deposits held with the banks
established in accordance with the procedure laid down by laws of the Republic of Lithuania
(hereinafter referred to as “banks”), the branches of foreign banks established in the Republic of
Lithuania (hereinafter referred to as “branches of banks”) as well as the Central Credit Union and
credit unions (hereinafter referred to as “credit unions”) and the level of insurance compensations
for these deposits, the procedure for insuring liabilities of banks, financial brokerage firms and
management companies authorised to provide investment services                        (hereinafter referred to as
“undertakings”), also of branches of banks, branches of foreign financial brokerage firms and
management companies (hereinafter referred to as “branches of undertakings”) to their investors
and the level of insurance compensations.
       2. The provisions of this Law have been harmonised with the legal acts of the European
Union referred to in the Annex to this Law.


       Article 2. Definitions
       1. Insurance undertaking shall mean the state company Deposit and Investment Insurance.
       2. Insured event shall mean institution of bankruptcy proceedings against a credit union,
bank or undertaking or taking a decision by a supervisory authority on sanctions application or
provision of investment services discontinuation where the credit union or bank (branch of the
bank) is not able to settle with creditors or when the undertaking (branch of the undertaking) is not
capable of meeting its liabilities to investors.
        3. Depositor shall mean a natural or legal person holding a deposit with a bank, branch of a
bank or a credit union, with the exception of the entities whose deposits under this Law may not be
covered by insurance. Where the natural or legal person (with the exception of a management
company, where it manages collective investment undertakings and pension funds) having a deposit
acts as a trustee, the trustor shall be held a depositor. Where a group of persons has rights of claim
to the funds under contracts, each person of the group shall be held a depositor and the funds shall
be divided among them in equal portions unless the contracts under which their rights of claim arise
or court rulings provide otherwise.
        4. Deposit shall mean the amount of the funds held with a bank, a branch of a bank or a
credit union under a bank deposit and/or a bank account agreement, and of other funds to which a
depositor has the rights of claim arising from the obligation of a credit institution to perform
transactions with the depositor's funds or to provide to him investment services (including the
accrued interest).
        5. Deposit Insurance Fund shall mean a fund containing the assets accumulated for
payment of insurance compensations to depositors.
       6. The insured of deposits and/or liabilities to investors (hereinafter referred to as the
“insured”) shall mean a bank, a foreign bank which has set up a branch in the Republic of
Lithuania (hereinafter referred to as “a foreign bank”), a credit union or an undertaking or a foreign
undertaking licensed to provide investment services which pays, in accordance with the procedure
established by this Law, insurance premiums to the Deposit Insurance Fund or the Fund of
Insurance of Liabilities to Investors administered by the state company Deposit and Investment
Insurance.
       7. Insurance premium for deposits and/or liabilities to investors (hereinafter referred to
as an “insurance premium”) shall mean the amount of funds paid by the insured in accordance
with the procedure laid down by this Law to the Deposit Insurance Fund and the Fund of Insurance
of Liabilities to Investors administered by the state company Deposit and Investment Insurance.
       8. Insurance compensation for deposits and/or liabilities to investors (hereinafter
referred to as “insurance compensation”) shall mean the amount of funds prescribed by this Law
to which a depositor or an investor is entitled in the event of occurrence of a insured event.
       9. Insured amount of deposits and/or liabilities to investors (hereinafter referred to as the
“insured amount”) shall mean the amount of an insured deposit or liabilities to investors which is
calculated in accordance with the procedure laid down by this Law.

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       10. Investment services shall mean the investment and ancillary services referred to in
paragraphs 13 and 22 of Article 3 of the Republic of Lithuania Law on Markets in Financial
Instruments.
       11. Investor shall mean a natural and legal person who has entrusted funds or securities to
the insured with the aim of availing himself of the investment services provided by the insurer.
Where a group of persons had, under contracts, a right of claim to the funds and/or securities, each
person thereof shall be regarded as an investor, and the securities and funds shall be divided among
them in equal portions unless the contracts from which the rights of claim arise or court rulings
provide otherwise. Where a person who has entrusted funds or securities (with the exception of a
management company managing collective investment undertakings and pension funds) acted as a
trustee, the trustor shall be regarded as the investor.
       12. Liabilities to investors shall mean the liabilities of the insured providing investment
services to the investor concerning repayment of the funds owned by the investor and/or return of
the securities held by the investor.
        13. Fund of Insurance of Liabilities to Investors shall mean a fund containing the assets
accumulated for paying insurance compensations to the investors.
        14. Collective investment undertaking shall be interpreted as defined in the Republic of
Lithuania Law on Collective Investment Undertakings.
        15. Pension fund shall be interpreted as defined in the Republic of Lithuania Law on the
Supplementary Voluntary Accumulation of Pensions, the Republic of Lithuania Law on the
Accumulation of Pensions, also the fund of occupational pensions as defined in the Republic of
Lithuania Law on the Accumulation of Occupational Pensions.
        16. Supervisory authority:
        1) the Bank of Lithuania;
        2) the Securities Commission;
        3) an institution in a foreign state performing the functions analogous to those of the Bank of
Lithuania and the Securities Commission.
        17. Foreign insurance undertaking shall mean institution administrating insurance
(compensation) of deposits and/or liabilities to investors or ensuring deposits‟ and/or liabilities‟ to
investors security in other forms according to foreign countries„ legal acts.
        18. Management company shall be interpreted as defined in the Republic of Lithuania Law
on Collective Investment Undertakings, and a pension fund management company shall be
interpreted as defined in the Republic of Lithuania Law on the Supplementary Voluntary
Accumulation of Pensions.


