Lietuviškai
Case No. 20/02
THE CONSTITUTIONAL COURT OF THE REPUBLIC OF
LITHUANIA
RULING
ON THE COMPLIANCE OF PARAGRAPH 2 (WORDING OF 4 JUNE 2002)
OF ARTICLE 4 OF THE REPUBLIC OF LITHUANIA LAW ON THE
REORGANISATION OF JOINT-STOCK COMPANIES "BŪTINGĖS NAFTA",
"MAŽEIKIŲ NAFTA" AND "NAFTOTIEKIS" WITH THE CONSTITUTION OF THE
REPUBLIC OF LITHUANIA AND ON THE PETITION OF THE MAŽEIKIAI
DISTRICT LOCAL COURT, THE PETITIONER, TO INVESTIGATE WHETHER
PARAGRAPH 8 (WORDING OF 4 JUNE 2002) OF ARTICLE 3 OF THE
REPUBLIC OF LITHUANIA LAW ON THE REORGANISATION OF JOINT-STOCK
COMPANIES "BŪTINGĖS NAFTA", "MAŽEIKIŲ NAFTA" AND "NAFTOTIEKIS"
IS NOT IN CONFLICT WITH THE CONSTITUTION OF THE REPUBLIC OF
LITHUANIA
12 December 2005
Vilnius
The Constitutional Court of the Republic of Lithuania,
composed of the Justices of the Constitutional Court Armanas
Abramavičius, Toma Birmontienė, Egidijus Kūris, Kęstutis
Lapinskas, Zenonas Namavičius, Ramutė Ruškytė, Vytautas
Sinkevičius, Stasys Stačiokas, and Romualdas Kęstutis Urbaitis,
with the secretary of the hearing-Daiva Pitrėnaitė,
in the presence of the representative of the Mažeikiai
District Local Court, the petitioner, who was the judge
Kęstutis Stulginskis,
in the presence of the representative of the Seimas of the
Republic of Lithuania, the party concerned, who was Gediminas
Sagatys, senior advisor of the Law Department of the Office of
the Seimas of the Republic of Lithuania,
pursuant to Articles 102 and 105 of the Constitution of
the Republic of Lithuania and Article 1 of the Law on the
Constitutional Court of the Republic of Lithuania, in its
public hearing on 10 November 2005 heard case No. 20/02
subsequent to the petition of the Mažeikiai District Local
Court, the petitioner, requesting to investigate whether
Paragraph 8 (wording of 4 June 2002) of Article 3 of the
Republic of Lithuania Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis",
following which "after not having submitted the obligatory
offer to buy up the rest of the shares, a general meeting of
the shareholders of the joint-stock company 'Mažeikių nafta'
was convened on 19 June 2002" and the provision of Paragraph 2
(wording of 4 June 2002) of Article 4 thereof on the
non-application of Article 19 of the Republic of Lithuania Law
on Securities Exchange are not in conflict with the Preamble to
the Constitution of the Republic of Lithuania and with Articles
1, 23, 29 and 46 thereof.
The Constitutional Court
has established:
I
The Mažeikiai District Local Court, the petitioner, was
investigating a civil case. By its ruling, the court suspended
the investigation of the case and applied to the Constitutional
Court with a petition requesting to investigate whether
Paragraph 8 (wording of 4 June 2002; Official Gazette Valstybės
žinios, 2002, No. 56-2231) of Article 3 of the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" (hereinafter also referred
to as the Law), following which after not having submitted the
obligatory offer to buy up the rest of the shares, a general
meeting of the shareholders of the joint-stock company
"Mažeikių nafta" was convened on 19 June 2002 and the provision
of Paragraph 2 (wording of 4 June 2002; Official Gazette
Valstybės žinios, 2002, No. 56-2231) of Article 4 on the
non-application of Article 19 of the Law on Securities Exchange
are not in conflict with the Preamble to the Constitution and
with Articles 1, 23, 29 and 46 thereof.
