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    Legal Updates

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    Law Update June 2004
    Lideika, Petrauskas, Valiūnas & Partners
    June, 2004
    Articles:
    Company Law (Lithuania)

          On 27 April 2004 the Parliament adopted Law No IX-2168 on Amending of Articles 1722, 224, 2591 of the Code of Administrative Violations of Law and its Supplementing with Article 17227. Article 1722 of the Code of Administrative Violations of Law sets out that the filing with the register of false documents,

          data or any other relevant information of a legal entity, its affiliate or representative office, an affiliate or representative office of a foreign legal entity or any other organisation, or failure to file with the register, on due time and subject to the

          procedure prescribed by laws, any documents, data or any other relevant information of a legal entity, its affiliate or representative office, an affiliate or representative office of a foreign legal

          entity or any other organisation, will incur on the manager of a legal entity, its affiliate or representative office, an affiliate or representative office of a foreign legal entity or any other organisation, or on any other person

          defined in laws or founding documents, the penalty in the amount from 100 to 5,000 litas. Article 17227 of the Code of Administrative Violations of Law also prescribes that failure to include any mandatory information in the documents of a legal entity, its affiliate or

          representative office, an affiliate or

          representative office of a foreign legal entity or any other organisation, which are used in relations with other entities, will incur on the manager of a legal entity, its affiliate or representative office, an affiliate or representative office of a foreign legal entity or any other organisation, or on any other person

          defined in laws or founding documents, the penalty in the amount from 100 to 1,000 litas. On 29 April 2004 the Parliament adopted Law No IX-2199 on European Companies. This law

          regulates the change of location of the

          registered office, incorporation, management and reorganisation of legal entities which in their legal form are European companies. This law ensures the application of the EU Council

          Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company. European companies which are domiciled in

          the Republic of Lithuania will be subject mutatis mutandis to legal norms of the Republic of Lithuania regulating public companies to the extent permitted and unless otherwise prescribed by the abovementioned regulation, this law and other legal acts which govern

          European companies. The Law will come into effect as of 8 October 2004.

    Competition Law (EU)

          COMPETITION LAW

          On 1 May 2004 Commission Regulation (EC) No 802/2004 of 7 April 2004 implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings entered in force. It has approved a set of standard documents to be used to notify mergers to the Commission: Form CO for the notification of concentration, short form CO for the notification of concentration unlikely to raise competition concerns and Form RS for Reasoned Submissions for pre-notification referral under Articles 4(4) and 5 of the implemented regulation.

    Customs Law (Lithuania)

          CUSTOMS LAW

          On 26 April 2004 the Director of the Customs Department by Order No 1B-403 approved the Rules of Issue of Permits to Apply the Procedure for Temporary Import for Processing.

          On 26 April 2004 the Director of the Customs Department by Order No 1B-404 approved the Rules of Issue of Permits to Apply the Procedure for Temporary Export for Processing.

          On 26 April 2004 the Director of the Customs Department by Order No 1B-405 approved the Rules of Issue of Permits to Apply the Procedure for Processing under Customs Supervision.

    Data Protection (EU)

          On 28 May 2004 an International Agreement on Passenger Name Records (PNR) was signed by the EU and US. It entered into force with

          immediate effect. The agreement was signed in Washington DC by US Secretary for Homeland Security Tom Ridge, Ambassador Noel Fahey of

          Ireland representing the EU Presidency, and Ambassador Guenter Burghardt, Head of the European Commission Delegation in Washington.The document sets forth the conditions for the transfer of air passenger data by the airlines to the US, as required by the US law enacted following 11 September 2001 events, thus ending a lengthy process of coordinating US and EU interests After extensive talks, on 11 May 2004 US issued a set of unilateral Undertakings. Based on these

          Undertakings, on 14 May 2004 the European Commission adopted a so-called "adequacy finding" required by the Data Protection Directive. The PNR agreement further provides for the obligation of the US Bureau of Customs

          and Border Protection to abide by its

          undertakings regarding the protection of

          transferred data. Also, the agreement ensures that the way in which PNR data is used by the US will not unlawfully discriminate against EU passengers and secures reciprocal support from the US for any European passenger indentification system that may be adopted in the future. It also includes a commitment to jointly and regularly review the implementation of the

          Agreement. LAW Although the European Parliament has applied to the European Court of Justice for an opinion on whether the Agreement was compatible with the Treaty of the European Community, this request is expected to become moot after the PNR agreement has been signed.

    Electronic Communications Law (Lithuania)

          On 15 April 2004 the Parliament adopted Law No IX-2135 on Electronic Communications. This law regulates public relations pertaining to electronic communication services, networks and related means and services, use of electronic communication resources, also public relations pertaining to radio equipment, terminal equipment and electromagnetic compatibility. Given that, the scope of regulation by this law has enlarged significantly as compared to the previous Law on elecommunications which on 1 May 2004 was superseded by the abovementioned law. The Law on Electronic Communications is aimed at regulating the operation of electronic communications of the Republic of Lithuania in 3 LIDEIKA, PETRAUSKAS, VALIŪNAS IR PARTNERIAI conformity with the requirements of up-to-date legal acts regulating the operation of EU

          electronic communications (telecommunications).