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        19. Securities shall mean the financial instruments indicated in paragraph 4 of Article 3 of
the Republic of Lithuania Law on Markets in Financial Instruments.


                                           CHAPTER TWO
                                      INSURANCE PREMIUMS


       Article 3. Object of Insurance
       1. Deposit insurance coverage shall be provided for depositors‟ deposits in Litas and in a
foreign currency - the US dollars, euros, and national currencies of the Member States of the
European Union and states of the European Economic Area (hereinafter referred to as the
“European states”) (hereinafter referred to as the “foreign currency”).
        2. Insurance coverage for liabilities to investors shall be obligations provided for liabilities
to investors to repay the securities irrespective of their denomination or money in Litas or the
foreign currency.
        3. The deposits and liabilities to investors indicated in paragraphs 1 and 2 of this Article
must be insured at an insurance undertaking by banks, credit unions, undertakings as well as foreign
banks or the undertakings having established branches in the Republic of Lithuania with which
deposits are held or whose liabilities to investors have no insurance coverage (are not subject to
compensation) or which are not covered by any other protection schemes under the legislation of a
foreign state exercising jurisdiction over the bank having a branch or the undertaking.
       4. Insurance coverage may not be provided to the debt securities (deposit certificates) issued
by the same insured or the liabilities arising out of own acceptances and promissory notes, the
mortgage bonds issued under the Republic of Lithuania Law on Mortgage Bonds and Mortgage
Loans, also the deposits of or liabilities to the following entities:
       1) the Bank of Lithuania;
       2) insurance undertakings;
       3) credit institutions;
       4) financial brokerage firms;
       5) the insurance undertakings operating under the Law on Insurance;
       6) pension funds;
       7) management companies;
       8) the undertakings engaged in leasing (financial lease);
       9) collective investment undertakings.




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       Article 4. Supplementary Insurance
       1. Where the deposits held with or the liabilities to investors assumed by a branch
established in the Republic of Lithuania by a foreign bank or an undertaking not falling under the
jurisdiction of a European state are insured (compensated) or their protection is ensured in any other
way under the legislation of a foreign state, however the council of the insurance undertaking
determines that these insurance (compensation) conditions of the deposits or liabilities to investors
or any other conditions ensuring their protection are less favourable than in this Law, the foreign
bank or the undertaking which has established the branch must, in accordance with the procedure
established by the council of the insurance undertaking and published in the official gazette
Valstybės žinios, provide supplementary coverage for the depositors‟ deposits held with and the
liabilities of the foreign bank or the undertaking to investors assumed by the branch. A foreign bank
or an undertaking having a branch in the Republic of Lithuania and falling under the jurisdiction of
a European state shall, in this case, have the right to provide a supplementary insurance coverage to
the deposits held with and the liabilities to investors assumed by the branch.
       2. Supplementary insurance coverage shall be provided only to the deposits or liabilities to
investors who, under the legislation of a foreign state, have less favourable conditions of insurance
(compensation) or any other conditions of ensuring their protection than those provided by this
Law.
       3. The deposits or liabilities to investors which are not provided insurance coverage
(compensation) or any other protection under the legislation of a foreign state must be insured in
accordance with this Law.
       4. Insurance undertaking shall cooperate with foreign insurance undertaking in which state
territory a bank or undertaking has established a branch or with a foreign state under which
jurisdiction bank or an undertaking has established a branch in the Republic of Lithuania.


       Article 5. Insured Amount
       1. The insured sum shall be equal to the depositor‟s deposit kept with a bank, a branch of a
bank or a credit union on the day of the insured event, however it may not exceed the amount in
Litas equivalent to EUR 100 000.
       2. The insured amount of a deposit under supplementary coverage shall be equal to the
difference between the deposit and the amount payable under the legislation of a foreign state,
however, it may not exceed the insured amounts specified in paragraph 1 of this Article.
       3. The insured amount of liabilities to an investor shall be equal to the liabilities of a bank or
an undertaking, as well as of the branch of a bank or undertaking, to the investor on the day of the
insured event, however, it may not exceed the amount in Litas equivalent to EUR 22 000.