II
1. In Paragraph 8 (wording of 4 June 2002) of Article 3 of
the Law it is established:
"The announcement on the first meeting of the shareholders
of the joint-stock company 'Mažeikių nafta' that will take
place after the financial institution indicated in the
agreement between the Government of the Republic of Lithuania
and the strategic investor, and/or any other person indicated
by the financial advisor of the joint-stock company 'Mažeikių
nafta', including the crude oil supplier under a long-term
crude oil supply contract (and/or a person who is under his
control or other person suggested by the crude oil supplier,
which is indicated by the financial advisor of the joint-stock
company 'Mažeikių nafta') has acquired the new issued shares of
the joint-stock company 'Mažeikių nafta' indicated in Paragraph
2 of this Article, is publicly announced not later than 10 days
prior to the day of the meeting, and the announced agenda of
the meeting is not subject to revision. In this case the
provisions of Paragraphs 2 and 3 of Article 27, Paragraphs 1
and 4 of Article 28 and Paragraphs 2 and 3 of Article 30 of the
Law on Companies are not applied."
2. In Paragraph 2 (wording of 4 June 2002) of Article 4 of
the Law it is established:
"In the agreements between the Government and the
strategic investor, a party of which may also be the person who
will acquire the shares of the joint-stock company 'Mažeikių
nafta' according to Paragraph 2 of Article 3 of this Law, such
procedure may be established under which the parties of such
agreements and/or the successors to their rights under the laws
and/or agreements, including any and all the subsequent
successors to the rights, will transfer the shares of the
joint-stock company 'Mažeikių nafta' which belong to them by
right of ownership or will acquire them, will acquire newly
issued shares of the joint-stock company 'Mažeikių nafta' or
will implement their right of priority to acquire the shares of
the joint-stock company 'Mažeikių nafta' that belong to the
state by right of ownership. While concluding these agreements
and implementing their provisions, the Law on the Privatisation
of State-owned and Municipal Property and the provisions of
Article 19 of the Law on the Securities Exchange shall not be
applied."
III
The petition of the petitioner is based on the following
arguments.
1. In the opinion of the petitioner, the legal regulation
established in Paragraph 8 (wording of 4 June 2002) of Article
3 and in Paragraph 2 (wording of 4 June 2002) of Article 4 of
the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" is
virtually designated to the implementation of private interests
of individual persons, and general norms that are valid to all
other persons, which are established in other laws (inter alia
the Law on the Securities Market), are not applied. After the
aforementioned exceptions of the general legal regulation had
been established, the objective of an open, just, harmonious
civil society and state under the rule of law which is declared
in the Preamble to the Constitution, as well as the provision
of Article 1, under which the State of Lithuania is a
democratic republic, and the principle of equality of all
persons before the law consolidated in Paragraph 1 of Article
29, were violated.
2. According to Paragraph 2 (wording of 4 June 2002) of
Article 4 of the Law, the small shareholders of the joint-stock
company "Mažeikių nafta" were deprived of the right to sell
their shares to the big shareholders who act in cooperation,
which the legislator consolidated by the obligatory offer to
buy up the rest of securities of accountable issuer in Article
19 of the Law on Securities Exchange; that is what every person
legitimately and reasonably expects, when he acquires shares
from public trading. Thus, according to the petitioner, by the
said exceptional legal regulation Article 23 of the
Constitution was violated, under which the principles of
inviolability of property and just compensation for seizure of
property for the needs of society are entrenched.
3. In 2001 the authorised capital of the joint-stock
company "Mažeikių nafta" was reduced (on the exceptional
basis), therefore, the value of the shares of the small
shareholders decreased. After Paragraph 2 of Article 4 of the
Law was amended on 4 June 2002, the shares belonging to the
small shareholders became absolutely worthless. According to
the petitioner, the small shareholders may neither manage
(implementing their property and non-property rights), nor sell
them to the strategic investor, because they were not provided
with the obligatory offer to purchase the rest of the shares.
Thus, by the disputed provisions the state, without use to
society and without having justly compensated the small
shareholders, absolutely depreciated their property and
deprived them of their essential rights provided by the shares.
Moreover, by regulating economic activity, the state has
to coordinate the interests of the person and society: what is
needed for a strategic investor, may not always be just and
legitimate with regard to other owners and the public interest.
Meanwhile, the disputed exceptional legal regulation
groundlessly granted big privileges to one or several persons.
