T. Ðevèenkos 21 LT-03111 , SALADÞIUS & PARTNERS Tel. (+370 5) 239 23 91 Law firm Fax (+370 5) 239 23 90 www.splegal.lt

August LEGALLEGAL MONITOR MONITOR 2005

Legal Monitor is a publication of the Law Firm Saladžius & Partners where we provide the information on the latest Lithuanian and EU legislation, related to the legal entities' activities.

In this issue we discuss the order of notifying about the posted workers, the newly adopted Law on Real Estate Tax, the ordained social tax, the amendments and supplements to the Law on Securities Market, amendments to the Law on Stock Companies also Rules on approval and drafting of the securities prospectus and disclosure of information, regulation implementing Council regulation on Community trade mark and present the announced acts of law.

Order of the Minister of Social Security and Labour No A1 - 169 of 16 June 2005 on Confirmation of Order of Notification about Posted Workers (announced: State Gazette, 2005, No. 77 - 2801). 2. Tax on real estate

LITHUANIAN AND EU LAW NEWS The Law on Real Estate Tax adopted on 7 June 2005 sets forth the order of taxation of real estate by real estate tax. According to this law, as from 1 January 2006, real estate situated in the territory of the 1. Order of notifying about the posted Republic of Lithuania and used for commercial purposes would be workers taxed by1%ofthereal estate fiscal value tax.

As from the date of coming into force of this law, not only legal The Order of the Minister of Social Security and Labour on persons shall be obliged to pay the real estate tax for real estate Confirmation of Order of Notification about Posted Workers which pertaining by the ownership right, as yet, but also natural persons for came into force as of 22 June 2005 sets forth the order of real estate which they use for economical or individual activity. presentation of information about the posted workers and guarantees applied for them to the territory branches of the State Labour It is noteworthy, that legal persons shall assess, declare and pay the Inspection of the Republic of Lithuania. This order is approved in said tax not only for real estate pertaining by the ownership right but pursuance of the provisions of the Law on Guarantees for Posted also for the real estate (or its part) pertaining by ownership right to Workers of the Republic of Lithuania. natural persons, which was transferred to legal persons for termless or for a period longer than one month use (in other cases, natural The employer who sends the employee from any of the EU country persons shall assess, declare and pay the real estate tax by or other country for temporary work in the territory of the Republic themselves). of Lithuania for the period longer than 30 days or to work constructions works provided in the Law on Construction of the The tax would be assessed following the fiscal value indicated in the Republic of Lithuania, is obliged to present the notification to the records of the Register of Real Estate, which are going to be prepared territory branch of the State Labour Inspection of the Republic of by real estate assessor. In accordance with the general provision, the Lithuania, which shall be of a special form and in Lithuanian. In fiscal value of real estate is the average market value of real estate. case the employee is posted to several companies, every person The value of real estate may be also considered the fiscal value of (natural or legal) accepting the posted employee shall be indicated in real estate fixed after individual real estate evaluation. the notification. This notification shall be presented no later than 5 days to the beginning of work in the Republic of Lithuania. On Law on Real Estate Tax of the Republic of Lithuania No X - 33 of 7 extraordinary unscheduled events, the exemplary list of which is June 2005 (announced: State Gazette, 2005, No. 76 - 2741) presented in the order, the territory branch of the State Labour Inspection of the Republic of Lithuania shall be informed on the first workday of the posted worker in the Republic of Lithuania. 3. Social tax is being ordained

In case the period between separate dispatches to the territory of the In accordance with the Law on Temporary Social Tax, enacted on 7 Republic of Lithuania is less than 30 days, the indicated 30 days June 2005, as from 1 January 2006, legal persons that have period is calculated by adding up all the periods of dispatches (the obligation to pay profit tax from the taxable profit are taxed by an rest period between the work in the territory of the Republic of additional temporary social tax. Lithuania is not reckoned in the dispatched period). This tax, which replaces contribution from income payable to the The employer has to present the revised notice immediately, if the road programme, shall be paid for the tax period starting in 2006 and dispatched period, the provisions set out in the order or other 2007. When assessing the tax for the taxable period starting in 2006, conditions of the dispatched are changed. In case the dispatch was tax rate of 4 % shall apply, and for the taxable period starting in 2007 withdrawn, the employer has to inform the territory branch of the - the tax rate of 3 % shall apply. The base of this tax is taxable profit State Labour Inspection of the Republic of Lithuania where the assessed following the order indicated in the Law on Profit Tax. posted worker performs his functions. 1 T. Ðevèenkos 21 SALADÞIUS & PARTNERS LT-03111 Vilnius, Lithuania Tel. (+370 5) 239 23 91 Law firm Fax (+370 5) 239 23 90 www.splegal.lt