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       4. The insured amount of liabilities to an investor under supplementary coverage shall be
equal to the difference between the liabilities to the investor and the amount payable to the investor
under the legislation of a foreign state, however, the insurance amount may not be in excess of the
insurance amounts specified in paragraph 3 of this Article.


       Article 6. Insurance Premium of Banks, Branches of Banks and Credit Unions
       1. The insurance premium for banks, branches of banks and credit unions shall be calculated
from the amount of the Litas-denominated and/or foreign currency-denominated balance of money
on the depositors‟ accounts opened under bank deposit and/or bank account agreements at credit
unions, banks and branches of banks where the deposits held with them are not compensated or
protected in any other way under the legislation of a foreign state having jurisdiction over the
foreign bank which has established the branch. When providing, in the case provided for by this
Law, supplementary cover for deposits, the insurance premium shall be calculated from the amount
which consists the difference between the balance of money on the accounts of deposits under
supplementary coverage opened under bank deposit and/or bank account agreements and the
compensations payable to depositors under the legislation of a foreign state.
       2. The annual rate of an insurance premium shall, with the exception of the case provided
for in paragraph 3 of this Article, be as follows:
       1) 0.45 per cent for banks and branches of banks;
       2) 0.2 per cent for credit unions.
       3. The council of the insurance undertaking shall have the right to change the rate of the
insurance premium in the following cases:
       1) when the ratio between the Deposit Insurance Fund and all the deposits covered by
insurance becomes higher than 3 per cent, but does not exceed 4 per cent. In this case, the annual
rate of the insurance premium for the insured indicated in subparagraph 1 of paragraph 2 of this
Article may not be lower than 0.045 per cent, and for the insured indicated in subparagraph 2 of
paragraph 2 of this Article – not lower than 0.0025 per cent;
       2) when the ratio between the Insurance Fund and all the deposits covered by insurance
becomes higher than 4 per cent. In this case, the annual rate of the insurance premium for the
insured specified in subparagraph 1 of paragraph 2 of this Article may not be lower than 0.001 per
cent, and for the insured specified in subparagraph 2 of paragraph 2 of this Article – not lower than
0.0005 per cent.
       4. The banks which have acquired the right to accept deposits, in the cases provided for in
paragraph 1 of Article 4 the foreign banks which have established the branches entitled to accept
deposits shall, in accordance with the procedure laid down by the council of the insurance

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undertaking, pay to the account of the insurance undertaking the first (advance) insurance premium
in the amount of LTL 5000. The credit unions which have the right to accept deposits and the newly
established credit units which have acquired the right to accept deposits shall, in accordance with
the procedure laid down by the council of the insurance undertaking, pay to the account of the
insurance undertaking the first (advance) insurance premium in the amount of LTL 500. Other
insurance premiums shall be calculated by the insured and shall be paid by it to the account of the
insurance undertaking each month.
       5. The insurance premium of banks and branches of banks shall not depend on the
investment services provided by them.


       Article 7. Insurance Premium of Undertakings
       1. The annual premium for the undertakings which are not entitled to provide a
supplementary service of safekeeping of the securities and funds belonging to clients shall amount
to LTL 3000. The annual premium for the undertakings which are entitled to provide a
supplementary service of safekeeping of the securities and/or funds belonging to clients shall
amount to LTL 10000.
       2. The undertakings which execute orders on account of clients shall additionally pay a
portion of the annual premium – 0.01 per cent of the total value of the orders executed over the
previous calendar year on account of clients, however, this portion may not be lower than LTL 1000
and not higher than LTL 10000.


       Article 8. Procedure for Paying Insurance Premiums
       1. The procedure for and time limits of the calculation and payment of the insurance
premium, as well as changes to the rate of the insurance premium shall be established by the council
of the insurance undertaking and published in the official gazette Valstybės žinios.
       2. If the insured fails to pay the insurance premium or a portion thereof to the account of the
insurance undertaking within the time limit laid down by the council of the insurance undertaking, a
default interest shall be charged for each day of delay. The amount of the default interest shall be
determined by the council of the insurance undertaking taking into account the average interest rate
of the previous calendar quarter payable on the bonds of the Government in Litas with maturity of
up to one year. Default interest shall be calculated and paid according to the procedure for
calculating default interest for a failure to timely pay the insurance premium as approved by the
council of the insurance undertaking. Where the insured fails to pay insurance premiums, the
amount due and default interest shall be recovered therefrom in accordance with the procedure laid


                                                      7
down by laws of the Republic of Lithuania. Default interest shall be recovered where costs of
recovery thereof does not exceed the amount to be recovered.
       3. From the day when an insured event occurs for the insured or when the council of the
insurance undertaking terminates a deposit insurance for the insured, insurance premiums shall
cease to be paid. In this case, the part of the insurance premium unpaid by the day of the insured
event or by the day of termination of insurance shall be deemed a debt of the insured, and the
default interest laid down in paragraph 2 of this Article shall not be calculated from the day of the
insured event or from the day of termination of insurance.