In this way the provision of Paragraph 1 of Article 46 of the
Constitution under which Lithuania's economy shall be based on
the right of private ownership and individual freedom of
economic activity and initiative, the provision of Paragraph 3,
under which the state shall regulate economic activity so that
it serves the general welfare of the Nation, and the
prohibition to monopolise the market and restrict the freedom
of fair competition, consolidated in Paragraph 4 thereof, were
violated.
IV
In the course of the preparation of the case for the
Constitutional Court hearing, written explanations from Saulius
Švedas, senior advisor of the Law Department of the Office of
the Seimas, the party concerned, were received where it was
stated that the disputed provisions of the Law are not in
conflict with the Constitution. The position of the party
concerned is grounded on the following arguments.
1. The disputed provisions were consolidated regarding the
existing extremely difficult financial situation of the
joint-stock company "Mažeikių nafta" and its exceptional
significance to the Lithuanian economy. One was seeking to
create favourable conditions for investments into this
enterprise and in that way to strengthen its financial
potential and defend the interests of the consumers, whom it
mostly supplies with petroleum products. Thus, the legislator,
consolidating the disputed legal regulation in the Law,
implemented the provisions of Article 46 of the Constitution
that the state shall regulate economic activity so that it
serves the general welfare of the Nation and that the state
shall defend the interests of the consumer.
2. According to the representative of the party concerned,
the petitioner did not present any arguments which would
confirm the statement that, allegedly, the disputed provisions
are in conflict with Paragraph 1 of Article 46 of the
Constitution.
3. While deciding whether the disputed provisions of the
Law are not in conflict with the constitutional principle of a
state under the rule of law and Article 1 of the Constitution,
one is to take into account the Constitutional Court ruling of
18 October 2000, adopted in the case in which it was
investigated whether the provisions of Paragraphs 3 and 5 of
Article 3 of the Law (wording of 5 October 1999), analogous to
those established in this case were not in conflict with the
Constitution; in that ruling the Constitutional Court stated,
that "the provisions of Paragraphs 2, 3, 5 and 6 of Article 3
of the Law, which established differentiated legal regulation,
in themselves do not conflict with a principle of a state under
the rule of law, established in the Constitution, as well as
Article 1 of the Constitution".
4. The provision of Paragraph 8 (wording of 4 June 2002)
of Article 3 of the Law on non-application of certain articles
of the Republic of Lithuania Law on Companies was designated to
all the shareholders of the joint-stock company "Mažeikių
nafta", thus, it is impossible to state that the principle of
equality of all persons before the law, entrenched in Paragraph
1 of Article 29 of the Constitution, was violated. The
significance of the joint-stock company "Mažeikių nafta" to the
Lithuanian economy is exceptional and the financial situation
of this enterprise was such, that it was necessary to create
favourable conditions for attracting investments into the
company as soon as possible, thus, certain rights of the
shareholders had to be limited in the interest of the society
to preserve the stability of oil economy, and alongside, of all
Lithuanian economy. However, the small shareholders were not
deprived of the right of participation in general meetings of
the shareholders and by voting to express their opinion there
on the issues discussed. Moreover, the aforementioned
provisions of the Law on Companies had to be non-applicable
only to one general meeting of the shareholders of this
joint-stock company.
5. There are no data confirming that the shares of the
joint-stock company "Mažeikių nafta" were totally depreciated
during the time from consolidating the disputed provisions in
the Law till the ruling of the Mažeikiai District Local Court
was made. While providing the conditions for the strategic
investor to come into the joint-stock company "Mažeikių nafta",
the legislator also created preconditions for the prices of the
shares of the joint-stock company "Mažeikių nafta" to rise.
Thus, the disputed provisions are not in conflict with Article
23 of the Constitution.
V
In the course of the preparation of the case for the
Constitutional Court hearing, written explanations from V.
Uspaskich, Minister of Economy of the Republic of Lithuania, P.
Koverovas, State Secretary of the Ministry of Justice of the
Republic of Lithuania, D. Kriaučiūnas, Director General of the
European Law Department under the Government of the Republic of
Lithuania, V. Poderis, Chairman of the Lithuanian Securities
Commission, as well as a letter from A. Malikėnas, acting
Director General of the state enterprise "State Property Fund",
were received.
