Rules for Managing the Database of Credit Risk

      Amended On 6 March 2008, the Board of the Bank of Lithuania by its Resolution No. 25 “On Amending Resolution No. 125 of the Board of the Bank of Lithuania, dated 21 December 1995 "On Approval of the Rules for Managing the Database of Credit Risk"“ (official gazette Valstybės Žinios, 2008, No. 31-1113) amended the Rules for Managing the Database of Credit Risk (hereinafter referred to as the “Rules“). The amended Rules will come into effect on 30 June 2008. The Rules were amended taking into account that the banks have been expanding their activities, there is a need for additional information to be provided to and received in the database of credit risk, also taking into account banks’ requests to stop submission of certain data as they are not material for establishing the borrower’s possibilities to fulfil obligations to the bank. It has been established that only the data of annual financial statements of the borrowers are to be submitted to the database of credit risks. Earlier, there was a duty to submit information on holders of the controlling interest or five major shareholders to the database of credit risks. This requirement has been waived in view of the fact that such information is not significant for establishing whether the borrower will be able to fulfil its obligations to the bank in time. The amended Rules provide that banks, if they present a brief enquiry of the first type about the borrower, will be entitled to a brief answer, too.

      The Government‘s proposal regarding amendments to the Law on Gaming of the Republic of Lithuania On 12 March 2008 the Government of the Republic of Lithuania adopted Resolution No. 233 “On Draft Law No. XP-1060 on Supplementing of the Law on Gaming of the Republic of Lithuania with Article 101, On Draft Law No. XP-2400 on Amendments to Article 10 of the Law on Gaming of the Republic of Lithuania, On Draft Law No. XP- 2645 on Supplementing of the Law on Gaming of the Republic of Lithuania with Article 31 and 251“ (official gazette Valstybės Žinios, 2008, No. 33-1178) (hereinafter referred to as the “Resolution”). The Seimas of the Republic of Lithuania was suggested in the Resolution to:

      (i) Supplement the Law with Article 101 providing for responsibility of the gaming organisers to post notices warning that immoderate gambling may lead to addiction to gambling; that persons included in the register of persons who have requested not to be allowed to gamble, are not permitted to gamble or stay in the places where gambling is being organised.

      (ii) Supplement the Law with Article 102, providing for the right of each natural person to submit application requesting not to be allowed to gamble and indicate the term during which such person would not be allowed to gamble. Such a person would be included in the register established by the State Gaming Control Commission, listing the persons who have submitted applications requesting not be allowed to gamble. From such right of each natural person the duty of gaming organisers arises to prevent such persons from entering.

      (iii) Disapprove supplementing of the Law with Articles 31 and 251, according to which establishment of places where gaming is organised and the number thereof depends on the number of inhabitants in the territory of a county. Reasons for disapproval:

       (a) there are no explicit criteria defining which gaming organiser would be given a permit to open a place for organising gaming if the set ratio of gaming places permitted to be established and the number of inhabitants was less than the number of applicants;

      (b) not clear who, under what terms and following what procedure would inspect the number of inhabitants as well as the ratio of gaming places and the number of inhabitants; who and following what procedure would reconsider the number of places where gaming is organised;

      (c) it is questionable whether such regulation limiting the freedom of establishment and freedom to provide gaming services is not in breach of Articles 43 and 49 of the EC Treaty. The above amendments to the Law on Gaming of the Republic of Lithuania are expected to come into effect on 1 July 2008.