                                           CHAPTER III
                                INSURANCE COMPENSATIONS


       Article 9. Amount of an Insurance Compensation
       1. A depositor shall become entitled to an insurance compensation from the day of an
insured event. An investor shall become entitled to an insurance compensation from the day of an
insured event only where the insured has transferred or used the investor's securities and/or funds
without the consent of the investor. When calculating an insurance compensation for liabilities to
investors, only those securities and funds of the investor shall be included into the liabilities to the
investor which the insured is not able to repay to the investor.
       2. Insurance compensations for deposits and insurance compensations for liabilities to
investors shall be calculated and paid separately.
       3. Amounts of insurance compensations for depositors or investors shall be as follows:
       1) 100 per cent of the liabilities to the investors up to the amount of Litas equivalent to EUR
3 000 and 90 per cent of the liabilities to the investors from the amount of Litas equivalent to EUR
3000 up to the amount of Litas equivalent to EUR 20 000;
       2) 100 per cent of the deposit up to the amount of Litas equivalent to EUR 100 000.
       4. Insurance compensations for deposits or liabilities to investors in a foreign currency shall
be calculated on the basis of the exchange rate of Litas and the foreign currency determined by the
Bank of Lithuania on the day of an insured event.
       5. The amount of an insurance compensation to the investors shall be calculated according to
the market value of the investor's securities on the day of an insured event.




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       Article 10. Procedure for Paying an Insurance Compensation
[in force until 31 December 2010]
       1. Insurance compensations shall be paid in Litas within three months from the day of an
insured event. The council of the insurance undertaking may extend this time limit for up to three
months (in case of deposit insurance – not more than twice for up three months each time).
[in force from 31 December 2010]
       1. Insurance compensations for depositors shall be paid in Litas within 20 working days
from the day of an insured event. Under the exceptional conditions and when concerted with the
supervisory authority the council of the insurance undertaking may extend this time limit for up to
10 working days. Insurance compensations for investors shall be paid in Litas within 3 months from
the day of an insured event. The council of the insurance undertaking may extend this time limit for
up to 3 months.
       2. A depositor or an investor shall be entitled to an insurance compensation for a period of
five years from the day of an insured event.
       3. An insurance compensation shall be calculated and paid by the insurance undertaking on
the basis of the data as of the day of an insured event about depositors or investors, their deposits or
liabilities to the investors as well as about the amounts of deposits or liabilities to the investors
covered by supplementary insurance. The procedure for calculating and paying insurance
compensations shall be determined by the council of the insurance undertaking and published in the
official gazette Valstybės žinios.
       4. The amount of a supplementary insurance compensation shall be calculated by deducting
from the insurance compensation calculated pursuant to provisions of Article 9 of this Law the
insurance compensation (guarantee) calculated pursuant to the legislation of a foreign state.
       5. Disputes over the right of a depositor or an investor to an insurance compensation shall be
settled by court.
       6. By the request of insurance undertaking insured must provide data necessary for the
insurance compensation payment calculation.


       Article 11. Impact of Payment of an Insurance Compensation
       1. After the insurance undertaking pays insurance compensations to depositors or investors
of the insured, the insured must, subject to an instruction of the insurance undertaking, reduce
liabilities to the depositors or investors by the amounts indicated by the insurance undertaking and
increase accordingly liabilities to the insurance undertaking.




                                                       9
          2. From the day on which an insurance compensation was paid to the depositor or the
investor, he shall forfeit any rights of claim to a sum of money in the amount of the insurance
compensation from a bank, a credit union or an undertaking.


          Article 12. Limitations on Insurance Compensations
          1. Insurance compensations shall not be paid in the following cases:
          1) to the depositors or investors whose deposits or liabilities to the investors have been
declared as illegally acquired by a court ruling;
          2) to the depositors or investors whose deposits or liabilities to the investors have been
transferred, under contracts or in any other way (with the exception of inheritance), after the day of
an insured event;
          3) to heads of the administration of a bank, a credit union or an undertaking, heads of
branches of a credit union or an undertaking, members of the council (supervisory board) and the
board; to the persons holding at least 5 per cent of a bank's share capital, or the persons holding
more than 50 per cent of the capital of the undertakings holding at least 5 per cent of the bank's
share capital; to the persons who are carrying out an independent audit of a bank, a credit union or
an undertaking; to the children, adopted children, spouses, cohabitants living in registered
partnership, parents and adoptive parents of the persons indicated in this subparagraph;
          4) to borrowers of a bank, a credit union or an undertaking, where the deposits or liabilities
to investors are not in excess of their liabilities (the outstanding loans and interest). If the deposit of
a borrower of a bank, a credit union or an undertaking is in excess of the borrower‟s liabilities (the
outstanding loans and interest), the insured amount shall be calculated by deducting the borrower‟s
liabilities from the deposit or liabilities to the investor, however, it may not exceed the amount
indicated in paragraph 3 of Article 9 of this Law;
          5) for the deposits kept in anonymous and coded accounts;
          6) for the deposits for which the insured has fixed an interest rate twice as high as the
interest rate set for comparable deposits held with the same credit institution.
          2. Payment of insurance compensations to the depositors and investors against whom an
application has been filed with law enforcement or courts in respect to the legality of acquisition of
their deposit funds or liabilities to the investors shall be suspended until the coming into effect of a
ruling.