VI
1. At the hearing of the Constitutional Court, the
representative of the petitioner, the Mažeikiai District Local
Court, who was the judge K. Stulginskas, additionally explained
the position of the petitioner in the following aspects: (1)
there were some doubts on the compliance of the disputed
provisions of the Law with the Preamble to the Constitution,
but only to the extent that the Preamble declares the striving
for an open, just, harmonious civil society and state under the
rule of law, i.e. it is doubted whether the disputed provisions
of the Law are not in conflict with the constitutional
principle of a state under the rule of law; (2) one doubted the
compliance of Paragraph 8 (wording of 4 June 2002) of Article 3
of the Law with the Constitution in the aspect that after not
having submitted the obligatory offer to buy up the rest of the
shares, a general meeting of the shareholders of the
joint-stock company "Mažeikių nafta" was convened on 19 June
2002.
2. At the hearing of the Constitutional Court, the
representative of the Seimas, the party concerned, who was G.
Sagatys, assented to the written explanations of the
representative of the party concerned S. Švedas.
G. Sagatys also stated that the rights of the small
shareholders are not their innate rights, but guarantees of
activity. The obligatory official offer to buy up the rest of
the shares is also not one more right of the shareholder, but a
protective measure of his rights. By following its economic
priorities and upon political resolve, the state can provide
the shareholders with such guarantees or it can decide not to
do so. In this aspect, the disputed provisions were
consolidated in the Law while regarding the economic logic,
i.e. taking into account the situation in which the Government
had been while searching for a strategic investor to the
joint-stock company "Mažeikių nafta".
3. At the hearing of the Constitutional Court the
explanations of the specialists V. Poderis, Chairman of the
Lithuanian Securities Commission and S. Spėčius, the advisor of
the Prime Minister of the Republic of Lithuania, were
submitted.
The Constitutional Court
holds that:
I
On the compliance of Paragraph 2 (wording of 4 June 2002)
of Article 4 of the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
with Articles 1, 23, 29 and 46 of the Constitution and with the
constitutional principle of a state under the rule of law.
1. The petitioner had doubts on whether the inter alia the
provision "on the non-application of Article 19 of the Law on
Securities Exchange" of Paragraph 2 (wording of 4 June 2002) of
Article 4 of the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
is not in conflict with Articles 1, 23, 29 and 46 of the
Constitution and with the constitutional principle of a state
under the rule of law.
2. On 4 June 2002, the Seimas adopted the Republic of
Lithuania Law on Amending and Supplementing Articles 3 and 4 of
the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis", which
became effective on 7 June 2002.
Article 2 of the Law on Amending and Supplementing
Articles 3 and 4 of the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" changed Paragraph 2 (wording of 2 August 2001) of
Article 4 of the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis".
Paragraph 2 (wording of 4 June 2002) of Article 4 of the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" provides:
"In the agreements between the Government and the
strategic investor, a party of which may also be the person who
will acquire the shares of the joint-stock company 'Mažeikių
nafta' according to Paragraph 2 of Article 3 of this Law, such
procedure may be established under which the parties of such
agreements and/or the successors to their rights under the laws
and/or agreements, including any and all the subsequent
successors to the rights, will transfer the shares of the
joint-stock company 'Mažeikių nafta' which belong to them by
right of ownership or will acquire them, will acquire newly
issued shares of the joint-stock company 'Mažeikių nafta' or
will implement their right of priority to acquire the shares of
the joint-stock company 'Mažeikių nafta' that belong to the
state by right of ownership. While concluding these agreements
and implementing their provisions, the Law on the Privatisation
of State-owned and Municipal Property and the provisions of
Article 19 of the Law on the Securities Exchange shall not be
applied."
3. From the arguments of the petition of the petitioner,
it is clear that he had doubts on whether Paragraph 2 (wording
of 4 June 2002) of Article 4 of the Law is not in conflict with
the Constitution to the extent that it is established that the
provisions of Article 19 of the Law on the Securities Exchange
shall not be applied while concluding and implementing the
agreements, indicated in this paragraph, i.e. the agreements:
- the parties of which are the Government and the
strategic investor (into the joint-stock company "Mažeikių
nafta"; hereinafter also referred to as the strategic investor)
and a party of which may also be the person who will acquire
the shares of the joint-stock company "Mažeikių nafta"
according to Paragraph 2 of Article 3 of this Law, as well as
the successors to the rights provided for in the laws and/or
agreements;
- by which the parties and/or the successors to the rights
provided for in the laws and/or agreements, not excluding any
subsequent successor to the rights, under the established
procedure in these agreements transfer the shares of the
joint-stock company "Mažeikių nafta" which belong to the
parties by right of ownership, acquire the shares of this
company which belong to the parties by right of ownership,
and/or the successors to their rights provided for in the laws
and/or agreements, not excluding any subsequent successor to
the rights, acquire newly issued shares of the joint-stock
company and/or make use of their right of priority to acquire
the shares of the joint-stock company "Mažeikių nafta" that
belong to the state by right of ownership.
