AB „Lietuvos draudimas“ põhikiri

 1.GENERAL PROVISIONS

1.1. AB “Lietuvos draudimas” (hereinafter referred to as the Company) is an insurance company established after reorganizing the State Insurance Institution of the Republic of Lithuania after the initial privatisation and is the outright successor of its rights, obligations, and liabilities.

1.2. The Company acts under the Civil Code, Law on Companies, other legal acts of the Republic of Lithuania governing insurance business, resolutions passed by the Lietuvos bankas (hereinafter – the Supervisor), and the Company’s Articles of Association.

1.3. Full name of the Company is – Akcin- bendrov- “Lietuvos draudimas”, briefly referred to as AB “Lietuvos draudimas”.

1.4. The term of the Company’s activity is not limited. Fiscal year of the Company shall coincide with the calendar year.

1.5. The Company is a public limited liability legal entity. The company is liable for its obligations only to the extent of its property owned.

1.6. The address of the Company’s administrative office: J. Basanaviciaus st. 12, 03600 Vilnius, the Republic of Lithuania.

2. GOALS AND OBJECT OF ECONOMIC ACTIVITIES

2.1. The goal of Company’s activities is organization and performance of the business provided herein, developing insurance services, seeking to gain income and profit, and to satisfy property interests of the shareholders.

2.2. The object of Company’s activities is insurance operations.

2.3. The Company exercises groups of insurance attributed to the Non-Life insurance branch (65.12):
2.3.1. Accident insurance (65.12);
2.3.2. Illness insurance (65.12);
2.3.3. Insurance of land conveyance, except for the railway vehicles (65.12);
2.3.4. Railway vehicle insurance (65.12);
2.3.5. Aircraft insurance (65.12);
2.3.6. Watercraft (marine, lake, river, and channel) insurance (65.12);
2.3.7. Carried cargos insurance (65.12);
2.3.8. Property (excl. 2.3.3 – 2.3.7) insurance against fire and natural disasters (65.12);
2.3.9. Property insurance against other risks (excl. Item 2.3.8) (65.12);
2.3.10. Land conveyance third party liability insurance (65.12);
2.3.11. Aircraft third party liability insurance (65.12);
2.3.12. Water craft third party liability (65.12);
2.3.13. General third party liability insurance (65.12);
2.3.14. Surety insurance (65.12);
2.3.15. Financial loss insurance (65.12);
2.3.16. Legal expenses insurance (65.12).
2.3.17. Assistance insurance (65.12);

2.4. The Company may engage in insurance, reinsurance and related activities: administration of insured and reinsured events, insurance and reinsurance mediation, consultations on insurance and reinsurance issues, mediation in conclusion of pension savings (except for additional voluntary savings) contracts, training of insurance and reinsurance specialists, qualification improvement, rent of real estate, assessment of insurable property (real estate and movable property), as well as other activities permitted to insurance companies as provided by the laws of the Republic of Lithuania.

3. CAPITAL AND RESERVES

3.1. The authorised capital of the Company amounts to 11 665 377,60 Eur. It is divided into 805 620 ordinary registered shares. The nominal value of one share is 14,48 Eur.

3.2. The authorised capital of the Company may be increased or reduced provided the General Shareholders Meeting passes a resolution thereof and the Company’s Articles of Association are respectively amended. The authorised capital shall be considered increased or reduced only having registered respective amendments to the Company’s Articles of Association at the Register of Legal Entities. The authorised capital of the Company may be increased or reduced following the ways and procedure set by the Law on Companies of the Republic of Lithuania.

3.3. The capital of the Company shall be divided into ownership and borrowed capital.

3.4. The ownership capital consists of:
3.4.1. paid authorised capital;
3.4.2. Share premiums (excess of nominal value of the shares);
3.4.3. Re-evaluation reserve;
3.4.4. Obligatory reserve;
3.4.5. Reserve for acquisition of own shares;
3.4.6. Reserve for giving shares;
3.4.7. Other reserves;
3.4.8. Retained result – profit (loss).