    Public Procurement

          On 4 May 2004 the European Commission published a Green Paper on public private partnerships (PPPs). PPPs are forms of cooperation between public authorities and, of business which aim to ensure the implementation infrastructure projects provision of services of use to the public. They can take the form of public procurement or of a concession in Lithuania. The Green Paper analyses PPPs with regard to EU law on public procurement and concessions. Under current EU law, PPPs created for contracts that qualify

          as "public contracts" must comply with the detailed EU public procurement directives. "Works concessions" are covered by a few scattered provisions of directives and "service concessions" are not covered by the EU directives at all. PPP contracts must in all cases also guarantee the freedom of establishment

          and the freedom to supply services for

          companies established throughout the EU and they must be based on the principles of transparency, equal treatment, proportionality and mutual recognition. In Lithuania, concessions are governed by the Law on Concessions which also implements the EU directives' requirements applicable to

          "works concessions". The aim of the Green Paper is to launch a debate to find out whether the EU needs to regulate the procedure how all PPP contracts (including concessions) are awarded. The Green Paper addresses both PPPs created on the basis of purely contractual links ("contractual PPPs"), and PPPs involving joint participation of a public partner and a private partner in a mixed capital legal entity ("institutional PPPs").

          Full text of the Green Paper is available at the following address:

          http://europa.eu.int/comm/internal_market/ppp. The Commission seeks comments from all interested parties until 30 July 2004 (comments may be sent by e-mail MARKT-D1-PPP@cec.eu.int). On 30 April 2004 Directive 2004/17/EC

          coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors (the Utilities Directive) and Directive 2004/18/EC on the coordination of procedures for the

          award of public works contracts, public supply contracts and public service contracts (the Public Sector Directive) have entered in force. They must be implemented in Member States not later than by 31 January 2006. The new Utilities Directive has replaced Directive 93/38/EEC. The Public Sector Directive has consolidated and replaced three previous directives governing procurement of works (93/37/EEC), services (92/50/EEC) and supplies (93/36/EEC). The new legislation seeks

          to simplify and modernise the existing rules. A new procedure providing for more extensive dialogue in awarding complex contracts has been introduced. Also, electronic procurement is facilitated: the new legislation provides for electronic means of procurement and tendering, eAuctions and dynamic purchasing systems.

    Tax Law (EU)

          The European Commission has launched an open consultation regarding a one-stop shop system, whereby a trader could fulfil his VAT

          obligations for his EU-wide activities solely in the Member State in which he is established. According to the present regulatory regime, the place of supply determines the Member State where tax obligations must be fulfilled. A taxpayer active in several Member States has therefore to meet his tax obligations in several countries, which entails additional time and financial costs. The Commission considers that a launch of a one-stop-shop system must simplify tax obligations of Community traders having cross-border activities. The consultation is open until 31 July 2004, with the view of making a legislative proposal taking into account its results in autumn. More information, including the consultation document, is available on the Internet at:

          http://europa.eu.int/comm/taxation_customs/consultations_en.htm.

    Tax Law (Lithuania)

          TAX LAW

          On 29 April 2004 the Parliament adopted Law No IX-2201 on Amending and Supplementing of Articles 5, 12, 26, 35, 36, 37, 53 of the Law on Profit Tax, its Supplementing with Articles

          371 and 372 and Supplementing of Annex 3 thereto. This law sets out the criteria and requirements for exemption from withholding tax on income (amounts) paid to a foreign entity

          or its permanent establishment. Also, the law regulates special conditions of taxation of a foreign entity's income from interest derived otherwise than through its permanent establishments in the Republic of Lithuania.

          On 29 April 2004 the Parliament adopted Law No IX-2202 on Amending and Supplementing of Articles 6, 17, 21 and 37 of the Law on Income Tax of Residents and Supplementing of

          Annex thereto. Considering the practice of the European Court of Justice and corresponding EC documents, this law has served to change the provisions relating to taxation of pensions under

          which taxation of payments to and from the Lithuanian pension funds was more favourable as compared to taxation of payments to and from foreign pension funds.

          On 30 April 2004 the Head of the State Tax Inspectorate by Order No VA-82 approved the Rules of Use of VAT Invoices Issued and/or Received by Electronic Means.

          On 30 April 2004 the Head of the State Tax Inspectorate by Order No VA-83 approved the Rules of Registration with the State Tax Inspectorate as a Surety and/or Guarantor.

          On 29 April 2004 the Director of the Customs Department and the Head of the State Tax Inspectorate by Order No 1B-439/VA-71 approved the Rules of Exemption of Goods Imported and Supplied to Another EU Member

          State from Import VAT.

    Trade Law (EU)

          On 18 April 2004 Regulation (EC) No

          1829/2003 of the European Parliament and of the Council of 22 September 2003 on genetically modified food and feed, and Commission Regulation (EC) No 641/2004 of 6 April 2004 on detailed rules for the implementation of Regulation (EC) No 1829/2003 of the European Parliament and of the Council as regards the application for the

          authorisation of new genetically modified food and feed, the notification of existing products and adventitious or technically unavoidable presence of genetically modified material which has benefited from a favourable risk evaluation, entered in force. The new regulations will facilitate preparing of applications for authorisation and notifications and their evaluation by national authorities.

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