4. While deciding whether Paragraph 2 (wording of 4 June
2002) of Article 4 of the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" to the extent indicated is not in conflict with
the Constitution, it is to be noted that the provisions of this
paragraph are to be construed while relating them with other
provisions of the Law, as well as the provisions of some other
laws; moreover, the legal regulation entrenched in the Law has
been changing all the time.
5. On 2 July 1997, the Seimas adopted the Republic of
Lithuania Law on Loans from Foreign Banks to Finance the
Project of Būtingė Oil Terminal, by which it was decided to
take foreign loans from foreign banks (confirmed by the
Government) and/or to provide these banks with the state
guarantees on the granted loans to the joint-stock company
"Būtingės nafta" to finance the project of Būtingė oil terminal
(Article 1). This law became effective on 16 July 1997.
Its provisions were changed by the Law on Amending and
Supplementing the Republic of Lithuania Law on Loans from
Foreign Banks to Finance the Project of Būtingė Oil Terminal,
which was adopted on 28 April 1998 (which became effective on
13 May 1998).
On the same day, i.e. 28 April 1998, the Seimas adopted
the Law on the Investments into the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" and the
Requirements for the Owners of the Blocks of Shares, which
established the conditions of investing into each of these
enterprises in particular. It became effective on 13 May 1998.
This law has not made sure that investments were made into
these companies in a proper manner, nor did it help to attract
a strategic investor to any of these joint-stock companies.
6. On 29 September 1998, the Seimas adopted the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" that became effective on 14
October 1998.
In Article 1 of the Law (wording of 29 September 1998) the
purpose of this Law and its relation with other laws,
regulating the same relationships, was established: the Law
determines the reorganisation procedure of the joint-stock
companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis",
the conditions and procedure of the investments into the
company continuing its activity after the reorganisation, and
the requirements for the owners of blocks of shares (Paragraph
1); the reorganisation procedure of the joint-stock companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" and the
activity and management of the company which would continue its
activity after the reorganisation are regulated by the Law on
Companies, while the privatisation-by the Republic of Lithuania
Law on the Privatisation of State-owned and Municipal Property,
where the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" does not
provide otherwise (Paragraph 2). It is to be noted that the
joint-stock companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" had to be reorganised by merger of the companies
by incorporating the joint-stock companies "Būtingės nafta" and
"Naftotiekis", which had to terminate their activities as legal
persons, into continuing its activity joint-stock company
"Mažeikių nafta"; the requirements of Paragraphs 9, 10, 11, 13
and 14 (Paragraph 6 of Article 2) of Article 10 of the Law on
Companies had to be not applied to the said reorganisation
(Paragraph 1 of Article 2).
When the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
became effective, the Law on the Investments into the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" and the Requirements for the Owners of the Blocks
of Shares became no longer valid.
7. In the context of the constitutional justice case at
issue, it is to be mentioned that, according to Article 3
(wording of 29 September) of the Law, on presentation by the
Government and by the decision of the Seimas the confirmed
strategic investor was granted the right to acquire newly
issued shares of the joint-stock company "Mažeikių nafta",
which continued its activity after the reorganisation, the
total nominal value of which did not exceed 33 percent of the
company's authorised capital-in this case the authorised
capital of the joint-stock company "Mažeikių nafta" was
increased without applying the provisions of Paragraph 4 of
Article 43 of the Law on Companies and of Article 18 of the Law
on the Privatisation of State-owned and Municipal Property
(Paragraph 1); after the strategic investor had acquired the
new issue of shares of the joint-stock company "Mažeikių
nafta", the shares of the joint-stock company "Mažeikių nafta"
that belonged to the state by ownership right had to be
privatised only according to the procedure indicated in the Law
on the Privatisation of State-owned and Municipal Property
(Paragraph 2); after the privatisation the block of shares of
the joint-stock company "Mažeikių nafta", entitling to more
than 25 percent of votes in the general meeting of shareholders
had to belong to the state by ownership right (Paragraph 2).