3.5. The borrowed capital consists of:
3.5.1. Insurance technical provisions;
3.5.2. Reinsurers’ deposits;
3.5.3. Other liabilities;
3.5.4. Accrued expenses and deferred income.

3.6. In case the Company ownership capital becomes smaller than 1/2 of the authorised capital specified herein, the Company’s Board, following the provisions of the Law on Companies of the Republic of Lithuania, must convene an extraordinary General Shareholders Meeting.

3.7. The Company may form other reserves following the decision made by the General Shareholders Meeting. When passing a resolution regarding formation of certain reserve, the General Shareholders Meeting must set concrete purpose of such reserve, amount, and usage procedure. All Company’s reserves shall be formed, reduced, or cancelled on the basis of the resolution passed by the General Shareholders Meeting at minimum 2/3 votes majority.

4. INSURANCE TECHNICAL PROVISIONS

4.1. The Company forms insurance technical provisions for performance of insurance (reinsurance) activities.

4.2. Insurance technical provisions funds are formed from insurance premiums and other sources. The funds of insurance technical provisions may be invested only following the procedure set by the Law on Insurance of the Republic of Lithuania.

5. SHARES AND THE RIGHTS GRANTED BY THEM

5.1. The Company’s shares are immaterial ordinary registered shares, 14,48 Eur par value each. The records in securities accounts prove share ownership.

5.2. Shareholders have the following property rights:
5.2.1. To get a part of Company’s profit (dividend);
5.2.2. To receive the Company’s funds when the capital of the Company is reduced with a view to paying out the Company’s funds to the shareholders;
5.2.3. To get a part of liquidated Company’s property;
5.2.4. To get the shares free-of-charge in case the authorised capital is increased out of Company’s funds, except for cases specified in the Law on Companies;
5.2.5. A priority right to acquire the shares issued by the Company, except in the case when the General Meeting of Shareholders decides to withdraw the pre-emption right for all the shareholders according to the procedure specified by the Law on Companies;
5.2.6. To lend the funds to the Company following the ways and procedure provided by the laws;
5.2.7. Other property rights provided by the laws.

5.3. Shareholders have the following non-property rights:
5.3.1. To attend the shareholders meeting and have a decisive vote right;
5.3.2. To vote at the General Shareholders Meetings under the rights granted by the shares held;
5.3.3. To receive the information on the economic activities of the Company;
5.3.4. To appeal to court requesting to cover the damage to the Company, incurred due to nonperformance or improper performance of the duties of the Company’s CEO and the Board Members set herein and in other laws, as well as in other cases provided by the laws;
5.3.5. To authorise other person to represent the interests of the shareholder in the Company’s activities following the procedure set by the laws;.

5.4. Every Company’s share held – 14,48 Eur par value – shall grant the shareholder one vote when passing resolutions at the General Shareholders Meeting.

5.5. If the General Shareholders Meeting passes a resolution to cover the Company’s losses by additional shareholders’ contributions, the shareholders voting “for” such resolution are obliged to make the respective contributions. Shareholders that did not participate in such General Shareholders Meeting or voted “against” such resolution, shall have a right not to pay respective contributions.

5.6. Rights granted by the Company’s shares shall be implemented following the procedure set by the laws of the Republic of Lithuania.

6. BODIES OF THE COMPANY

6.1. The Company has the following bodies: General Shareholders Meeting, Supervisory Council, the Board and CEO. Chairman of the Company’s Board shall also be the CEO of the Company.

6.2. The Company’s bodies must act only to the benefit of the Company and its shareholders, assure transparent, prudent and credible management of the Company’s operations.

6.3. The Company’s bodies shall have no right to make decisions or perform actions violating these Articles of Association or contradicting to these Articles of Association or the Company’s activity goals set herein, as well as the ones that are apparently detrimental or economically unreasonable.

7. COMPETENCE OF THE GENERAL SHAREHOLDERS MEETING, PROCEDURE FOR SUMMONING THE MEETING AND VOTING

7.1. The General Shareholders Meeting of the Company is the supreme Company’s managing body. Persons being the Company’s shareholders at the end of the meeting day shall have a right to participate in it. Members of the Supervisory Council, the Board, auditor who prepared the audit conclusion and audit report, Company’s CEO shall have a right to participate and speak out in the General Shareholders Meeting.