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                                         CHAPTER FOUR
    PROVISION OF INFORMATION ABOUT INSURANCE AND TERMINATION OF
                                            INSURANCE


       Article 13. Provision of Information about Insurance
       1. The insured must provide information to depositors and investors in the Lithuanian
language about the insurance undertaking or foreign insurance undertaking which has provided
insurance cover for deposits and (or) for liabilities to the investors, terms and conditions of
insurance, including insured amount, object of insurance and the cases set in paragraph 4 of Article
3 of this legal act when the deposits and liabilities to investors are not covered. Moreover, where a
depositor or an investor requests so, he must be provided information about the terms and
conditions of and procedure for paying insurance compensations.
       2. Terms and conditions of insurance may not become an instrument of competition used in
advertising. Only an insurance undertaking or foreign insurance undertaking which has provided
insurance cover for deposits and for liabilities to the investors may be mentioned in advertisements.


       Article 14. Procedure for Terminating Insurance
       1. Where the supervisory authority of the insured revokes, temporarily or permanently, the
right of the insured to accept deposits, the council of the insurance undertaking shall, respectively
temporarily or permanently and without giving an advance notice, terminate for the insured the
insurance of deposits. Where the supervisory authority revokes, temporarily or permanently, the
right of the insured to provide investment services, such a prohibition of liabilities of the insured to
investors shall be terminated respectively temporarily or permanently.
       2. The supervisory authority must forthwith notify the council of the insurance undertaking
of withdrawal of the right to accept deposits or provide investment services.
       3. Where the insured acts in breach of the procedure of insurance and/or where its activities
pose a risk to the capability of the insurance undertaking to meet its liabilities, the council of the
insurance undertaking shall, upon giving a prior notice to the supervisory authority, warn the
insured of the likely termination of insurance at least 12 months in advance. If the insured fails to
eliminate breaches in the procedure of insurance within 12 months following the warning, insurance
of the deposits accepted by the insured or its liabilities to investors may be terminated by a decision
of the council of the insurance undertaking agreed with the supervisory authority of the insured.
       4. The insurance undertaking shall make public notification of termination of insurance of
deposits and liabilities to investors in the supplement Informaciniai pranešimai to the official
gazette Valstybės žinios.

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         Article 15. Impact of Termination of Insurance
         Where an insured event occurs to the insured for whom insurance has been terminated, the
insurance undertaking shall pay insurance compensations only for the deposits and liabilities which
had been accepted (assumed) prior to the coming into force of the decision about termination of
insurance and had not been repaid or met before the day of the insured event.


                                          CHAPTER FIVE
               STATE COMPANY DEPOSIT AND INVESTMENT INSURANCE


         Article 16. Status of the Insurance Undertaking
         1. The insurance undertaking shall be a state company established by the Government of the
Republic of Lithuania on the basis of State-owned property under the Republic of Lithuania Law on
the Insurance of Deposits of Individuals and registered in accordance with the procedure laid down
by laws of the Republic of Lithuania, having its own seal with the state emblem of Lithuania and
the name “state company Deposit and Investment Insurance”. Its founder shall be the Ministry of
the Finance.
         2. In its activities, the insurance undertaking shall be guided by this Law, the Republic of
Lithuania State and Municipal Enterprise Law and other legal acts, unless this Law provides
otherwise, and by its by-laws.


         Article 17. By-laws of the Insurance Undertaking
         The by-laws of the insurance undertaking must lay down purposes of its activity, rights and
duties of its council and the head as well as other requirements set out in the Republic of Lithuania
State and Municipal Enterprise Law.


         Article 18. Functions of the Insurance Undertaking
         In implementing the purposes of activity specified by this Law, the insurance undertaking
shall:
         1) accumulate funds, in accordance with the procedure laid down by this Law, in the Deposit
Insurance Fund and the Fund of Insurance of Liabilities to Investors;
         2) calculate and pay insurance compensations to the depositors and investors of the insured;
         3) assess the terms and conditions of insurance (compensation) of deposits or liabilities to
investors or other protection provided by the foreign states whose banks or undertakings are setting
up branches in the Republic of Lithuania;


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       4) supervise compliance by the insured with the procedure of insurance laid down by this
Law;
       5) assess the risk of the insurance undertaking;
       6) invest the funds administered by it and funds of the equity of the insurance undertaking
into the securities of the governments and central banks of the states determined by the council of
the insurance undertaking and into deposits with the Bank of Lithuania;
       7) on a regular basis verify if insurance undertaking is ready to perform functions which are
set in this legal act and its by-laws;
       8) perform other functions indicated in this Law and the by-laws of the insurance
undertaking relating to implementation of this Law and ensuring of the functioning of the insurance
undertaking.


