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Banking Law Review May- September 2016
I. CASE-LAW CONSIDERATIONS REGARDING THE ELECTRONIC ENTRY INTO CREDIT AGREEMENTS
On 11 May 2016, the Chamber of Judges of the Supreme Court of Lithuania spoke on the electronic entry into service agreements and explicated the case-law on the matters of validity of consumer credit agreements. It has been established in the case at issue that the respondent has disclosed authentication information to the members of his family. One of the family members to whom the said information has been disclosed has unlawfully electronically entered into a consumer credit agreement on behalf of the respondent and has failed to repay the granted consumer credits. The failure to repay the consumer credit has caused damages to the granting financial institution. The Supreme Court of Lithuania has investigated the case and has stated that damages must be paid not by the third party who has used personal data, but by the respondent who has disclosed his authentication information and, thus, has acted with negligence as he has failed to ensure the safety and non-disclosure of the said information.
II. CASE-LAW CONSIDERATIONS OF INSURANCE LAW ISSUES
On 3 June 2016, the Chamber of Judges of the Supreme Court of Lithuania spoke on the right of the policyholder to lodge a claim regarding the payment of insurance benefits in the event the beneficiary is stated in the insurance contract. In this case the factual circumstances resulted in the property insurance contract being concluded by the policyholder and the insurer. The leasing company the leased property of which was covered by the insurance was stated as the beneficiary in the insurance contract. Once the insured event (a fire which damaged a part of the leased property) occurred, the policyholder lodged a claim against the insurer regarding the award of respective parts of insurance benefits to be paid to him (being the policyholder) and the lessee (being the beneficiary). The Supreme Court of Lithuania investigated the case, quashed the ruling of the Lithuanian court of appeal instance and stated that, first, in the case at issue the policyholder was entitled to lodge a claim (the Court of Appeal of Lithuania has interpreted to the contrary); second, in the event the insurance benefit receivable by the beneficiary covers the damages sustained by the beneficiary, i.e. the leasing company, the policyholder is entitled to receive the remaining amount of the insurance benefit. This means that the insurance coverage is also applicable to the policyholder to a certain extent, and the policyholder has independent insurance interest and the resulting rights.
III. CASE-LAW CONSIDERATIONS REGARDING THE TERMS OF GUARANTEE PAYMENT
On 17 June 2016, the Supreme Court of Lithuania established the explicit and strict case-law relating to the interpretation of law on guarantee payment matters. Speaking on the right of the guarantor to refuse to make guarantee payments under the guarantee on request the Court pointed out that the guarantor shall have an undisputed right to refuse to grant the creditor’s claim in the event the creditor’s claim or supporting documents do not comply with the terms and conditions of the guarantee.
IV. CASE-LAW CONSIDERATIONS REGARDING THE RIGHTS OF SHAREHOLDERS OF A COMPANY
On 26 September 2016, the Supreme Court of Lithuania provided its response to the question whether a controlling shareholder of a company shall have a special legal capacity to initiate the investigation of operations of the legal entity pertaining to the period when such shareholder was not a shareholder of the company. In the case at issue the Court stated that the legislator provides the right to a shareholder to initiate an investigation of a legal entity pertaining to the period when such shareholder was not yet a shareholder. In addition, the Supreme Court of Lithuania stated that in such cases the investigation of a legal entity can be initiated if the investigation of the operations of the legal entity pertaining to the period established at the Court’s discretion is likely to solve the conflict of interest groups within the company and to ensure a more transparent continuation of operations.
V. AMENDMENTS TO THE LAW ON THE CENTRAL CREDIT UNION AND THE LAW ON CREDIT UNIONS
On 30 June 2016, the Seimas adopted amendments to the recast Law on the Central Credit Union and the Law on Credit Unions.
Pursuant to the new Law on the Central Credit Union, the right to establish the central credit union is granted not only to the associated investor and the state but also to at least 5 credit unions, provided their accumulated total assets are at least EUR 50 million and provided the assets of the largest credit union that establishes the central credit union do not exceed 50% of the accumulated total assets of credit unions that establish the central credit union.
Pursuant to the new Law on Credit Unions, credit unions must not only provide the licensed financial service prescribed by this law, viz. accept deposits and other repayable funds from non-professional participants of the market, but the provision of non-licensed financial services are subject to additional regulation.
Based on the data provided by the Seimas of the Republic of Lithuania
VI. DESCRIPTION OF THE REVIEW OF QUALITY OF ASSETS OF CREDIT UNIONS AND THE CENTRAL CREDIT UNION HAS BEEN APPROVED
On 17 August 2016, the Board of the Bank of Lithuania approved the description of the review of quality of assets of credit unions and the Central Credit Union organised by the Bank of Lithuania. It established the principal requirements and procedures for the review of quality of assets of credit unions. It also specified the duties and liabilities of persons involved in the asset quality review, the process of the review of quality of assets of credit unions, controls and the procedure for drawing up of reports.
Based on the data provided by the Bank of Lithuania
CO-AUTHORS OF THE PUBLICATION:
Kazimieras Karpickis
Head of practice group
Tel.: +370 5 2487467
Mob. Tel.: +370 616 16619
E-mail: kazimieras.karpickis@leadell.com
Fausta Šimonėlytė
Associate
Tel.: +370 5 2487467
Mob. tel.: +370 616 16665
E-mail: fausta.simonelyte@leadell.com
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