It is also to be mentioned that, according to Article 4
(wording of 29 September 1998) of the Law, a block of shares of
this joint-stock company, entitling to more than 24 percent of
votes could not belong to each shareholder of the joint-stock
company "Mažeikių nafta", except the state and the strategic
investor, together with its controlled entities, the notion of
which is determined under the then Republic of Lithuania Law on
Public Trading in Securities (Paragraph 1); the state had the
right of priority to acquire the shares of the joint-stock
company "Mažeikių nafta" from the shareholders, to whom after
the reorganisation of the said joint-stock company belonged not
less than 1 percent of the shares by ownership right and who
sold or in other way transferred the shares of this joint-stock
company, and the Government had the right to establish such
right of priority also to the strategic investor (Paragraph 2).
Paragraph 2 (wording of 29 September 1998) of Article 4 of the
Law to the extent that the right of shareholders to transfer
their shares otherwise is restricted, by the Constitutional
Court ruling of 18 October 2000 was recognised as being in
conflict with Article 23 of the Constitution.
8. It is to be held that at the time when the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was adopted and became
effective, in Lithuania the economic system reform was taking
place, including inter alia also privatisation of the companies
which belonged to the state by right of ownership (totally or
in part). This privatisation of companies was regulated by the
Law on the Privatisation of State-owned and Municipal Property
providing for a possibility to privatise the said companies
also according to other laws (Article 2); such laws could be
designed for regulating the privatisation of certain companies
(even single companies)-in this regard differentiated legal
regulation could be established in these laws.
In this context, it is to be noted that, as the
Constitutional Court has held, peculiarities of the development
of this country, conditions of state-owned enterprises, the
situation in the national economy and other factors influence
on the choice of methods of privatisation. Implementing the
economic reform, the state may establish differentiated legal
regulation, by not violating the constitutional principles and
requirements of constitutional norms (Constitutional Court
ruling of 18 October 2000).
9. It is also to be held that in the joint-stock company
"Mažeikių nafta" which continued its activity after the
reorganisation a certain, relatively small, part of the shares
already belonged not to the state but to other shareholders,
who acquired the shares of the corresponding companies
according to the laws regulating the privatisation of
companies.
10. In Articles 3 and 4 (wording of 29 September 1998) the
notion of a strategic investor is used.
In this context, it is to be held, that the notion of a
strategic investor has been (is) used in various laws-those
being in effect before adoption and entry into effect of the
Law on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis", and others, adopted
and becoming effective soon after this law had become effective
(i.e. the Law on the Investments into the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" and the
Requirements for the Owners of the Blocks of Shares, the Law on
the Privatisation of State-owned and Municipal Property, the
Republic of Lithuania Law on Foreign Capital Investment in the
Republic of Lithuania, the Republic of Lithuania Law on
Investment, the Republic of Lithuania Law on Tax
Administration, the Republic of Lithuania Law on Rehabilitation
and Restructuring of the Capital of Companies, the Republic of
Lithuania Law on Public Procurement, etc).
While construing the legal status of the strategic
investor into the joint-stock company "Mažeikių nafta", inter
alia in the context of overall (i.e. established in various
laws) legal regulation consolidating the institute of a
strategic investor, it is to be noted that, on the one hand,
the strategic investor into the joint-stock company "Mažeikių
nafta", as well as the strategic investor into any other
enterprise, essentially differs from other subjects, who have
invested and will invest into a corresponding enterprise; on
the other hand, the strategic investor into the joint-stock
company "Mažeikių nafta" has certain peculiarities that are not
typical to strategic investors into other enterprises.