        Article 19. Purposes of the Activity of the Insurance Undertaking
        The insurance undertaking shall insure deposits of depositors and liabilities to investors,
administer the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors as well
as carry out other activities indicated in the by-laws of the insurance undertaking.


       Article 20. Rights of the Insurance Undertaking
       1. The insurance undertaking shall have the right:
       1) to have accounts with the Bank of Lithuania, banks and branches of banks;
       2) to conclude agreements and assume obligations;
       3) to dispose of the property it administers in accordance with the procedure prescribed by
laws and its by-laws;
       4) to terminate insurance of deposits and of liabilities to investors in the cases indicated in
this Law;
       5) to verify the accuracy of calculation and payment of insurance premiums by the insured;
       6) to obtain from the insured the information necessary for the performance of its functions;
       7) to verify if insured are ready to provide insurance undertaking with data necessary to
calculate insurance compensation;
       8) to obtain from the supervisory authorities of the insured the following information: the
sanctions applied against the insured; the problems which could cause insured event; the granting
and withdrawal of authorisations for banks, credit unions, and branches of banks to accept deposits;
the rights granted to banks, undertakings, credit unions and branches of banks and undertakings;
       9) to take loans in order to meet liabilities of the insurance undertaking;


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       10) to receive a share of the assets of the bank, undertaking or credit union in liquidation
which provided insurance coverage for deposits of depositors or liabilities to investors under this
Law;
       11) to enter into property valuation agreements with the persons having the right to engage
in securities valuation;
       12) in the cases and in accordance with the procedure laid down by laws, to adopt a decision
on the taking of a bank‟s shares from shareholders of the bank for public needs, also in accordance
with the procedure laid down by legal acts, to manage, use and dispose by the right of trust of the
shares taken;
       13) where a decision is adopted on the taking of a bank‟s shares from shareholders of the
bank for public needs, to obtain from the Central Depository a list of holders of the bank‟s shares;
       14) to engage in other activities provided for in the by-laws of the insurance undertaking.
       2. The insurance undertaking shall have full control of the Deposit Insurance Fund and the
Fund of Insurance of Liabilities to Investors.
       3. The insurance undertaking must, in accordance with the procedure laid down by laws,
insure the tangible fixed assets transferred to it in trust with an insurance undertaking registered in
the Republic of Lithuania.


       Article 21. Bodies of the Insurance Undertaking
       1. Bodies of the insurance undertaking shall be an institution exercising the rights and duties
of the owner of the insurance undertaking, the council of the insurance undertaking and a single-
person management body – the head of the insurance undertaking.
       2. The council shall comprise six members appointed by the Government of the Republic of
Lithuania. The Ministry of Finance shall nominate three candidates, the Bank of Lithuania – two
candidates, and the Securities Commission – one candidate. With the approval of the council, one
representative from each of the following – an association of banks, an association of financial
brokers, an association of management companies and an association of credit unions – may take
part in meetings of the council with a deliberative vote. Members of the council shall be
remunerated for their work by the institutions which have delegated them.
       3. The term of office of members of the council shall be four years and the number of terms
shall not be limited. The institution which has nominated its candidate to the members of the
council may recall him and nominate another candidate to fill the vacancy.
       4. The activities of the council shall be directed by the chairman of the council and in the
absence thereof – by the deputy chairman of the council. The chairman and deputy chairman of the
council shall be elected by the council of the insurance undertaking from among its members.

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        5. The council shall:
        1) submit conclusions, comments and proposals to the institution exercising the rights and
duties of the owner of the insurance undertaking regarding the operating strategy and management
structure of the insurance undertaking;
        2) submit proposals to the institution exercising the rights and duties of the owner regarding
amendments of the by-laws of the insurance undertaking;
        3) establish the procedure for and time limits of calculation and payment of insurance
premiums, the rate of default interest for late payment of an insurance premium and the procedure
for calculating and paying the default interest;
        4) lay down the procedure for calculating and paying insurance compensations;
        5) approve the policy of investment of funds of the equity of and funds administered by the
insurance undertaking;
        6) adopt decisions on the termination of insurance of deposits or insurance of liabilities to
investors;
        7) adopt decisions on the change of the rate of the insurance premium, determine the amount
of the loan to be taken by the insurance undertaking for meeting its liabilities;
        8) establish the procedure for providing supplementary insurance coverage for deposits or
liabilities to investors;
        9) submit to the institution exercising the rights and duties of the owner of the insurance
undertaking an annual report about its activities;
        10) in the cases and in accordance with the procedure laid down by laws as well as upon
agreement with the institution exercising the rights and duties of the owner of the insurance
undertaking, adopt a decision on the taking of a bank‟s shares from shareholders of the bank for
public needs and determine the payment for these shares and the amount of the funds allocated for
restoration of the safety and soundness of activities of the bank;
        11) perform other functions provided for in this Law and the by-laws.
        6. The head of the insurance undertaking shall be accountable to the institution exercising
the rights and duties of the owner of the insurance undertaking.