7.2. The General Shareholders Meeting shall have a right to:
7.2.1. Amend the Company’s Articles of Association (except for the cases set by the Law on Companies of the Republic of Lithuania);
7.2.2. Change the registered office of the Company;
7.2.3. Elect and revoke the Supervisory Council or its members. In case the Company’s activities are detrimental, the General Shareholders Meeting must consider if the members of the Supervisory Council, the Board or the CEO are suitable to run their positions;
7.2.4. Elect and revoke the auditor or audit company for the carrying out of the audit of a set of annual financial statements, set the audit remuneration conditions,
7.2.5. Set annual payments to the Supervisory Council and the Board members, considering the provisions of the Law on Companies of the Republic of Lithuania;
7.2.6. Approve a set of annual financial statements;
7.2.7. Pass a resolution to increase the authorised capital;
7.2.8. Set the category, number, nominal value, and minimal share issue price;
7.2.9. Pass a resolution to recall the priority right to all the shareholders to acquire the shares issued by the Company or convertible bonds as regards specific issue of shares or convertible bonds;
7.2.10. Pass a resolution to reduce the authorised capital (except for the cases provided by the Law on Companies of the Republic of Lithuania);
7.2.11. Approve the set of interim financial statements drawn up for the purpose of adoption of a decision on the allocation of dividends for a period shorter than the financial year;
7.2.12. Take a decision on the allocation of dividends for a period shorter than the financial year;
7.2.13. Pass a resolution to issue convertible bonds;
7.2.14. Pass a resolution to convert one category of the Company’s shares into another, to approve the procedure for converting the shares;
7.2.15. Pass a resolution to change the number of shares issued by the Company of the same class and the nominal value of the share, without changing the amount of the authorized capital;
7.2.16. Pass a resolution for the Company to acquire its own shares;
7.2.17. Pass a resolution on the approval of the Procedure for granting Shares to employees and (or) members of the bodies;
7.2.18. Pass a resolution regarding reorganization or separation of the Company, and to approve the conditions of reorganization and separation, except where otherwise provided for by the law;
7.2.19. Pass a resolution to rearrange the Company;
7.2.20. Pass a resolution to restructure the Company in cases specified in the Law on Restructuring of Enterprises;
7.2.21. Pass a resolution regarding profit (loss) allocation;
7.2.22. Pass a resolution regarding formation, use, reduction, and liquidation of the reserves;
7.2.23. Pass a resolution to liquidate the Company or recall the liquidation of the Company (except for the cases provided by the Law on Companies of the Republic of Lithuania);
7.2.24. Elect and recall the Liquidator of the Company (except for the cases provided by the Law on Companies of the Republic of Lithuania);
7.2.25. Pass other resolutions in compliance with the laws of the Republic of Lithuania.

7.3. The General Meeting of Shareholders shall issue its approval for:
7.3.1. disposal of non-current assets classified as intangible assets, property, plant and equipment or long-term investments, including contribution to a company or a cooperative – if the market value of those assets exceeds 5% of total assets, determined on the basis of the most recent approved financial statements; and also handing those assets over for use to another entity for a period longer than 180 days in a calendar year based on a legal act, if the market value of the subject matter of the legal act exceeds 5% of total assets, whereas the handing over of assets for use in the case of:
7.3.1.1. lease, rental and other agreements to hand over an asset for use to other entities against payment, the market value of the subject matter of a legal act is defined as the value of benefits for:
– one year – if the asset was handed over under agreements signed for an indefinite term,
– the entire term of the agreement – in the case of agreements signed for a definite term,
7.3.1.2. lending for use agreements and other agreements regarding handing over of an asset to other entities for gratuitous use, the market value of the subject matter of a legal act is defined as the value of benefits that would be due if a lease or rental agreement was executed instead, for:
– one year – if the asset was handed over under agreements signed for an indefinite term,
– the entire term of the agreement – in the case of agreements signed for a definite term,
7.3.2. purchase of non-current assets with the value exceeding:
7.3.2.1. 22 600 000 Eur (twenty two million six hundred thousand euro); or
7.3.2.2. 5% of total assets, determined on the basis of the most recent approved financial statements.

