Bank of Lithuania
2018-03-02
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Žemaitijos pienas, AB has been fined EUR 158 thousand for violations of the Law on Securities and given a warning for neglecting the instructions of the Bank of Lithuania.

‘An inspection revealed the Company’s negligent approach to accounting and provision of information to investors. Moreover, when taking some decisions regarding tantièmes, the management of Žemaitijos pienas, AB took no account of the interests of the Company itself and of its minority shareholders,’ said Vytautas Valvonis, Executive Director of the Supervision Service at the Bank of Lithuania.  

The Supervision Service of the Bank of Lithuania established that Žemaitijos pienas, AB’s financial statements were in breach of the requirements of two international accounting standards – ‘Financial Instruments. Recognition and Measurement’ and Property, Plant and Equipment’. The Company acknowledged the impairment of the amount of almost EUR 1.6 million to be received from an affiliated undertaking, but did not substantiate it properly. On top of that, it was established that, while the Bank of Lithuania instructed the Company to revise the useful lives of total tangible fixed assets, the Company failed to do that. Consequently, Žemaitijos pienas, AB improperly provided financial information about its financial situation and performance in 2016.

The Supervision Service also established that the management of Žemaitijos pienas, AB took decisions in favour of the controlling shareholder rather than the Company and total shareholders: in breach of legal acts, they suggested the General Meeting of Shareholders to take a decision to pay out intermediate tantièmes (EUR 0.75 million) to members of the Supervisory Board and the Board. As a result, the Company’s controlling shareholder and related persons received additional income from the Company, whereas the Company’s undistributed profit was unreasonably reduced.  There was also some doubt as to proper representation of minor shareholders and their interests, as persons related by a family relationship participated in both the management and supervision bodies. In addition, it was established that the possibility for the minor shareholders to access the Company’s documents and information necessary for the exercise of their rights was impeded.   

Žemaitijos pienas, AB has also violated the Law on Securities by negligent distribution of regulated information and submitting false information on compliance with the principles and standards of the code of management applicable to companies trading in securities on a regulated market.

The Bank of Lithuania has also instructed Žemaitijos pienas, AB to publicly notify of the violations identified, the fine and the obligations imposed. The Company has already done that.

The Bank of Lithuania had some reproof for the audit company Grant Thornton Baltic which audited Žemaitijos pienas, AB and the auditor Laimė Jablonskienė.  The Authority of Audit, Accounting, Property Valuation and Insolvency Management applied a warning to the audit company and suspended the auditor’s certificate for the auditor. 

The company has lodged a complaint about the decision of the Director of the Supervision Service with the Vilnius County Administrative Court.