        Article 22. Confidentiality of Commercial Secrets of the Insurance Undertaking
        The information which is a commercial secret of the insurance undertaking may be supplied
only to the institutions specified by laws and in accordance with the procedure laid down by laws.




                                                      15
       Article 23. Separateness of the Deposit Insurance Fund and the Fund of Insurance of
Liabilities to Investors
       1. The insurance premiums paid by banks, branches of banks and credit unions, insurance
compensations and earnings from the investments of the Deposit Insurance Fund, also the funds
recovered from the insured in liquidation which had paid insurance premiums to the Deposit
Insurance Fund and other income and costs of the Deposit Insurance Fund shall be accounted and
accumulated separately from the insurance premiums paid by undertakings, the insurance
compensations and earnings from the investments made by the Fund of Insurance of Liabilities to
Investors, also the funds recovered from the insured in liquidation who had paid insurance
premiums to the Fund of Insurance of Liabilities to Investors and other income of the Fund of
Insurance of Liabilities to Investors.
       2. Insurance compensations for deposits and liabilities of banks and branches of banks to
investors shall be paid from the Deposit Insurance Fund, while insurance compensations for the
liabilities of undertakings to the investors shall be paid from the Fund of Insurance of Liabilities to
Investors.
       3. Where one of the funds lacks resources for payment of insurance compensations while the
other has such resources, insurance compensations may be paid from the fund which has the
resources, however prior to using the other fund the mandatory reserve shall be used first.
Afterwards, the insurance premiums paid into the fund which lacked resources for the payment of
insurance compensations shall be used primarily for repayment of resources to the other fund.


       Article 24. Equity of the Insurance Undertaking
       1. The equity of the insurance undertaking shall consist of the capital of the owner of the
insurance undertaking, mandatory reserve, revaluation reserve (result) and retained profit (loss) of
the current year. The capital of the owner of the insurance undertaking shall be indicated in the by-
laws of the insurance undertaking.
       2. The capital of the owner of the insurance undertaking may be used for the payment of
insurance compensations only where both funds and the mandatory reserve lack resources for this
purpose.
       3. The portion of the capital of the owner of the insurance undertaking used pursuant to
paragraph 2 of this Article shall be restored up to the level of the owner‟s capital specified in the
by-laws of the insurance undertaking from resources of the Deposit Insurance Fund and the Fund of
Insurance of Liabilities to Investors. Both the Deposit Insurance Fund and the Fund of Insurance of
Liabilities to Investors used to restore the owner‟s capital must correspond to the amounts by which
the owner‟s capital has been reduced for the payment of insurance compensations of each of these

                                                      16
funds. Resources of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to
Investors shall be used for restoration of the owner‟s capital prior to repayment of resources to the
other fund in accordance with the procedure laid down in paragraph 3 of Article 23 of this Law.


        Article 25. Income and Costs of the Deposit Insurance Fund and the Fund of Insurance
of Liabilities to Investors
        1. The income of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to
Investors shall consist of insurance premiums, the amounts recovered, in accordance with the
procedure laid down by laws, from the insured in liquidation, earnings from the investments made
by the Deposit Insurance Fund and the Fund of Insurance of Liabilities to Investors, the funds
obtained upon the sale of the shares or assets of a bank whose shares have been taken from
shareholders for public needs, also other amounts.
        2. The costs of the Deposit Insurance Fund and the Fund of Insurance of Liabilities to
Investors shall consist of insurance compensations, the administration costs of the Deposit
Insurance Fund and the Fund of Insurance of Liabilities to Investors, the amounts payable for the
shares of a bank taken from shareholders of the bank for public needs, also the amounts intended for
restoration of the safety and soundness of activities of a bank whose shares have been taken from
shareholders for public needs.
        3. The amount of administrative costs of the Deposit Insurance Fund and the Fund of
Insurance of Liabilities to Investors shall be determined, upon assessment of the expected
administrative costs of each of the funds and the amounts of the funds, by the council of the
insurance undertaking when approving the estimate of administrative costs of the Deposit Insurance
Fund and the Fund of Insurance of Liabilities to Investors.


        Article 25(1). Income and Costs of the Insurance Undertaking
       1. The income of the insurance undertaking shall comprise:
       1) remuneration for administration of the Deposit Insurance Fund and the Fund of Insurance
of Liabilities to Investors;
       2) earnings from investment of the equity of the insurance undertaking;
       3) other income.
       2. The costs of the insurance undertaking shall comprise:
       1) administration costs of the Deposit Insurance Fund and the Fund of Insurance of
Liabilities to Investors;
       2) costs of investment of the equity of the insurance undertaking;
       3) other costs.

