Licensing and supervision

Public marketing of investment units or shares in the Republic of Lithuania of collective investment undertakings (UCITS) established in foreign States

23/05/2007 | Licensing and supervision

The notification procedure and the applicable requirements are established in Article 61 of the Law on Collective Investment Undertakings of the Republic of Lithuania (Official Gazette, 2003, No. 74-3424), and items 61-69 of the Rule on the Issuance and the Revocation of the Licenses for Management Companies and the Investment Companies with Variable Capital (hereinafter – the Rules).

For the purpose of the executing the notification procedure the Securities Commission of the Republic of Lithuania (hereinafter – the Commission) acts in accordance with the Guidelines to simplify the notification procedure of UCITS of the Committee of European Securities Regulators (hereinafter – the Guidelines). See the Guidelines in the English language by clicking on the link.

The concept of „public marketing“

The procedure for the notification of the Commission of an intention of a collective investment undertaking established in a foreign State to market its investment units or shares in the Republic of Lithuania shall be applied only the PUBLIC marketing of the investment units or shares.

Article 29(2) of the Law on Collective Investment Undertakings of the Republic of Lithuania defines public offering of units or shares as:

1. offering of units or shares over the media, in advertisements; or

2. when addressing over 100 persons.

Documents to be submitted to the Securities Commission

A collective investment undertaking intending to market publicly in Lithuania its investment units or shares (hereinafter – investment units) shall furnish with the Securities Commission the following documents:

1. A notification letter of an established form (model form provided in Annex II of the Guidelines);

2. A valid attestation of the registered supervisory authority of the home Member State of the compliance of the foreign collective investment undertaking with the requirements of the legal acts of the European Union (model for provided in Annex I of the Guidelines);

3. Instruments of incorporation of the collective investment undertaking intending to market its investment units (regulations, articles of association, etc.);

4. Full and simplified prospectus;

5. The most recent published annual report of the collective investment undertaking and the semi-annual report where such has been drawn up following the annual report;

6. The procedure for the marketing of the investment units or shares comprising a specific information related to the marketing of investment units or shares of a collective investment undertaking in the Republic of Lithuania (recommended to be submitted in the form specified in Annex VIII of the Rule);

7. A copy of the contract concluded with the distributor of the investment units;

8. A document certifying the payment of the stamp duty.

Submission of documents

All the above documents shall be furnished to the Securities Commission in a single copy and approved by signatures of responsible persons.

Requirements to the translation of the documents

All the above documents must be submitted in the original language with an accompanying translation thereof into the Lithuanian language except the valid attestation of the registered supervisory authority of the home Member State (see item 2) that may be submitted in the English language.

Stamp duty

The stamp duty for the examination of the documents of collective investment undertakings licensed in a Member State of the European Union submitted with a view to publicly marketing of the investment units in the Republic of Lithuania (per each sub-fund individually) is LTL 1,700.

The commencement of the public marketing of investment units

A management company may commence marketing the investment units or shares of a collective investment undertakings complying with the requirements of the legal acts of the European Union after the receipt of the confirmation that the Securities Commission had familiarised itself with all the documents submitted by the collective investment undertakings and does not object to the procedure of the public marketing of the investment units or shares in the Republic of Lithuania.

In the event the Commission does not furnish the confirmation, a management company or an investment company with variable capital may commence marketing their investment units or shares in two months after the Commission has been furnished the complete information set forth in item 61 of the Rule on the Issuance and the Revocation of the Licenses for Management Companies and the Investment Companies with Variable Capital.

Upon receipt of the complete information and the documents the Commission shall not later than within one month notify the management company or the collective investment undertaking thereof and shall indicate the date of the receipt of the documents and the date starting from which the public marketing of the investment units in the Republic of Lithuania may be commenced unless the Commission passes a negative decision.

The public marketing of the investment units or shares in the Republic of Lithuania may not be commenced where the Commission, exercising its right established in Article 61(3) of the Law on Collective Investment Undertakings, within two months from the date of the receipt of the complete information resolves not to authorise the public marketing of the investment units for one or several of the below reasons:

1. The procedure for the marketing of the investment units in the Republic of Lithuania contradicts the legal acts of the Republic of Lithuania;

2. The procedure for the marketing of the investment units in the Republic of Lithuania cannot ensure a fair disbursement of the funds generated from the redemption of the investment units or shares;

3. The procedure for the marketing of the investment units in the Republic of Lithuania cannot guarantee an appropriate provision of information.

Termination of the public marketing of investment units

According to Art. 5h(a)(b) of the Directive and provisions of the Law on Collective Investment Undertakings (items 1-2 of paragraph 1 of Art. 9) management and investment companies are obliged to act in the best interest of collective investment undertaking as well as their investors. As for the time being, the renouncement of the distribution of units or shares of collective investment undertaking in Lithuania does not require any specific administrative proceedings or permits from the Lithuanian Securities Commission.

Still, foreign collective investment undertakings publicly marketing their investment units or shares in the Republic of Lithuania are recommended to notify the Lithuanian Securities Commission and all the existing unit holders who have acquired units of a foreign collective investment undertaking on the course of public offering in Lithuania of their intention to cease the public marketing of the units. Moreover, reference to the legal consequences of such termination should also be made (e.g. relating to the right of unit holder to requite redemption of the units; the right to acquire information concerning the collective investment undertaking etc.). Moreover management companies and investment companies are recommended to assure that the rights of existing unit holders, who have acquired units or shares of collective investment undertaking on the course of public marketing in Lithuania, are secured after the renouncement of distribution (for example, the possibility of unit holders to demand redemption and receive payment of the amount which corresponds to the unit as well as acquire the information concerning the collective investment undertaking).

Other requirements of national regulations applicable to the public marketing of the investment units of shares

Other specific national regulations and the requirements applicable to the marketing of investment units or shares and the activities related thereto are defined in Annex III of the Guidelines.