August LEGALLEGAL MONITOR MONITOR 2005

It should be noted, that the social tax shall be calculated and paid in advance, save some exceptions laid down in the law (e.g., the newly 5. Amendments to the Law on Stock registered legal persons would not be obliged to pay an advanced tax Companies during the first taxable period). On 23 June 2005, amendments to some provisions of the Law on Law on Temporary Social Tax of the Republic of Lithuania No X - Stock Companies were adopted, by which the Law on Stock 231 of 7 June 2005 (announced: State Gazette, 2005, No. 76 - 2739). Companies was harmonized with the Law on Amendments and Supplements to the Law on Securities Market, enacted at the same 4. The amendments and supplements to time.

the Law on Securities Market came into It is noteworthy, that, as of now, the date and number of a public force stock company securities' prospectus shall be indicated in the agreement for the subscription of shares in case the prospectus shall According to the latest amendments to the Law on Securities Market be confirmed following the order indicated in legal acts regulating (effective from 12 July 2005), the shareholder (acting personally or securities' market, instead of registration date and number of a public together with other persons) of any accountable issuer incorporated stock company's shares, in case the shares were registered in the in Lithuania who holds the shares which grant him no less than 95% Securities' Commission. of all votes at a general meeting of shareholders of that issuer shall be entitled to request that all the remaining shareholders of the issuer Law on Amendments to the Articles 13, 44, 46, 48, 55, 72 and 74 of sell to him the shares conferring voting rights held by them and the Law on Stock Companies of the Republic of Lithuania No. X - 271 minority shareholders shall be obliged to sell such shares following of 23 June 2005 (Announced: State Gazette, 2005, No. 84 - 3109). the order stipulated in the Law (squeeze-out right). Previously (until entry into force of the last amendments of the Law) the above- 6. Rules on approval and drafting of the mentioned provision was applicable only to the shareholders of the accountable issuers which shares were included into the official or securities prospectus and disclosure of current lists of a stock exchange. information adopted

The amendments to the Law also established a right of the minority shareholders to demand from the shareholders, who hold no less The Securities Commission of the Republic of Lithuania approved than 95% of all votes at a general meeting of shareholders of that the Rules on Approval and Drafting of the Securities Prospectus and issuer, to buy their shares (sell-out right). Disclosure of Information on 15 July 2005. These rules were adopted in accordance with the above-mentioned amendments and Among the other amendments and supplements to the Law, the Law supplements to the Law on Securities Market related to the approval provides for cases and order of the publication of the issuer's and publication of the prospectus. prospectus. The prospectus is a document for the investors and public presenting the basic information about the issuer and its According to these rules, the approval of the securities prospectus securities, which are publicly offered or included in the trade of the will be carried instead of the registration of securities. The rules regulated market. It is noteworthy, that the newly established provide for requirements for the information presented in the procedure of the approval of the prospectus carried out by the prospectus, structure of the prospectus, peculiarities of the validity Securities Commission of the Republic of Lithuania or the of the prospectus, as well as the exceptions to the obligation to competent institution of another Member State of the European publish the prospectus (e.g., when the shares, that will be publicly Union replaced the securities registration. The public offering of the offered or put for trading at regulated market of Lithuania, were securities can be only executed in the Republic of Lithuania after the issued instead of previously issued shares of the same class, issuer or the offeror publishes the approved prospectus according to provided that such a new issue does not increase the authorised the order provided in the Law. capital). In comparison with the previously valid version of the prospectus, the new prospectus must involve more comprehensive The amendments to the Law also alter the definition of a information about the issuer (activity description, financial status), professional investor and establish the criteria according to which risk factors, status of the debts of the issuer, owners of the blocks of the natural persons are regarded as the professional investors. shares and related - party transactions.

We would like to draw your attention towards the fact that persons, Resolution of the Securities Commission of the Republic of Lithuania who, acting independently or together with other persons, obtained regarding the Approval of Rules on Approval and Drafting of the 19/20 of all votes at a general meeting of shareholders of the Securities Prospectus and Disclosure of Information No. 1K-21 of accountable issuer incorporated in Lithuania before the amendments 15 July 2005 (announced: State Gazette, 2005, No. 91 - 3420). to the Law came into force, must inform the Securities Commission of the Republic of Lithuania and the issuer about the number of the 7. Commission regulation N2868/95 votes they hold not later than within 30 days. implementing Council regulation on the The Law of the Republic of Lithuania on the Amendments and Community trade mark amended Supplements to the Law on Securities Market No. X-270 of 23 June 2005 (announced: State Gazette, 2005, No.84 - 3108). On 29 June 2005, the European Commission adopted the regulation 2 T. Ðevèenkos g. 21, SALADÞIUS IR PARTNERIAI LT-03111 Vilnius Tel. (8~5) 239 23 91 Advokatø kontora Faks. (8~5) 239 23 90 www.splegal.lt

LEGAL MONITOR August LEGAL MONITOR 2005

No 1041/2005 implementing the latest changes to the Council 6. Resolution No 739 of the Government of the Republic of Lithuania of June regulation on the Community trade mark made on 19 February, 30, 2005 “Concerning the methods for the determination of amounts of 2004. remuneration to the state registers and cadastres for the supply of information” (Announced: State Gazette, 2005, No 82 - 3024).