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      New Form of the Quarterly

      Statistical Report on Main Corporate Financial Ratios Approved On 28 February 2008, the Director General of the Department of Statistics under the Government of the Republic of Lithuania adopted Order No. DĮ-68 “On Approval of the Form of the Quarterly Statistical Report on Main Corporate Financial Ratios“ (official gazette Valstybės Žinios, 2008, No. 27-1013) (hereinafter referred to as the “Order“), by which form F-01 of the quarterly report on financial ratios was approved. The Order came into effect on 7 March 2008. The Order superseded Order No. DĮ-63 of the Director General of the Department of Statistics under the Government of the Republic of Lithuania, dated 27 February 2007 “On Approval of the Form of the Statistical Report on Main Corporate Financial Ratios“ (2007, No. 28-1049). Pursuant to paragraph 2 of Article 14 of the Law on Statistics of the Republic of Lithuania, legal persons must gratuitously provide statistical data for fulfilment of the Official Statistics Work Program. New Form of the Statistical Report on Business and Financial Activities of a Non‐profit Organisation Approved On 26 February 2008, the Director General of the Department of Statistics under the Government of the Republic of Lithuania adopted Order No. DĮ-63 “On the Statistical Report on Business and Financial Activities of a Non‐profit Organisation“ (official gazette Valstybės Žinios, 2008, No. 26-957) (hereinafter referred to as the “Order“), by which form F-16 of the statistical report on business and financial activities of a non‐profit organisation was approved. The Order came into effect on 5 March 2008. The Order superseded Order No. DĮ-67 of the Director General of the Department of Statistics under the Government of the Republic of Lithuania, dated 28 February 2007 “On Approval of the Form of the Statistical Report on Business and Financial Activities of a Non‐profit Organisation“ (official gazette Valstybės Žinios, 2007, No. 28-1052). Pursuant to paragraph 2 of Article 14 of the Law on Statistics of the Republic of Lithuania, non‐profit organisations also must gratuitously provide statistical data for fulfilment of the Official Statistics Work Program.

      New Price Caps for Preparing Pharmaceutical Preparations in a Pharmacy

      Approved On 14 March 2008, the Minister of Health of the Republic of Lithuania by his Order No. V-194 (official gazette Valstybės Žinios, 2008, No. 32-1125 ) approved “Price Caps for Preparing Pharmaceutical Preparations in a Pharmacy“ (hereinafter referred to as the “Price Caps“). The Price Caps will come into effect on 18 April 2008. After the Price Caps come into effect, Order No. 419 of the Minister of Health of the Republic of Lithuania, dated 1 August 2001 “On Approval of Maximum Tariffs for Preparing and Packing Medicines in Pharmacies“ will lose effect. The Price Caps are applicable in calculating the sale prices of reimbursable extemporaneous pharmaceutical preparations in a pharmacy. Meanwhile, the sale prices of non-reimbursable extemporaneous pharmaceutical preparations in a pharmacy are established by pharmacies themselves. In comparison with prices of preparations prepared in pharmacies, as established by the Minister of Health of the Republic of Lithuania in 2001, the Price Caps have been increased by 30 to 100 percent. The groups of preparations prepared in pharmacies for which these prices are established have not changed.

      The Court of Justice of the European Communities proposed the introduction of the urgent preliminary ruling procedure

      On 3 March 2008 the Court of Justice of the European Communities proposed the introduction of a new form of procedure: the urgent preliminary ruling procedure. This procedure is applicable as from 1 March 2008 and should enable the Court to deal far more quickly with the most sensitive issues relating to the area of freedom, security and justice, such as those which may arise, for example, in certain situations where a person is deprived of his liberty and the answer to the question raised is decisive as to the assessment of the legal situation of the person detained or deprived of his liberty, or, in proceedings concerning parental authority or custody of children, where the jurisdiction under Community law of the court hearing the case depends on the answer to the question referred for a preliminary ruling. Three important features distinguish the new procedure from the ordinary preliminary ruling procedure. In the first place, with the aim of speeding up the process, the urgent preliminary ruling procedure makes a distinction between the persons who may participate in the written stage of the procedure and those entitled to participate in the oral stage. In the new procedure, only the parties to the main proceedings, the Member State of the court making the reference, the European Commission and, if appropriate, the Council and the European Parliament (if one of their measures is at issue) are authorised to lodge written observations in the language of the case within a short period of time. The other interested persons and, in particular, the Member States other than that of the referring court, do not have that opportunity but are invited to a hearing at which they may, if they wish, submit their oral observations on the questions referred by the national court and on the written observations lodged. In the second place, the internal handling of cases under the new procedure is accelerated considerably, as all cases falling within the area of freedom, security and justice are, as soon as they reach the Court, referred to a Chamber of five judges specifically designated for a period of one year to be responsible for the screening and processing of such cases. If that Chamber decides to allow a request for the urgent procedure to be applied, it will go on to give its ruling shortly after the hearing, and after hearing the Advocate General. Finally, to ensure the desired expeditiousness, the procedure.