7.4. The General Shareholders Meeting has no right to delegate to other management bodies solving of issues attributable to its competence.

7.5. General Shareholders Meeting may adopt resolutions provided that shareholders whose owned shares grant more than ½ of the total votes are present. If quorum has been established, it shall be deemed to persist throughout the meeting. Otherwise, the repeated meeting shall be summoned following the provisions of the Law on Companies of the Republic of Lithuania.

7.6. General Shareholders Meeting may be ordinary and extraordinary.

7.7. An ordinary General Shareholders Meeting shall be convened by the Board annually not later than within 4 months after the end of the fiscal year.

7.8. The Supervisory Council, the Board, and the shareholders holding at least 1/10 of the total votes shall have a right of initiative to convene the General Shareholders Meeting.

7.9. The General Shareholders Meeting shall be convened by the resolution passed by the Board, or by the CEO in cases provided by the Law on Companies of the Republic of Lithuania. Such resolution should contain the purpose and the goals of the meeting, drafts of the resolutions proposed, and the proposals on the meeting date and place.

7.10. At least 10 days prior the General Shareholders Meeting, shareholders shall be granted an opportunity to study the documents available in the Company related to the meeting agenda, including the draft resolutions. In case a shareholder requires in writing, the CEO of the Company not later than 3 days after receipt of the written request shall submit to the shareholder all draft resolutions to be discussed in the meeting personally or by registered mail.

7.11. Voting in General Shareholders Meeting is open. Should any of the shareholders require a secret voting and should at least 1/10 of the shareholders with the voting right agree, the voting shall be made secret.

7.12. Resolutions of the General Shareholders Meeting shall be considered passed provided the votes “for” it exceed the votes “against” it, except for the cases provided by the Law on Companies of the Republic of Lithuania, when a qualified majority of votes is needed, which cannot be less than 2/3 or 3/4 of the total votes granted by the shares held by the shareholders present at the meeting.

8. SUPERVISORY COUNCIL

8.1. Supervisory Council is a collegiate Company’s supervisory institution elected for 4 years by the General Shareholders Meeting, consisting of 5 members and headed by the Chairman of the Supervisory Council.

8.2. When electing members of the Supervisory Council, every shareholder shall have the number of votes equaling to the number of votes granted by the shares held multiplied by the number of Supervisory Council members elected. The shareholder reserves the right to distribute his/her possessed votes in his/her own disposition – for one or several candidates. Candidates getting more votes than the other ones shall be elected. The Chairman of the Supervisory Council shall be elected by its members.

8.3. The Supervisory Council has no right to delegate or transfer the functions attributed to its competence under the laws of these Statute to other bodies of the Company.

8.4. Competence of the Supervisory Council:
8.4.1. Elect and revoke members of the Board. The elected Board shall elect the chairman of the board from among its members, who also becomes the Chief Executive Officer of the Company. If the Company operates detrimentally, the Supervisory Council considers if the members of the Board are suitable for their
positions;
8.4.2. Appoint and dismiss a person, responsible for implementation of internal audit function, establish his performance methodical instructions;
8.4.3. Approve the Supervisory Council’s Rules of Procedure;
8.4.4. Supervise activities of the Company’s Board and the CEO;
8.4.5. Present comments and proposals to the General Shareholders Meeting on the Company’s business strategy, set of annual financial statements, profit/loss allocation project and the annual report of the Company as well as on the operation of the Company’s Board and the CEO;
8.4.6. Present proposals to the Company’s Board, CEO to recall the resolutions passed by them that do not comply with the laws of the Republic of Lithuania, Company’s Statute, or the  resolutions passed by the General Shareholders Meeting;
8.4.7. Evaluate the annual statements regarding representative expenditures, expenditures on legal, marketing, public relations and public communication services and management consulting services, prepared by the Management Board according to point 9.3.7 of these Articles of Association.
8.4.8. Solve other Company and its managing bodies supervision related issues attributed to the competence of the Supervisory Council by the Company’s General Shareholders Meeting.

