The company\u2019s shareholder rights are regulated by the Civil Code of the Republic of Lithuania and the Law on Companies of the Republic of Lithuania.<\/p>\n
The Law on Companies of the Republic of Lithuania has been recently amended<\/strong>. These amendments are mainly related to the legal provisions of the company\u2019s shareholder rights and were made according to the indicators of World Bank and Organisation for Economic Co-operation and Development (OECD).<\/p>\n Some of the proposed changes, such as the limited majority shareholder right to receive the company\u2019s commercial\/industrial secret and\/or confidential information, came into force on 29 November 2017. Other proposed changes (i.e. the power of the supervisory board to consider and approve the business strategy of the company) took effect on 1\u00a0January 2018.<\/p>\n Taking into account the new rules in Lithuania, LEADELL law offices \u2013 LEADELL Bal\u010di\u016bnas & Grajauskas<\/strong> in Lithuania, LEADELL Pilv<\/strong> in Estonia and LEADELL Fogels & Vitols<\/strong> in Latvia prepared a comparative legal overview of national legal regulations in all three Baltic countries.<\/p>\n The shareholder\u2019s right to receive the company\u2019s commercial\/industrial secret and\/or confidential information<\/strong><\/p>\n One of the major amendments in the Law on Companies in Lithuania <\/strong>is related to the exercise of certain shareholder rights, i.e. the shareholders\u2019 right to receive information, and the company\u2019s duty to provide information about a company. The main changes are following:<\/p>\n <\/p>\n The absolute duty of a company to provide the company\u2019s commercial\/industrial secret and\/or confidential information to a shareholder or a group of shareholders holding or controlling more than \u00bd of shares (a majority shareholder) has been eliminated in Lithuania.<\/strong><\/p>\n For comparison, in Estonia<\/strong> the management board may refuse to give information or to present documents if there is a basis to presume that this may cause significant damage to the interests of the private limited company. If the management board refuses to give information or refuses to allow documents to be examined, the shareholder may demand that the legality of the shareholder’s demand be decided by the meeting of shareholders or to submit, within 2\u00a0weeks after receiving the refusal of the management board or, within 4\u00a0weeks after submission of the request if the management board has not responded to the request, a petition to a court in a proceeding on petition (in Estonian hagita menetlus<\/em>) in order to obligate the management board to give information or to allow documents to be examined.<\/p>\n Shareholders whose shares represent at least 1\/10 of the share capital may demand a resolution on conduct of a special audit (in Estonian erikontroll<\/em>) on matters regarding the management or financial situation of the private limited company, and the appointment of an auditor for the special audit by a resolution of the shareholders (may be also demanded through court, if necessary and only with good reason). The members of the management board and supervisory board shall enable the auditors for the special audit to examine all documents necessary for conduct of the special audit and shall provide necessary information. The auditors for the special audit shall preserve the business secrets of the private limited company. The auditors for the special audit shall prepare a report concerning the results of the special audit, which they shall present to a meeting of shareholders.<\/p>\n In<\/strong> Latvia<\/strong> shareholders are entitled to receive from the board of director\u2019s information on the company\u2019s activities, commercial\/industrial secrets, and have general right to access all the company\u2019s documents (commercial\/industrial secrets are not exempted). These shareholders rights may be restricted in each particular case by shareholders meeting\u2019s decision under suspicion that respective shareholder could misuse the acquired information against the company\u2019s interests, thus causing significant damage or loss.<\/p>\n Power to consider and approve the company\u2019s business strategy<\/strong><\/p>\n Another new amendment in the Law on Companies in Lithuania<\/strong> is related to a company’s body which has a power to consider and approve the company\u2019s business strategy. Before the amendments came into force, this power had been delegated to the board but currently it is a power of the supervisory board in case the company has the supervisory board.<\/p>\n The supervisory board now has a power to consider and approve the company\u2019s business strategy in Lithuania.<\/strong><\/p>\n For comparison, in Estonia<\/strong>, the approval of the business strategy is in the competence of the management board (i.e. if the private limited company does not have a supervisory board (in Estonian n\u00f5ukogu<\/em>), which not mandatory). If the company has a supervisory board, then the latter\u00a0 shall plan the activities of the company, organise the management of the company and supervise the activities of the management board. The supervisory board shall also approve the annual budget of the company unless the articles of association place this within the competence of the general meeting. The management board shall, in managing, adhere to the lawful orders of the supervisory board. Transactions which are beyond the scope of everyday economic activities may only be concluded by the management board with the consent of the supervisory board.<\/p>\n In<\/strong> Latvia<\/strong> the supervisory board is purely a supervising authority and shall enjoy competence to approve business strategy developed by board of directors, only if specifically set by the Articles of Association. Otherwise, approval of business strategy fully remains within the competence of board of directors.<\/p>\n Duty of the company manager to give information about events which may influence the company’s activities<\/strong><\/p>\n Also, according to the amendments in Lithuania<\/strong>, in some cases, the board decision should be approved by the general meeting of shareholders or the supervisory board (i.e. \u201cdecisions on the acquisition of the fixed assets where the price exceeds 1\/20 of the company\u2019s capital, unless the articles of association indicate another price<\/em>\u201d). Before these amendments came into force, in some cases, only the general meeting of shareholders had a right to approve the decision made by the board<\/p>\n Amendments of the Law on Companies in Lithuania<\/strong> provide also for other changes of legal provisions<\/strong>. For instance, the company manager has a duty to provide information about events which may influence the company’s activities to the board and the supervisory board. This differs from the regulation in Latvia and Estonia. In Latvia<\/strong> there does not exist a concept of \u201ccompany manager\u201d under the Commercial Law.<\/p>\n In Estonia<\/strong> the rights and obligations of the company manager (in Estonian tegevjuht<\/em>), if any, are not regulated by the Commercial Code but by employment law, and mainly, employment contract. At the same time at the management board level (and differently from Lithuania) the duty to provide information about events which may influence the company’s activities is very detailed in Estonia. If the private limited company has\u00a0supervisory board, then the management board<\/p>\n shall present an overview of the economic activities and economic situation of the company to the supervisory board at least once every 4 months and shall immediately give notice of any material deterioration of the economic condition of the company or any other material circumstances related to the economic activities of the company in Estonia. The management board shall also notify of any circumstances concerning related companies that may significantly affect the operation of the private limited company.<\/p>\n <\/p>\n COMPARATIVE TABLE:<\/strong><\/p>\n A table of comparison between the Lithuanian, Latvian and Estonian regulations of the company\u2019s shareholder rights related to the changes discussed above:<\/em><\/p>\n\n