      The Constitutional Court spoke on prohibiting charter carriers from collecting passengers at places bordering with bus stations

      On 5 March 2008, the Constitutional Court of the Republic of Lithuania had passed a ruling “On Compliance of Paragraph 4, Article 18 of the Road Transport Code of the Republic of Lithuania (wording of 23 December 2005) with the Constitution of the Republic of Lithuania” in case No. 31/06-08/07 (official gazette Valstybės Žinios, 2008, No. 28-1018). Having examined the compliance of the Road Transport Code of the Republic of Lithuania with Article 46 of the Constitution to the extent whereby it is established that the charter carriers are prohibited from picking up and carrying groups of passengers from streets and places bordering with bus stations, the borders of which are established by municipal authorities, the Constitutional Court had ruled as follows:

      (i) Differentiation between regulation of legal relations in connection with carrying of passengers on regular itineraries and relations in connection with carrying of passengers on chartered itineraries should not be considered creating of conditions for unfair competition.

      (ii) In any case charter carriers may carry only such groups of passengers which had been formed having in advance submitted to the carrier an order and having in advance signed with the carrier an agreement on carrying. The charter carriers are prohibited from carrying groups of passengers picked up on the spot and leaving right away (quasi by charter carrier), i.e. groups of passengers which had been formed without a prior order to the carrier and without signing with it a prior agreement on carrying.

      (iii) A group formed of people waiting for regular carriers in the territory of a bus station or in its vicinity and in other specially designed places, as well as other persons, regarding carrying of whose a prior order has not been presented to the carrier, and agreement on carrying has not been concluded, may not be considered a passengers‘ group formed in advance.

      (iv) The prohibition set forth in the said Article of the Road Transport Code shall not be interpreted as charter carriers’ prohibition from picking up in the said territories and carrying of groups of passengers formed in advance, which comply with the definition of the group of passengers assembled in advance set out in the Road Transport Code.

      (v) The responsibility of municipal authorities to define the boundaries of streets and territories bordering with bus stations, wherefrom collecting and carrying of groups of passengers by charter carriers is prohibited, is deemed superfluous. Such boundaries do not signify anything since the charter carriers do not have the right to carry groups of passengers picked up on the spot and leaving right away (quasi by charter carrier) anyway, even without such prohibition being established.

      (vi) There is no basis for allegations that the prohibition set fort in the said Article of the Road Transport Code is in breach of freedom of fair competition, distorts competition in the market of carrying of passengers and creates conditions for monopolising the market. With regard to the above, the Constitutional Court has ruled that Paragraph 4 of Article 18 of the Road Transport Code of the Republic of Lithuania, is not in contradiction to Article 46 of the Constitution to the extent whereby it is established that the charter carriers are prohibited from collecting and carrying groups of passengers from the streets and territories bordering with bus stations, the borders of which are defined by municipal authorities.

      New Resolutions Implementing the Law on Collective Investment Undertakings Adopted On 14 March 2008, the Securities Commission of the Republic of Lithuania, implementing the new version of the Law on Collective Investment Undertakings (official gazette Valstybės Žinios, 2007, No. 117-4772), which provides for a possibility for management companies, in addition to currently existing regulated collective investment undertakings, to establish special (real estate, hedge, private capital, etc.) collective investment undertakings, the activities of which are not regulated on the EU level, as well as for a possibility to establish investment companies of the closed-ended type, adopted these resolutions:

      1. No. 1K-6 “On the Rules for Issuing, Amending and Cancelling of Licences for Activities of the Management Company and Investment Company” (official gazette Valstybės Žinios, 2008, No. 35-1271). The resolution establishes that management companies which, in addition to current activities are going to engage in management of special collective investment undertakings, will have to apply for supplementing their licence of a management company. The decision on licence supplementing will be taken by the Securities Commission within 3 months as of the submission of all the required data and documents. The resolution came into effect on 28 March 2008.