The Commission regulation was adopted in order to implement the 7. Resolution No 794 of the Government of the Republic of Lithuania of June latest changes to the Regulation on the Community trade mark and 15, 2005 “Concerning the implementation of right to object the transfer of the to rectify various procedural drawbacks discovered in the practice of seat of the legal entity to another country and participation of a Public stock application of the Regulation on the Community trademark. company in the incorporation of a European Company by virtue of merger” (Announced: State Gazette, 2005, No 88 - 3323). The regulation in question changes and simplifies opposition for the 8. Order No VA - 52 of the Head of the State Tax Inspectorate under the registration of trade mark, application for conversion and renewal of Ministry of Finance of the Republic of Lithuania of June 14, 2005 the trade mark procedures. It also abolishes trade mark transfer fee, “Concerning the registration/deregistration of foreign legal entities within the clarifies in detail the procedures for electronic and facsimile register of tax payers” (Announced: State Gazette, 2005, No. 77 - 2804). communications and addresses other pertinent questions. 9. Resolution No. 1K - 19 of the Lithuanian Securities Commission of June It is worth giving a record that the new version of the regulation 23, 2005 “Concerning approval of the new wording of rules on the entitles persons applying for the registration of mark in color to identification of clients of intermediaries carrying out public trading in securities” (Announced: State Gazette, 2005, No. 80 - 2937). indicate color codes, and in cases of applications for sound marks to attach an electronic sound file thereto.

Regulation, subject to some exceptions, entered into force on 25 July 2005.

Commission Regulation No 1041/2005 of 29 June 2005 Amending Regulation No 2868/95 Implementing Council Regulation No 40/94 on the Community Trade Mark (Announced: Official Journal, 2005, L 172, p.4). The announced acts of law

1. Directive 2005/29/EC of the European Parliament and of the Council of May 11, 2005 concerning unfair business-to-consumer commercial practices OTHER NEWS in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Managing Partner of the Law Firm Jonas Saladžius headed the Parliament and of the Council (Unfair Commercial Practices Directive) Delegation of the Lithuanian Bar Association to the Plenary Session (Announced: Official Journal, 2005, L 149, p.22) of CCBE (Council of Bars & Law Societies of Europe) organised in Bordeaux, France. 2. The Law of the Republic of Lithuania No X-191 of the 12 May, 2005 on the ratification of the Convention between the Government of the Republic of Assistant to Attorney-at-law Rnjta Radzeviþinjtơ actively Lithuania and the Government of the Grand Duchy of Luxembourg for the avoidance of double taxation of income and capital and prevention of fiscal participated at Summer Law School, organised jointly by Vilnius evasion (Announced: State Gazette, 2005, No 70 - 2511). University Faculty of Law, Paris-X-Nanterre University and J.W. Goethe University Frankfurt/Main. The set of lectures on the 3. The Law No X - 273 of June 23, 2005 on the amendment of the articles 2, Law was delivered in French and German 14, 20, 46, 53, 55, 65, 69, 72, 90, 91, 92 and Annex of the Law on Banks of languages. the Republic of Lithuania (Announced: State Gazette, 2005, No 84 - 3110). Assistant to Attorney-at-law participated at the 4. Law No X - 327 of July 5, 2005 amending the articles 13 and 26 of the Law on Profit Tax of the Republic of Lithuania (Announced: State Gazette, ELSA Lithuania (The European Law Students' Association) 2005, No. 88 - 3292). Freshers' Camp. During the camp law students were introduced with the legal studies and lawyers' organisations in Lithuania. Andrius 5. Resolution of the Government of the Republic of Lithuania No. 695 of June Mamontovas, former Secretary General of ELSA Lithuania, shared 23, 2005 “Concerning the Resolution of the Government of the Republic of his experience on ELSA activities in Lithuania. Lithuania No 534 of April 15, 2002 `Concerning the approval of the rules of the cadastre of the real estate of the Republic of Lithuania” (Announced: State More news and updates are available on our website at Gazette, 2005, No. 80 - 2899). www.splegal.lt

The produced review of legal acts is provided for informational purposes and should not be construed as legal opinion or advice. For more detailed information we kindly ask you to contact Mr. Rimtis Puišys by phone 8 5 2392373 or by e-mail: [email protected] 3 © Law firm Saladžius & Partners, 2005