In this context it is to be mentioned that, according to
Paragraph 9 (still set forth in the wording of 4 November 1997)
of Article 1 of the Law on the Privatisation of State-owned and
Municipal Property which became effective on 1 December 1997
(thus, before the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
was adopted and became effective), the "Strategic Investor" is
a potential buyer (legal person or a group of legal persons)
recognised by a resolution of the Government, who acquires the
block of shares that belongs to the state or municipality by
right of ownership, and fulfils the established contractual
obligations, and according to Paragraph 1 (wording of 29
September 1998) of Article 3 of the Law on the Reorganisation
of Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis", the strategic investor to the joint-stock
company "Mažeikių nafta" could be recognised not by a
resolution of the Government but by a decision of the Seimas
adopted upon presentation by the Government.
It is also to be noted that according to the Section
"Economic Policy" of Paragraph 4 of Part I of the appendix to
the Law on the Basics of National Security (wording of 19
December 1996), the Seimas establishes by law the enterprises
and facilities (including those to be founded) that are of
strategic importance to national security; the law also
establishes which of these must belong to the state by
ownership right and where (and under what conditions) private
national and foreign capital conforming with the criteria of
the European and Transatlantic integration are allowed,
provided that the controlling decision power is retained by the
state. According to the Section "Long-range National Programmes
of Enhancing National Security" of Paragraph 11 of Part II of
the same appendix, one of the principle state long-range
programmes of enhancing national security is the programme on
stability and integration of the energy supply systems into
European energy supply systems. However, at the time when the
Law on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" was adopted and
became effective, there was no law in which the strategic
significance to national security of the joint-stock companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" or the
company continuing its activity after the reorganisation of the
said joint-stock companies was stated, because of which the
participation of the foreign capital that meets the European
and Transatlantic integration criteria in them should be
related to appropriate conditions.
Thus, the strategic investor into the joint-stock company
"Mažeikių nafta" provided by the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" by its legal status differs from strategic
investors to other companies. His legal status is special: it
is related with the fact that it is invested into a concrete
reorganised object, the joint-stock company "Mažeikių nafta",
also with that that a particular subject becomes a strategic
investor in a special way-he is recognised as a strategic
investor by the Seimas upon presentation by the Government.
It is to be mentioned that according to Paragraph 1 of
Article 1 of Seimas Resolution No. VIII-869 "On the Recognition
of the Strategic Investor" of 29 September 1998 (which became
effective on 15 October 1998), the United States of America
company Williams International Company was recognised the
strategic investor into the joint-stock company "Mažeikių
nafta", it was granted the right to acquire the shares of the
joint-stock company "Mažeikių nafta", which continued its
activity after reorganisation. This Paragraph of the Resolution
of the Seimas was recognised as being not in conflict with the
Constitution by the Constitutional Court ruling of 18 October
2000.
11. It was held that in the Law on the Privatisation of
State-owned and Municipal Property that regulated the
privatisation of the enterprises which belonged to the state
(totally or in part) by right of ownership a possibility was
provided for privatising the said enterprises also according to
other laws, which could be designed for regulating the
privatisation of certain enterprises (even single enterprises)
and in this regard for establishing differentiated legal
regulation.
11.1. It is to be held that the Law on the Reorganisation
of Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis", according to which in the established cases the
provisions of certain articles (their paragraphs) were not to
be applied, was a law consolidating the differentiated legal
regulation. A mere fact that the Law consolidated the
appropriate differentiated legal regulation does not mean in
itself that it is in conflict with the Constitution
(Constitutional Court ruling of 18 October 2000).
11.2. It is also to be held that the legal regulation
established in the Law was differentiated only in certain
respects: it was established that only certain articles (their
paragraphs) of the Law on the Joint-stock Companies and of the
Law on Privatisation of State-owned and Municipal Property
(paragraphs thereof) were not to be applied, and one expressis
verbis defined the cases when the provisions of these articles
(paragraphs thereof) were not to be applied.
11.3. Moreover, the above-mentioned differentiated legal
regulation was temporary in the regard that after the strategic
investor will have acquired the issue of shares of the
joint-stock company "Mažeikių nafta" continuing its activity
after the reorganisation (newly issued shares, the total
nominal value of which does not exceed 33 percent of the
joint-stock company's authorised capital), the shares that
belong to the state by right of ownership could be privatised
(leaving for the state the block of shares, entitling to more
than 25 percent of votes in the general meeting of
shareholders, and to no other subject except the state and the
strategic investor, together with its controlled entities,
allowing to acquire the block of shares entitling to more than
24 percent of votes in the general meeting of shareholders)
only according to the Law on the Privatisation of State-owned
and Municipal Property.