      2. No. 1K-7 “On Amending Resolution No. 1K-10 of the Securities Commission of the Republic of Lithuania, dated 22 March 2007 “On Approval of the Rules for Capital Adequacy Requirements for Financial Brokerage Companies and Management Companies““ (official gazette Valstybės Žinios, 2008, No. 32-1140). It provides for specific requirements for the initial capital of management companies, without relating it to the amount fixed in the rules for issuing and cancelling licences for activities of a management company and an investment company with variable capital. The initial capital of an equivalent of at least EUR 125,000 in litas is fixed for management companies existing under the Law on Collective Investment Undertakings, an equivalent of at least EUR 150,000 in litas is fixed for management companies existing under the Law on the Additional Voluntary Accumulation of Pensions, and it has been established that both the initial and the authorised capital of management companies managing pension funds where a part of the state social insurance contribution is accumulated must be an equivalent of at least EUR 300,000 in litas.

      A provision was added to the resolution on capital adequacy providing for a requirement for management companies, the value of assets managed by which exceeds EUR 250,000,000, to increase the capital of the company by the amount which must be at least 0.02% of the vale of the managed assets above EUR 250,000,000, and to keep it increasing in this way until the capital of the company reaches EUR 10,000,000. The resolution came into effect on 19 March 2008.

      3. No. 1K-8 “On Approval of Rules for Use of Benchmarks“ (official gazette Valstybės Žinios, 2008, No. 32-1141). The resolution was adopted implementing provisions of the Law on Collective Investment Undertakings and the Law on the Accumulation of Pensions, obligating regulated collective investment undertakings and pension funds where a part of the state social insurance contribution is accumulated to use a benchmark. The resolution sets forth the procedure of selection, changing, announcement and calculation of benchmarks.

      One or several universally recognised and widely used stock and bond indexes formed by independent persons, that will have to be selected by management companies according to investment types, their proportions, investment region provided for in the investment strategy of each managed pension fund or collective investment undertaking, can be selected as a benchmark. Benchmarks are intended for comparing financial results (return) of pension funds or collective investment undertakings with the return of markets of financial instruments where investments are made. Benchmarks have to create a possibility for the public to properly evaluate financial results of a pension fund or collective investment undertaking, the investment management efficiency, not to mislead existing and potential participants. Management companies will have to give graphs on their websites and compare changes in the value of an accounting or investment unit with changes in the benchmark value, and in case of substantial differences – to give related explanations. Other indexes announced in annual reports (standard deviation, alpha, beta) will give investors a possibility to evaluate the risk of the fund and competence of the fund manager. According to the resolution on use of benchmarks, alpha is an index which shows the difference between the change in the value of a unit of a pension fund or collective investment undertaking and the change in the benchmark value in case of a comparable risk level; beta is an index which shows the extent of a change of the value of a unit of a pension fund or collective investment undertaking in case of a change of the benchmark value; standard deviation is a statistical risk index which shows the extent to which changes in the unit value fluctuate or the extent to which changes of the benchmark value fluctuate in comparison with their average change. The resolution came into effect on 19 March 2008. On 28 March 2008, the Securities Commission of the Republic of Lithuania, implementing the new version of the Law on Collective Investment Undertakings (official gazette Valstybės Žinios, 2007, No. 117-4772), adopted these resolutions:

      1. “On Approval of the Rules for the Content of Prospectuses of Collective Investment Undertakings”; The Rules for the Content of Prospectuses of Collective Investment Undertakings (hereinafter referred to as the “Rules”) establish requirements for the content of the full and short prospectus of special collective investment undertakings. The Rules provide that an umbrella collective investment undertaking must have a common full prospectus, whereas short prospectuses can be prepared for each separate sub-fund. Please note that it is no longer necessary to obtain an approval of the Securities Commission for minor amendments and additions to prospectuses, but it is required to inform the Securities Commission about them, by presenting relevant documents and pointing out the modifications. Minor amendments to prospectuses are considered to be updates in connection with changes in addresses, telephone, fax numbers, names and surnames of individuals, e-mail and website addresses; updates of the historic data and indexes of activities during a previous period; updates of information about other holdings; other amendments of editing character (changes in sentence structures or of certain words when that do not change the meaning and essence of previously given information); inclusion or removal of information about distributors of units or shares of the undertaking, except for inclusion of information about foreign distributors of units of the undertaking.

      2. On Approval of the Procedure of Issuing Permits Provided for in the Law on Collective Investment Undertakings and in the Law on the Additional Voluntary Accumulation of Pensions; The Procedure of Issuing Permits Provided for in the Law on Collective Investment Undertakings and in the Law on the Additional Voluntary Accumulation of Pensions (hereinafter referred to as the “Procedure“) establishes the procedure of approving and amending the summary of the constitutional documents of collective investment undertakings: the summary of the constitutional documents will be approved or amended together with other constitutional documents. Besides, amendments to prospectuses will be approved not within 3 business days but within a general term of 15 days for issue of a relevant permit, as indicated in the Law on Collective Investment Undertakings. The Procedure regulates the issue of a permit for merging investment funds managed by management companies. It is provided that such a permit must be obtained before the investment funds are merged, upon submission of information indicated in the Procedure to the Securities Commission.

      3. On Amending and Supplementing the Methods of Calculation of the Net Asset Value. The amendments to the Methods of Calculation of the Net Asset Value are related to a possibility provided for in the Law on Collective Investment Undertakings for collective investment undertakings to invest not only into liquid securities, but also to alternatives investment instruments: real estate; securities issued by companies securities of which are not traded in regulated markets or special collective investment undertakings investing into such instruments. Therefore, it became necessary to provide for ways and methods of evaluation of new investment instruments. The amendments set forth a requirement to ensure the independence of persons determining the value of such instruments from the influence of persons taking investment decisions, to give details of ways of managing the risk related to improper evaluation, ways of solving issues not provided for in the procedures, etc. The procedures of calculation of the net asset value of active pension funds and collective investment undertakings will have to be brought in line with the amendments to the Methods of Calculation of the Net Asset Value no later than on 1 July 2008. All the above-mentioned resolutions will come into effect on the next day after they are published in the official gazette Valstybės Žinios, unless such resolutions set a later date.

      More safety on our roads ‐ equal treatment of resident and non‐resident drivers

      On 19 March 2008 the European Commission adopted a proposal for a Directive aimed at facilitating the cross-border prosecution of traffic offences which imperil road safety. Technical measures and legal instruments are to be put in place which will enable EU drivers to be identified and thus prosecuted for offences committed in a Member State other than the one where his or her vehicle is registered. As things stand today, a driver committing an offence under the highway code in a car registered in another country of the European Union evades prosecution, with very few exceptions, because of the difficulty of identifying them or of being able to check the address to which the vehicle is registered. This evasion of the law not only jeopardises road safety but is also discriminatory with respect to residents committing similar offences, who are exposed to penalties. To remedy this situation, the Commission would like to see a system introduced within the EU which will make it easier to deal across national borders with offences that are frequently the cause of accidents. A European network for the electronic exchange of data will make it possible to send notices of offences to other countries. Although this will require Member States to set up appropriate administrative instruments, it will result in a simpler procedure than today’s manual approach. The proposed Directive will cover four types of traffic offence: speeding, driving under the influence of alcohol, non-use of a seat belt and failing to stop at a red traffic light.