Disclosure Requirements - Lithuania
Disclosure Category 2
In the case of holdings in Lithuanian securities, Clearstream Banking can be under an obligation, to disclose, or being asked to disclose the identity of beneficial owners holding applicable positions.
Consent
Customers 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 Banking such information as is required to be disclosed. Customers not willing to give this consent cannot hold such securities and/or financial instruments in their account with Clearstream Banking.
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) stipulate 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.
Directive (EU) 2017/828 of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement (the second shareholder’s rights directive “SRD II”) has been transposed into the Law on Markets in Financial Instruments, the Law on Companies, the Law of the Republic of Lithuania on Financial Reporting by Undertakings and the Code of Administrative Offences in 27 June 2019, with entry into force on 3 September 2020 (SDR II Law).
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.
Shareholder identification as set out in the SRD II Law
The SRD II Law provides for the right for issuers to identify their shareholders.
Issuers can request intermediaries at each level of a custody chain to promptly provide relevant information to facilitate such identification.
In accordance with SDR II Law as amended, an intermediary (in this case, Clearstream Banking) shall, upon receipt of the shareholder identification disclosure request, transmit a similar request to the next intermediaries in the custody chain (that is, Clearstream Banking customers with holdings in the requested securities). A response to the shareholder identification disclosure request shall be sent by every intermediary in the custody chain directly to the recipient's address defined in the request and without delay. Clearstream Banking will generate the response as required, with information regarding the shareholder's identity, limited to Clearstream Banking books only.
Fulfilment of the SRDII disclosure that take place prior to a meeting event, and subsequent registration of the beneficial owner in the Company’s register, is a conditional pre-requisite for votes to be accepted. Failure to disclose will therefore result into votes of non-registered shareholders to be rejected.