8.5. The approval of the Supervisory Board is required for:
8.5.1. execution an agreement to provide legal, marketing, public relations and public communication services and management consulting services, if the total net remuneration amount envisaged for the services is greater than EUR 110,000 annually,
8.5.2. amendment to an agreement to provide legal, marketing, public relations and public communication services and management consulting services, which increases the remuneration above and beyond the amount set referred to in item 1,
8.5.3. execution of an agreement to provide legal, marketing, public relations and public communication services and management consulting services which do not specify the maximum remuneration amount,
8.5.4. execution of the following agreements:
8.5.4.1. donation or another agreement having a similar effect, except ex gratia payments, whose value exceeds EUR 4,500 or 0.1% of total assets, determined on the basis of the most recent approved financial statements,
8.5.4.2. debt forgiveness or another agreement having a similar effect, except agreements related to subrogation, whose value exceeds EUR 11,000 or 0.1% of total assets, determined on the basis of the most recent approved financial statements.

8.6. The meetings of the Supervisory Council shall be arranged following the procedure set by the Rules of Procedure for the Supervisory Council.

8.7. The Supervisory Council may adopt resolutions provided more than a half of its members are present in the meeting. Votes of the members, who have surrendered their votes in advance, shall be incorporated into the overall quorum. Resolution of the Supervisory Council shall be considered adopted when the votes “for” it exceed the votes “against” it. In case of equal number of votes “for” and “against”, the Chairman’s vote shall be decisive.

9. THE BOARD

9.1. The Company’s Board is a collegiate management body consisting of 8 members. The Board is headed by the Chairman of the Board, who at the same time is the Chief Executive Officer of the Company. The members of the Board are appointed by the Supervisory Council for the period of 4 years. Terms of office of the Chairman of the Board and the Board members are not subject to any limitations.

9.2. The work procedures of the Board shall comply with the Board Rules of Procedure adopted by the Board.

9.3. Capacities of the Board:
9.3.1. Consider and approve:
9.3.1.1. The Company’s annual report;
9.3.1.2. The interim report of the Company;
9.3.1.3. Company’s remuneration policy;
9.3.1.4. Company’s management structure and positions;
9.3.1.5. Candidacies of department directors;
9.3.1.6. Job descriptions for CEO, regulations for branch offices;
9.3.2. The Board analyses and approves:
9.3.2.1. Implementation of the Company’s operational strategy;
9.3.2.2. Organization of the Company’s operations;
9.3.2.3. Company’s financial status;
9.3.2.4. Results of the economic operations, Company’s set of annual financial statements, income and expense estimates, draft of profit/loss allocation, inventory and other valuables accounting data;
9.3.2.5. Procedure for handling complaints submitted by insureds, policyholders, beneficiaries and aggrieved third parties and procedure for replying thereto;
9.3.2.6. Procedure of contract conclusion that would be also applied to the insurance intermediaries;
9.3.2.7. Procedures for accounting of reported insured events, reported events that may be proved insured events and of investigation results thereof, instructions for investigation of events that may be acknowledged insured events.
9.3.3. Establishes:
9.3.3.1. The Company’s strategic targets, measures to achieve those targets, procedure of monitoring the measures and assessment of the results, ensures that the Company’s activities are based on business plan;
9.3.3.2. the Company’s risk management strategy;
9.3.3.3. The policy on assessing the fitness and propriety of the Supervisory board and the Board members’, Chief Executive Officer, persons performing key functions and other officers in whom managerial powers are vested.
9.3.4. Adopts resolutions on:
9.3.4.1. Issuing bonds;
9.3.4.2. The Company becoming a founder or a participant in some other legal entity;
9.3.4.3. Establishing the Company’s branches and agencies;
9.3.4.4. Investment, transfer, rent of fixed assets the balance sheet value whereof exceeds 1/20 of the Company’s authorized capital (the value is calculated separately for each type of transaction);
9.3.4.5. Mortgage and hypothec of fixed assets the balance sheet value whereof exceeds 1/20 of the Company’s authorized capital (aggregate sum of transactions shall be calculated);
9.3.4.6. Guarantee or sponsion for the third parties fulfilling obligations the sum whereof exceeds 1/20 of the Company’s authorized capital;
9.3.4.7. Acquisition of fixed assets for the price that exceeds 1/20 of the Company’s authorized capital;
9.3.4.8. Considers and adopts resolutions on other issues that are specified in the Board Rules of Procedure and are in concert with laws of the Republic of Lithuania, as well as other resolutions delegated to the Board by General Shareholders Meeting decision;
9.3.5. Having checked the character, qualification and experience, appoints and dismisses the CEO, persons, responsible for risk management, actuarial, compliance functions and other managing positions.
9.3.6. Determines the provision of Company’s information to the public and the Supervisor and ensures that the information provided is correct;
9.3.7. Submits to the General Meeting of Shareholders annual statements regarding representative expenditures, expenditures on legal, marketing, public relations and public communication services and management consulting services.

