Disclosure requirements – Lithuania
Disclosure Category: 2
In the case of holdings in Lithuanian securities, Clearstream Banking can be under an obligation, to disclose, or being asked to disclose the identity of beneficial owners holding applicable positions.
Consent
Clients are hereby deemed to consent to disclosure and to the appointment of the requestor (for example, but not limited to, the issuer or its agent) as their attorney-in-fact, under power of attorney, to collect from Clearstream Banking such information as is required to be disclosed. Clients not willing to give this consent cannot hold such securities and/or financial instruments in their account with Clearstream Banking.
Disclosure requirements
In line with local laws and regulations, such as the Law on Companies, the Law on Markets in Financial Instruments, the Law of the Republic of Lithuania on Financial Reporting by Undertakings and the Code of Administrative Offences effective 3 September 2020, as well as the Directive (EU) 2017/828 of 17 May 2017 and implementing Regulation (EU) 2018/1212, Clearstream Banking or its depository may be due to disclose holding information and details of beneficial ownership with respect to the Eligible Securities held with Clearstream Banking's securities account.
Background and legal basis
The Law on Markets in Financial Instruments of the Republic of Lithuania (Articles 10 and 67) establishes a notification obligation if a beneficiary owner intends to undertake the acquisition or increase of holding which result will cause the crossing of the thresholds described below.
Also, Articles 64, 65, 67, and 89 of the Law on Markets in Financial Instruments stipulate that accounts of clients of account managers registered in Member States or third countries may be opened in the name of the account managers, indicating that they act as account managers and that the account has been opened on behalf of the client. Account managers of Member States or third countries, upon request by the Supervisory Authority or the Central Securities Depository (Nasdaq CSD), shall disclose the clients on whose behalf the financial instruments have been acquired. This means that the CSD has a right to require and get such information at beneficial owner level.
Directive (EU) 2017/828 of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement (the second shareholder’s rights directive “SRD II”) has been transposed into the Law on Markets in Financial Instruments, the Law on Companies, the Law of the Republic of Lithuania on Financial Reporting by Undertakings and the Code of Administrative Offences in 27 June 2019, with entry into force on 3 September 2020 (SDR II Law).
Sanctions
Failure to fulfil instructions of the Supervisory Authority, not providing the Supervisory Authority with the information specified in this and other laws or hindering the Supervisory Authority or its authorised persons to perform investigations or inspections is possibly subject to a fine – up to EUR 28,962, and may incur in the suspension of voting rights for a period of two years by the Supervisory Authority.
Obligation to report threshold crossings
The obligation to report the crossing of thresholds falls on the beneficial owner (that is, the party eligible to vote) as follows.
Thresholds for securities listed on the Lithuanian regulated markets
Article 25 of the Law on Securities of the Republic of Lithuania stipulates that a financial brokerage firm, in the sense defined in that Law, which transaction(s) induce(s) the resulting holding to reach, exceed or fall below 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75%, or 95% of voting rights at the general meeting of shareholders of an issuer, must notify the Supervisory Authority and the issuer within four (4) trading days after passing the thresholds.
Shareholder identification as set out in the SRD II Law
The SRD II Law provides for the right for issuers to identify their shareholders.
Issuers can request intermediaries at each level of a custody chain to promptly provide relevant information to facilitate such identification.
In accordance with SDR II Law as amended, an intermediary (in this case, Clearstream Banking) shall, upon receipt of the shareholder identification disclosure request, transmit a similar request to the next intermediaries in the custody chain (that is, Clearstream Banking clients with holdings in the requested securities). A response to the shareholder identification disclosure request shall be sent by every intermediary in the custody chain directly to the recipient's address defined in the request and without delay. Clearstream Banking will generate the response as required, with information regarding the shareholder's identity, limited to Clearstream Banking books only.
Fulfilment of the SRD II disclosure that take place prior to a meeting event, and subsequent registration of the beneficial owner in the Company’s register, is a conditional pre-requisite for votes to be accepted. Failure to disclose will therefore result into votes of non-registered shareholders to be rejected.
Clients are hereby informed and acknowledge that, according to SRD II, and its transposition into the Law on Companies, the Law on Markets in Financial instruments, the Law of the Republic of Lithuania on Financial Reporting by Undertakings and the Code of Administrative Offences, the intermediary that discloses information concerning the identity of shareholders for the purposes of the SRD II rules (including Clearstream Banking) shall not be considered to be in breach of any restriction on disclosure of information imposed by contract or by any legislative, regulatory or administrative provision.