The Bank’s approach to legal reform work in Lithuania is broadly designed to continue and deepen EBRD’s support to private companies to enable them to strengthen their business and governance model, expand their markets and enhance their competitiveness. With this in mind the bank has recently published or will shortly be publishing results of assessments in relation to corporate governance, electronic communications, Insolvency Office Holders public private partnerships, and secured transactions.
- Access to Finance
- Capital Markets
- Contract Enforcement and Judicial Capacity
- Corporate Governance
- Debt restructuring and bankruptcy
- Electronic Communications
- Energy and resource effiency
- Energy legal and regulatory reform
- Public Procurement
Access to Finance
Lithuania’s legal framework in the secured transactions sector comprises the Civil Code of 2000, the Law on Establishment of the Hypothec Register of 1997, the Instruction on Filling in the Mortgage, Compulsory Mortgage, Pledge and Compulsory Pledge Bonds introduced by Order No. 46 of the Minister of Justice of 20 February 2002, and Regulations of the Hypothec Register introduced by Resolution No. 1246 of the Government of 18 October 2001. Overall, Lithuania is an example of an advanced EBRD country of operations where the secured transactions regime does not require a general overhaul but rather specific sophisticated changes in order to further develop into a system that would fully cater for the needs of modern finance transactions.
In 2014 the EBRD conducted an assessment on secured transactions which examined the availability of collateralising different types of assets regardless of the underlying legal instruments used to achieve the establishment of secured creditor’s rights. In addition to the classic security interests (pledges and mortgages the assessment also covered usual types of quasi security, such as sale and lease back transactions. The assessment also covered related issues such as enforcement and syndicated lending. The links below take you to the assessment results for Lithuania.
The Lithuanian capital market is very young and of relatively small size. The applicable legal framework seems to be of high quality and it implements various EU directives. In EBRD’s Securities Markets Sector Assessment completed in 2007, Lithuania was rated in “high compliance” with international standards as to the quality of its securities markets regulation. The Assessment has indicated that a number of features of Lithuania’s securities markets regulation is quite strong, including those with respect to the regulator, self-regulatory organisations, issues and disclosure, collective investment schemes, and accounting; at the same
time, financial instruments have been identified as the major weakness of the system.
Contract Enforcement and Judicial Capacity
Judicial independence is protected by law, and Lithuania statute book is in accordance with the EU’s acquis communautaire. The country is considered to be one of the most effective EU states in implementing directives. Problems persist in relation to the implementation and enforcement of laws. Public trust in the judiciary is uneven, and there are concerns about corruption in the court system. In order to tackle these issues, a new National Anticorruption Programme aims to improve judicial transparency by digitising the court system.
The 2007 EBRD assessment on corporate governance showed Latvia being in “Medium Compliance” with the OECD Principles of Corporate Governance (please see Chart 2 below). The assessment showed some shortcomings especially in the sectors on “ensuring the basis for an effective corporate governance framework” and “the role of stakeholders in corporate governance” (see Chart 3 below). The Latvian framework has been progressively improved so as to transpose the relevant Acquis Communautaire and at 8 April 2011, Latvia appears to have duly transposed all Acquis in the field of company law.
Debt restructuring and bankruptcy
The Law on Bankruptcy No. IX-216 of 2001 (as amended, the LB) and the Law on Restructuring of Enterprises No. IX-218 of 2001 (as amended, the LR) set forth the legal framework for business insolvency and restructuring. The LR only applies to legal persons.
Based on the results of the assessment, a developed legal framework appears to exist for the IOH profession in Lithuania, which prima facie, displays a number of strengths. Nevertheless, such framework would benefit from further improvements to address certain important areas of weaknesses and thus improve IOH capacity and performance.
Lithuania’s electronic communications sector is governed mainly by the Law on Electronic Communications of 2004 (the “2004 Law”), as amended, most notably in 2007 and 2011, together with relevant subordinate legislation. In the 2012 assessment of the Electronic Communications sector Lithuania was rated as in high compliance as it had largely adopted best practice.
Energy and resource efficiency
The renewable energy and energy efficiency sectors in Lithuania are primarily regulated by the Law on Energy of 16 May 2002 (as amended), the Law on Renewable Energy of 24 June 2011 (as amended), the Law on Heat Sector No. IX-1565 of 20 May 2003 (as amended), the Law on Biofuel, Biofuels for Transport and Bio-oil No. VIII-1875 of 18 July 2000 (as amended).
Energy legal and regulatory reform
The Ministry of Energy has prepared a new National Energy Independence Strategy (‘the strategy’) to replace the 2007 National Energy Strategy. Currently, Lithuania relies primarily on oil and gas in its energy mix, and these fuels come from a single supplier, Russia. The goal of the strategy is for Lithuania to diversify its energy supply by 2020 by increasing interconnectedness with European electricity networks and liberalising its energy markets.
The Public Private Partnerships Law (the “PPP Law”) was adopted in 2009 repealing the Concession Law of 2000. Lithuania has further improved the legal framework for PPP and created a system which now regulates both concessions and general government and private entities’ partnership (“GGPEP") similar to PFI model used in United Kingdom.
EBRD Legal Reform projects
The EBRD assisted the Ministry of Economy with the creation of a workable legal framework allowing for the use of concessions in Lithuania as a basis for public private partnerships. The Bank provided expert advice on the main issues to be addressed by the Concessions Law, as well as on the requirements to be met under
EU legislation in view of the Lithuania’s EC accession bid. The assignment also included a follow up advice pending the submission of the draft Law to Parliament. The Law came into force on 1 October 2003.
Public procurement in the Republic of Lithuania is governed by the Law on Public Procurement of6 September 1997, No. I-1491, as amended by law No. X-471 of 22 December 2005 (the “PPL”). In addition, a number of laws govern operational aspects of public procurement, including application of the eProcurement tools in conducting public procurement procedures.
In the 2010 EBRD Public Procurement Assessment Lithuania scored to be in high compliance with international standards both in terms of public procurement legislation and practice. The Assessment has further shown that competition and uniformity are strongest, and efficiency of the public contract and enforceability are the weakest features of the regulatory framework in the public procurement sector (see Chart 12). In addition, local public procurement practice has proved to be regular and compliant with international standards.
- Public Procurement Sector Assessment 2010 – country profiles