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New Legislation

17 Oct 2017

The Board of the Bank of Lithuania adopted a resolution approving new accounting rules for financial instruments and their circulation (hereinafter - the Rules). The new Rules more clearly regulate the activities of financial instrument account managers and establish a simplified manner of accounting shares of joint-stock companies.

The main novelty is that new Rules eliminate the previously existing excessive requirement to register shares of joint-stock companies with the Central Securities Depository of Lithuania when the shares of joint-stock companies are transferred and the limits set out in Article 1.74 of the Civil Code of Republic of Lithuania are exceeded, i.e. when there is a sale of 25 percent or more shares or the sale price exceeds EUR 14,500, and the transaction is not notarised. The updated Rules contain only a mandatory requirement to transfer the management of shareholder’s personal securities accounts to the account manager. The account managers are subject to several requirements under the new Rules. For example, they must make sure that the transaction is made by authorized parties, as well as to ensure that the transaction meets the requirements for the transfer of relevant financial instruments and to ensure confidentiality.

Moreover, as of 1 January 2018, the new wording of clause 1.74 (1) (3) of the Civil Code of the Republic of Lithuania will come into force. It stipulates that a sale and purchase agreement of joint-stock company’s shares when selling 25% or more or the sale price exceeds EUR 14,500 can be concluded not in the notarial form, but in a simple written form. However, this exception will only be applicable if the personal securities accounts of the shareholders of a joint-stock company are transferred to the management of a legal entity authorised to open and manage personal accounts of financial instruments or if the shares of a joint-stock company are sold on the basis of privatisation of shares owned by the state or municipality.

The resolution of the Bank of Lithuania (in Lithuanian) can be found here. The new wording of Article 1.74 (1) (3) of the Civil Code of the Republic of Lithuania (in Lithuanian) can be found here.

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