9.4. In cases defined in point 7.3 of these Articles of Association, before adopting the decisions specified in points 9.3.4.4 – 9.3.4.7 of these Articles of Association, the Board must obtain the approval of the General Meeting of Shareholders.

9.5. The Board must timely arrange the General Shareholders Meetings.

9.6. Members of the Company’s Board must keep confidentially Company’s commercial secrets that they became aware of while being the Board members.

9.7. The Company having established other or having acquired the whole share package (100 percent of shares) of other stock or closed stock company, functions of the General Shareholders Meeting of the affiliated company shall be performed by the Company’s Board following the procedures stated in the Board Rules of Procedure.

10. CHIEF EXECUTIVE OFFICER

10.1. The Company’s Chief Executive Officer is a sole management body. The Company is managed by the Chief Executive Officer (hereinafter – the CEO), who at the same time is the Chairman of the Board.

10.2. The CEO reserves the following rights and obligations:
10.2.1. represent the Company in relations with state authorities and managing institutions, in court of justice, arbitration, and relations with the third persons;
10.2.2. Head the Company and organize its activities;
10.2.3. Act on the Company’s behalf and to its interests (assumption of obligations and duties, etc.);
10.2.4. Conduct negotiations on the Company’s behalf;
10.2.5. Handle Company’s assets, including monetary funds;
10.2.6. Enter into transactions, open and close current and other accounts in banks;
10.2.7. Provide powers of attorney to perform certain actions within the competence limits;
10.2.8. Convene meetings of the Company’s Board;
10.2.9. Take part and have an advisory vote in the Company’s Supervisory Council meetings;
10.2.10. Employ and dismiss Company’s employees, conclude employment contracts with them, establish salaries and bonuses, assess performance results, motivate employees and apply disciplinary punishments;
10.2.11. Pass resolutions related to management, internal documents (motivation systems and procedures, internal work procedure, job descriptions, etc.);
10.2.12. Keep Company’s commercial secrets found while being in the position of CEO.

10.3. The CEO shall be responsible for:
10.3.1. Organization of the Company’s operations and achievement of its targets;
10.3.2. Drawing of the set of annual financial statements and preparing of the Company’s annual report;
10.3.3. Drafting of a decision on the allocation of dividends for a period shorter than the financial year and drawing up of a set of interim financial statements and an interim report for the purpose of adoption of the decision on the allocation of dividends for a period shorter than the financial year;
10.3.4. Preparation of the draft of the Procedure for granting Shares to employees and (or) members of the bodies;
10.3.5. Contracting with an auditor or an audit company;
10.3.6. providing of information and documents for the General Shareholders Meeting, Supervisory Council and the Board in the cases laid down in laws or at their request;
10.3.7. Submission of the Company’s documents and data to the Administrator of the Legal Entities Register;
10.3.8. Submission of the Company’s documents to the Bank of Lithuania and the Central Securities Depositary of the Republic of Lithuania;
10.3.9. Public announcement of information specified in respective legislation in the sources indicated in these Articles of Association;
10.3.10. A report to the shareholders, the supervisory board and the board on significant events that affect the activities of the company;
10.3.11. Submission of information to shareholders;
10.3.12. The CEO shall also reserve other rights and obligations specified by laws of the Republic of Lithuania, the present Statute and the job description.