                                                     17
        Article 26. Investment of Funds of the Equity of the Insurance Undertaking, the
Deposits Insurance Fund and the Fund of Insurance of Liabilities to Investors
        1. The funds of the equity and the funds administered by the insurance undertaking may be
invested in accordance with the procedure established by the council of the insurance undertaking
into the securities of governments and central banks of the states determined by the council and into
deposits with the Bank of Lithuania.
        2. The income received from investment of the funds of the equity and the funds
administered by the insurance undertaking shall be attributed to the income of the insurance
undertaking and to the income of the funds administered by it in proportion to the amounts of the
equity of the insurance undertaking, the Deposits Insurance Fund and the Fund of Insurance of
Liabilities to Investors.


        Article 26(1). Appropriation of Profit and Mandatory Reserve of the Insurance
Undertaking
        1. The entire profit of the insurance undertaking shall be entered into the mandatory reserve.
        2. The mandatory reserve of the insurance undertaking may be used:
        1) for the payment of insurance compensations, in the event of shortage of funds in the fund
wherefrom insurance compensations are paid;
        2) for restoration of the owner‟s capital up to the amount prior to the use of the capital for
the payment of insurance compensations;
        3) for covering of the losses of the insurance undertaking‟s economic activities.
        3. Formation, amount and use of the mandatory reserve of the insurance undertaking shall
not be subject to provisions of the State and Municipal Enterprise Law.
        4. Unappropriated loss shall be carried forward to the next financial year.


       Article 27. Publication of Financial Statements
       The annual financial statements of the insurance undertaking must be published in
accordance with the procedure laid down by the by-laws within five months following the close of
the financial year.


       Article 28. (repealed)
       The insurance undertaking shall be exempted from payment of the interest on the use of the
capital of the state company‟s owner to the State budget.


                                                      18
       Article 29. Liquidation and Transformation of the Insurance Undertaking
       The insurance undertaking shall be liquidated or transformed in accordance with the
procedure laid down by laws of the Republic of Lithuania.


                                          CHAPTER SIX
                                      FINAL PROVISIONS


       Article 30. Entry into Force of the Law
       1. This Law shall enter into force on 1 July 2002.
       2. Until the entry into force of this Law, the insurance compensations calculated, but not
paid to the depositors pursuant to the Republic of Lithuania Law on the Insurance of Deposits of
Individuals and the Republic of Lithuania Law on Deposits Insurance shall not be changed and shall
continue to be paid from the Deposit Insurance Fund.
       3. The deposits held with a bank, a credit union and/or a branch of a bank which became the
insured under the Republic of Lithuania Law on the Insurance of Deposits of Individuals and/or
under the Republic of Lithuania Law on Deposits Insurance shall be deemed insured under this Law
from the day of its entry into force. Liabilities to investors shall be deemed insured from the day of
payment of the first insurance premium.


       Article 31. Implementation of the Law
       1. The name “state company Deposit Insurance Fund” shall be replaced by the name “state
company Deposit and Investment Insurance”.
       2. At the moment of entry into force of this Law, the funds controlled by the state company
Deposit Insurance Fund shall, with the exception of the authorised capital, be attributed to the
Deposit Insurance Fund, and 3 million Litas shall be attributed to the Fund of Insurance of
Liabilities to Investors.
       3. Within six months from the day of entry into force of this Law, the Government of the
Republic of Lithuania must amend the by-laws of the insurance undertaking and appoint one
member of the council of the insurance undertaking. The term of office of the members of the
council of the insurance undertaking appointed prior to the day of entry into force of this Law shall
be calculated from the day of their appointment.


       Article 32. Repeal of Laws
       Upon entry into force of this Law, the following laws shall be repealed:


                                                     19
       1) the Republic of Lithuania Law on Deposits Insurance (Valstybės žinios (Official Gazette)
No 23-760, 2001);
       2) the Republic of Lithuania Law Amending Articles 3, 4, 5 and 13 of the Law on Deposits
Insurance (Valstybės žinios (Official Gazette) No 90-3145, 2001);
       3) the Republic of Lithuania Law on Insurance of Liabilities of Commercial Banks and
Brokers Undertakings to Investors (Valstybės žinios (Official Gazette) No112-4073, 2001).


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


PRESIDENT OF THE REPUBLIC                                           VALDAS ADAMKUS


                                                   Annex to the Republic of Lithuania
                                                   Law on Insurance of Deposits and
                                                   Liabilities to Investors




      LEGAL ACTS OF THE EUROPEAN UNION IMPLEMENTED BY THIS LAW


       1. Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on
deposit-guarantee schemes (OJ 2004 Special edition, Chapter 6, Volume 2, p. 252).
       2. Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on
investor-compensation schemes (OJ 2004 Special edition, Chapter 6, Volume 2, p. 311).
       3. 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 (OL 2009 L 68, p. 3).




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