Establishment and authorisation / licencing of Management Companies acting in accordance with the Law on Collective Investment Undertakings

The aim of this Guide is to introduce persons concerned to the authorisation process for management companies, acting in accordance with the Republic of Lithuania Law on Collective Investment Undertakings (the Law on CIU), conducted by the Bank of Lithuania, requirements for management companies being established (legal persons not yet established) or being authorised (already established legal persons), set out the approach of the Bank of Lithuania to new market participants, set out a list of the documents to be submitted with an application for authorisation, and to identify other major aspects of authorisation.

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Management companies, acting in accordance with the Law on CIU, licence

Management company of collective investment undertakings (CIU) acting in accordance with the Republic of Lithuania Law on Collective Investment Undertakings¹ – an undertaking whose main activity is management of investment funds or investment companies.

¹ – Lithuanian consolidation version valid as of 1 December 2016. English version last amended on 18 June 2013.

Minimum equity capital requirements for a management company, acting in accordance with the Law on CIU

The initial capital of a management company of CIU operating according to the Republic of Lithuania Law on Collective Investment Undertakings shall not be less than EUR 125,000.

Authorisation process

The approach of the Bank of Lithuania to the authorisation process for management companies, as well as for other institutions, is, as far as possible, an open one and normally begins well before an application for an authorisation is submitted to it. We encourage all applicants who actively seek a licence of a management company to contact us as early as possible in their planning process so that we can discuss it together and help assess their proposed operating plans. This allows us to be clearer in explaining the authorisation process and its meaning, our requests, requirements, expectations and all other major aspects that may affect the authorisation process.

The following basic stages in the authorisation process can be singled out:

the pre-application stage: introducing the representatives of a prospective management company to the regulation applied in Lithuania, pre-application meetings and discussions with specialists of the Bank of Lithuania, a concise discussion of the list of submitted documents and their contents;
submission of an application to the Bank of Lithuania: the Bank of Lithuania, within 5 business days, reviews whether all necessary documents have been submitted and, where no formal deficiencies are identified, accepts the application for consideration;
assessment of an application to issue a licence of a management company and attached documents;
issuance of a licence or refusal to issue a licence: after finishing assessment of submitted documents, the Board of the Bank of Lithuania analyses summary information submitted and takes a decision regarding the issuance of a licence or refusal to issue it.

Statutory timeframe

The supervisory authority must notify an applicant of the agreement or disagreement to issue a licence of a management company of collective investment undertakings, operating according to the Republic of Lithuania Law on Collective Investment Undertakings, within 6 months of submission of all documents, data and explanations. The term of processing the application shall be calculated from submission of the latest documents or data.

Management company licence fee

Prior to applying for a licence of a mangement company it is necessary to pay into the account of the State Tax Inspectorate (STI) a state levy for the granting of the licence, which currently is EUR 826 (the sizes of levies are established by Resolution No 1458 of the Government of the Republic of Lithuania of 15 December 2000²).

The procedure for the generation of orders to the income collection accounts of the STI online and the numbers of the income collection accounts are available on the STI website.

² – Available only in Lithuanian.

Key requirements for a management company being established or authorised

Taking into account that, at the time of authorisation, the management company being established or authorised must be prepared to comply with all requirements set for it, as a management company in operation, the Bank of Lithuania requests that detailed data is submitted already at the time of application. Nevertheless, when assessing the critical aspects that may determine authorisation, the following basic elements can be singled out:

fitness of submitted documents: the documents submitted must comply with the requirements of legal acts regulating the activities of management companies and their supervision; all correct data established in legal acts or requested additionally must be submitted;
fitness and propriety of a management company and its shareholders (holders of voting rights): entities with a qualifying holding in the management company’s authorised capital and/or voting rights must be of good repute and have required competence;
fitness and propriety of heads of a management company: the heads of a management company must be of good repute and possess the qualification and experience necessary to properly perform their duties.

The planned business plan must correspond to the possibilities of the founders of the management company (shareholders or holders of voting rights) to implement it, while the prospective management company must, at the time of authorisation, be prepared to provide financial services in a safe and sound manner.

Assessment of submitted documents

The process usually involves verification and assessment by a number of specialists from the Bank of Lithuania to assist in the formation of a common opinion and in reaching a decision about the application. During the assessment period, the following processes are also carried out:

regular communication and meetings with representatives of the applicant firm (when required);
submission of comments by the Bank of Lithuania, according to which the management company must eliminate identified material deficiencies.

All applicants for a licence of a management company have direct access to Bank of Lithuania specialists, who are experts in assessing submitted documents. We are on hand to take applicants through the authorisation process, inform about the progress of the process, and aim to ensure a cooperation-based relationship between the Bank of Lithuania and financial market participants during both the authorisation process and after it.

Documents and information to be submitted to the Bank of Lithuania in order to be granted a licence of a management company, acting in accordance with the Law on CIU

To obtain a licence of a management company of collective investment undertakings operating according to the Republic of Lithuania Law on Collective Investment Undertakings, as laid down in Article 5(1) of the Law, a public limited liability company or a private limited liability company, intending to engage in such company’s management activity, must submit an application to the Bank of Lithuania. The application must be accompanied by a future business plan, defining, among other things, the areas of the future business, the company’s organisational structure, also information about a legal person, its participants, heads, activities, compliance with capital and other prudential requirements, as well as other information laid down in the authorisation rules approved by the Bank of Lithuania, upon reviewing which the supervisory authority would be able to state that the company meets the requirements set out in this Law.

Laws and legal acts regulating the activities and authorisation of management companies

³ – Lithuanian consolidated version valid as of 1 March–30 June 2017. English version last amended on 12 March 2015.

⁴ – Lithuanian consolidated version valid as of 1 December 2016. English version last amended on 17 January 2008.