CFCL Investment regulation – Lithuania

Regulatory structure

Please refer to the CBL Market infrastructure - Lithuania for the complete information about the regulatory structure.

Holding restrictions – CSD Market – Lithuania

The laws of the Republic of Lithuania do not require any specific disclosure/reporting in relation to assets held on accounts under a nominee name. However, the Lithuanian Law on Securities, article 23 establishes a notification obligation where specific thresholds are met.

An investor who invests in a securities market listed company must immediately, not later than within four trading days, inform the supervisory institution and the issuer, if investment crosses the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75% or 95% of capital and/or voting rights in either direction.

An investor who fails to fulfil the disclosure obligation within an established period of time shall not, for two years period after the proper disclosure of the data concerned, have the right to hold at the issuer's general meetings of shareholders more votes than the last threshold of which he was duly notified. Moreover, all decisions adopted during the period between the acquisition of the holding and the moment of a proper disclosure of the information may be annulled by a decision of the court if the decisions had resulted in a replacement of the issuer's managers or property or non-property rights of shareholders have been violated. Bank of Lithuania shall have the right to impose the following fines to persons, who have failed to timely notify of the acquisition or disposal of voting rights in the manner prescribed - up to EUR 10 million or up to 5% of the last financial year's income in case of being a legal entity or up to EUR 2 million if a natural person.

Disclosure requirements

Introductory information and categories

This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the Disclosure Requirements.

Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL Client shall handle the request on a voluntary basis.

Disclosure Requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.

For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.

In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.

In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.

The Disclosure Requirements do not constitute legal advice and the Clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.

Please note that CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.

It remains the sole responsibility of the Client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the Client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.

In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.

N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.

Disclosure categories

Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:

Category 1

Markets where disclosure by Clearstream Banking as a custodian of Clearstream Fund Centre to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law;

Category 2

Markets where disclosure by Clearstream Banking as a custodian of Clearstream Fund Centre of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances;

Category 3

Markets where there is no obligation for Clearstream Banking as custodian of Clearstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Fund Centre, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.

Disclosure requirements – CSD Market – Lithuania

Disclosure Category: 2

In the case of holdings in Lithuanian securities, Clearstream Fund Centre S.A. (“CFCL”), can be under an obligation, to disclose, or being asked to disclose the identity of beneficial owners holding applicable positions.

Consent

Clients are hereby deemed to consent to disclosure and to the appointment of the requestor (for example, but not limited to the issuer or its agent) as their attorney-in-fact, under power of attorney, to collect from Clearstream Fund Centre such information as is required to be disclosed. Clients not willing to give this consent cannot hold such securities and/or financial instruments in their account with Clearstream Fund Centre.

Background and legal basis

The Lithuanian Law on Securities, Article 23 establishes a notification obligation if a beneficiary owner crosses the thresholds described below.

Also, the Law on Markets in Financial Instruments, Article 87 and 89(1) stipulates that accounts of clients of account managers registered in Member States or third countries may be opened in the name of the account managers, indicating that they act as account managers and that the account has been opened on behalf of the client. Account managers of Member States or third countries, upon a request the Central Securities Depository (Nasdaq CSD), shall disclose the clients on whose behalf the financial instruments have been acquired. This means that the CSD has a right to get information at beneficial owner level.

Disclosure Requirement

Clients should be aware that the Lithuanian National Bank (BNB) may require CFCL on request to disclose to the BNB the identity of CFCL clients holding shares of Lithuanian banks in CFCL. Furthermore, should the above reporting reveal that a client's holding in the shares of a Lithuanian bank exceeds a certain percentage, the BNB may require the client to disclose information about the final beneficial owners of that holding.

The obligation to disclose falls on CFCL in whose name the securities are registered at the CDAD and is to be cascaded down to the final beneficial owners.

Obligation to report threshold crossings

The obligation to report the crossing of thresholds falls on the beneficial owner (that is, the party eligible to vote) as follows.

Thresholds for securities listed on the Lithuanian regulated market

Article 23 of Law on Securities stipulates that, when a beneficial owner is aware of a transaction that has caused his voting rights at the general meeting of shareholders of a Lithuanian issuer to reach, exceed or fall below a 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75% and 95% threshold, then such shareholder must notify the Bank of Lithuania and the issuer within four (4) trading days after passing the thresholds.

Sanctions

Failure to fulfil disclosure requirements by any person increasing or decreasing their holding in an issuer's share capital or voting rights (whether directly or indirectly) is currently punishable by a fine and may incur in the suspension of voting rights for a period of two years by the Bank of Lithuania.

Please refer to Disclosure Requirements - Lithuania for complete information on disclosure requirements for Lithuania.