Lithuania

These are some of the most important institutions and regulations for participants in the Lithuanian market:

Regulatory authority
The Vilnius Stock Exchange, now part of the OMX Baltic Market, was established by the state and is essentially a self-regulating entity, although the Securities Commission oversees it. It has

CSDL - Central Securities Depository of Lithuania
Lietuvos Centrinis Vertybiniu Popieriu Depozitoriumas (CSDL) is the Central Securities Depository of Lithuania. It is the central depository for all equity and debt securities traded on the public market in Lithuania through brokers. Securities introduces to the CSDL are dematerialised, may be held in book-entry form only, and cannot be rematerialised.

The National Stock Exchange of Lithuania
In October 1992 the resolution of the Government of the Republic of Lithuania regarding Provisional Regulations on Issuance and Public Trading of Securities and the Stock Exchange was passed. In May 2001 the exchange formally put on hold cooperation with the Nordic Alliance NOREX. December 2004 the Privatization Commission adopted the privatization program for the sale of 54.47% of the shares of the National Stock Exchange of Lithuania and 32% of the shares in the Central Securities Depository of Lithuania. In May 2004 OMHEX, Northern Europe’s largest securities market operator, and the Lithuanian State Property Fund (SPF) closed the transaction, whereby OMHEX purchased 44.30% of the shares of the National Stock Exchange of Lithuania and 32% of the shares in the Central Securities Depository of Lithuania.

The future of the Baltic Securities Market, the joint marketing and cross listing agreement between the three Baltic markets is unclear following the decision of Estonia and Latvia to join the HEX Group.

Taxation
Dividends paid by a Lithuanian resident company to a non-resident are subject to 15% withholding tax. The withholding tax is not applicable if the recipient has owned more than 10% of capital and voting shares in the Lithuanian company for at least 12 months. This exemption does not apply to companies registered in a statutorily designated low tax zone. An applicable double tax treaty may reduce the rate of withholding tax on the payment of dividends. Interest paid by a Lithuanian resident company to foreign companies is subject to withholding tax of 10%.

Investment restrictions
All securities traded in the public market are available to foreign investors. Foreign investors may not purchase shares in companies whose principal business is defence, pharmaceuticals, or lottery related, but these entities are generally not listed. Foreign investors wishing to acquire 10% or more of a Lithuanian bank’s shares must obtain prior approval from the central bank, a process that generally takes one month. It is the investor’s responsibility to seek and obtain this approval. If an investor inadvertently acquires more than 10% of the shares without prior central bank approval, the central bank may suspend the voting rights of the purchaser.

The substantial shareholder limits are set at 10%, 20%, 25%, 33%, 50%, 66% and 75% of total outstanding shares. The beneficial owner must disclose substantial shareholder acquisition to the Securities Commission and the issuer within seven days of exceeding the relevant limit.