11. EXTERNAL AND INTERNAL AUDIT

11.1. After termination of fiscal year, an external auditor or audit company shall check Company’s financial statement, which 4 months after the end of the fiscal year shall be approved by the ordinary General Shareholders Meeting, and every year, under procedures and terms established by the legal acts of the Republic of Lithuania shall be presented to the Supervisor. The review shall be performed by an auditor or an audit company, which has concluded an agreement of rendering audit services with the Company.

11.2. The external auditor or audit company shall be selected and payment conditions thereof established by the General Shareholders Meeting.

11.3. The external audit shall be carried out under legal acts regulating activity of audit and auditors and under conditions of the contracts between the Company and the auditor or the audit company.

11.4. The Company’s internal activities are controlled by a credible and properly operating internal control system and Internal Audit Department.

11.5. Internal Audit Department is a self-dependent unit directly subordinate to the Company’s Supervisory Council. Internal Audit Department, in pursuing its functions, shall comply with the document 9 approved by the Company’s Supervisory Council and the laws of the Republic of Lithuania. The Director of the
Internal Audit Department is elected and recalled by the Supervisory Council of the Company.

11.6. Internal Audit Department has the following rights:
11.6.1. Carry out an audit in all structural units of the Company and in all its business areas and present its conclusions and evaluations;
11.6.2. Directly communicate with any employee of the Company and receive his/her explanations;
11.6.3. Receive any data and documents related to audit, use Company’s database, etc.;
11.6.4. Use independent auditors and other institutions’ collected audit information, observe and (or) take part in their performed audits;
11.6.5. Other rights in compliance with the laws of the Republic of Lithuania and Company’s legal acts regulating competence of the Internal Audit Department.

11.7. Internal Audit Department has the following functions:
11.7.1. Assess if the Company’s financial accountability reflects the true Company’s status and performance results;
11.7.2. Assess and present conclusions if management and financial information systems meet the credibility standards, if Company’s implemented procedures and internal controls and testing thereof operate as expected.
11.7.3. Assess if all respective legal acts, Company’s Articles of Association, resolutions of the Supervisory Council, the Board, orders of the CEO and other internal legal acts are complied with and the way they are implemented;
11.7.4. Check and assess suitability and efficiency of the Company’s internal control system;
11.7.5. Check efficiency of the Company’s operations, strategic targets and measures taken to achieve those targets;
11.7.6. Propose to the Supervisory Council and the Board recommendations on their resolutions, present recommendations to the Company’s Board and the CEO on Company’s management and organization of the Company’s and its structural units’ operations and efficiency thereof, inform the Supervisory Council how these recommendations are implemented.
11.7.7. Monitor and assesses protection of the Company’s property;
11.7.8. Check if the risk assumed does not exceed risk limits established by the Company, analyse and assess if Company’s business risk management procedures and methods of business risk assessment methods are relevant and efficient;
11.7.9. Prepare audit reports and their summaries and, following the procedure set, submit those to persons specified by the Company’s shareholders and by the Company’s bodies;
11.7.10. Carry out other functions that do not contradict Company’s Internal Audit Regulations and laws of the Republic of Lithuania.

11.8. The Company’s Internal Audit Department shall perform internal audit functions in other companies, where the Company has a majority of votes either directly or indirectly, or may have crucial impact on them either directly or indirectly following the laws of the Republic of Lithuania. Such companies shall reimburse to the Company the costs related to internal audit functions. Such activities cannot be commercial.

12. PROFIT (LOSS) ALLOCATION

12.1. Company’s profit must be allocated not later than within 4 months after the end of the fiscal year, having beforehand approved the set of annual financial statements. Profit (loss) must be allocated following the procedure set by the Law on Companies of the Republic of Lithuania.

13. PROCEDURE FOR PRESENTATION OF COMPANY ANNOUNCEMENTS, DOCUMENTS, AND OTHER INFORMATION

13.1. The sale of fixed assets of value exceeding 0,1% of the total assets, established on the basis of the most recent approved financial statements, shall be conducted by tendering procedure, unless the value of the element being sold does not exceed EUR 4,500.
13.2. 2.The Company may sell fixed assets as referred to in section 1 without the tendering procedure when:
13.2.1. the assets are the subject matter of the investment activity,
13.2.2. in other justified cases, after the Management Board gives a consent by way of resolution to which the Supervisory Board issues a positive opinion.

14. PROCEDURE FOR ESTABLISHMENT OF COMPANY BRANCHES AND TERMINATION OF OPERATIONS

14.1. Company information that must be announced publicly shall be put into electronic publication for public notices published by the administrator of the Register of Legal Entities in accordance with the procedure prescribed by the Government – following the procedure and timelines set by the Civil Code of the Republic of Lithuania, Law on Companies of the Republic of Lithuania, Law on Insurance of the Republic of Lithuania, and other legal acts.

14.2. The Company is obliged to announce publicly solvency and financial condition report following the terms set by laws of the Republic of Lithuania.

14.3. Company’s notifications to its creditors and other persons shall be prepared in cases and following the procedure provided by laws of the Republic of Lithuania, the present Articles of Association and contracts concluded by the Company.

14.4. A company must, at a shareholder’s written request and not later than within seven days from the receipt of the request, grant to the shareholder access to and/or submit to him copies of the articles of association of the company, sets of annual and interim financial statements, annual and interim reports of the company, the auditor’s opinion and reports on audit of financial statements, minutes of the general meetings of shareholders or other documents executing decisions of the general meetings of shareholders, the recommendations and responses of the supervisory board to the general meetings of shareholders, the lists of shareholders, the lists of members of the supervisory board and the board, other documents of the company
that must be publicly accessible under laws, also other documents indicated in the articles of association of the company. The company may refuse to grant to the shareholder access to and/or submit copies of the documents related to the company’s commercial/industrial secret or confidential information, except for cases when the company’s information is necessary for the shareholder to fulfil imperative requirements provided for in other legal acts and the shareholder ensures the confidentiality of such information. The company must grant to the shareholder access to other company-related information and/or submit copies of documents if such information and documents, including also the information and documents related to the company’s
commercial/industrial secret and confidential information are necessary for the shareholder to meet the requirements provided for in other legal acts and the shareholder ensures the confidentiality of such information and documents. The company shall refuse to submit to the shareholder the copies of the documents if it is not possible to identify the shareholder who has requested the documents. A refusal to grant to the shareholder access to and/or submit the copies of the documents shall be executed by the company in writing if the shareholder so requests. Disputes related to the shareholder’s right to information shall be settled in court.

14.5. Company’s documents and information shall be presented to the shareholders free of charge.

15. PROCEDURE FOR ESTABLISHMENT OF COMPANY BRANCHES AND TERMINATION OF
OPERATIONS

15.1. The Company, in expanding its business and having received permission from the Supervisor, may establish branches following the procedure set by laws of the Republic of Lithuania. A branch shall not be deemed a legal entity, therefore it acts on behalf of the Company as a legal entity following these Articles of Association and provisions of the approved Branch Regulations. The property of the branch shall be accounted in the Company’s balance sheet. The Company may also establish other types of units.

15.2. Decision regarding establishment of Company’s branch and termination of activities shall be made by the Board. The Board shall also be entitled to approve Regulations of the Branch. Operations of the branch shall be organized by Head of Branch appointed by the Chief Executive Officer. Head of Branch is appointed following requirements set in the laws of the Republic of Lithuania.

Company’s operational issues not discussed herein shall be solved following the procedure set by the laws of the Republic of Lithuania and other legal acts.

The present wording of AB “Lietuvos draudimas” Articles of Association is approved by the ordinary

General Extraordinary Shareholders Meeting on 23 April 2018.

AB Lietuvos Draudimas
Chief Executive Officer
Kęstutis Šerpytis
April 2016