12. In the context of the constitutional justice case at
issue it is to be held that in the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" (wording of 29 September 1998):
- the following special requirements for the owners of the
blocks of shares of the joint-stock company "Mažeikių nafta"
continuing its activity after the reorganisation were
established: (1) while increasing the authorised capital of
this joint-stock company, the strategic investor (which, as
said, was recognised the United States of America company
Williams International Company) could acquire the newly issued
shares whose total nominal value does not exceed 33 percent of
the joint-stock company's authorised capital; (2) the block of
shares, entitling to more than 25 percent of votes in the
general meeting of shareholders, had to belong to the state by
right of ownership; (3) every other shareholder of the
joint-stock company "Mažeikių nafta", save the state and the
strategic investor, together with its controlled entities,
could not hold the block of shares entitling to more than 24
percent of votes in the general meeting of shareholders;
- a different procedure (in respect of other enterprises)
for increasing the authorised capital (by additional
contributions) of the joint-stock company "Mažeikių nafta"
continuing its activity after the reorganisation was
established: the authorised capital had to be increased without
applying certain provisions of the Law on Companies regulating
the authorised capital increase of joint-stock companies, as
well as certain provisions of the Law on the Privatisation of
State-owned and Municipal Property regulating the disposal of
shares of the joint-stock company, which by right of ownership
belong to the state, to other persons and the transfer of the
state control to other persons in the enterprise by that time
controlled by the state.
13. At the time when the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" was adopted and became effective, the Law on
Public Trading in Securities was in force, in Article 10 of
which (wording of 19 March 1998) it was established:
- in Paragraph 1: persons, who intend to acquire a block
of securities of the issuer, may do so by means of the official
offer; the official offer means the procedure of stating that a
natural or legal person is willing to acquire a part or all the
securities of the issuer; official offers are executed through
the Securities Exchange;
- in Paragraph 2: official offers to acquire the
securities of the accountable issuer may be obligatory or
voluntary; if a person, acting either alone or together with
other persons, acquires more than 50 percent of the votes at
the general meeting of shareholders of the issuer who has
issued securities into public trading, he must submit an
official offer to buy up the remaining shares of the issuer,
confirming the right to acquire the securities granting the
right to vote, at the price stated in the offer; this price
shall be registered with the Securities Commission, and it must
not be less than the weighted average of the prices of shares
that the offeror had acquired over 12 months before exceeding
the 50 percent limit.
- in Paragraph 3: the person, acting either alone or
together with other persons from the moment of exceeding the 50
percent of votes limit specified in Paragraph 2 of this Article
till the official offer is registered with the Securities
Commission is deprived of all rights to vote in the general
meetings of shareholders of the issuer; the person, acting
independently or in a concert with other persons regain his
right to vote on the day when the official offer is registered
with the Securities Commission or a securities transfer
transaction is concluded that would decrease the number of the
votes possessed at least to the 50 percent limit specified in
Paragraph 2 of this Article;
- in Paragraph 4: the official offers are registered with
and their submission and implementation rules are established
by the Securities Commission, by taking into account the size
of the issuers and the securities that they issued into public
trading; the Securities Commission has the right to establish
exceptions, when after having exceeded the 50 percent limit
specified in Paragraph 2 of this Article the obligatory
official offer is not to be made.
It is to be held that the provision of Paragraph 4
(wording of 19 March 1998) of Article 10 of the then Law on
Public Trading in Securities, under which the Securities
Commission has the right to establish exceptions when after
having exceeded the 50 percent limit specified in Paragraph 2
of this Article the obligatory official offer is not to be
made, as well as other provisions of this Article, in the
constitutional justice case at issue are not investigated in
the aspect of their compliance with the Constitution.
14. In the context of the constitutional justice case at
issue it is to be emphasised that the Law on the Reorganisation
of Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" (wording of 29 September 1998) in general did not
regulate the relations, related to the official offer (inter
alia obligatory one) to acquire the securities of the issuer
(hereinafter also referred to as the official offer, obligatory
official offer), established in Article 10 (wording of 19 March
1998) of the Law on Public Trading in Securities.
15. On 3 June 1999 the Seimas adopted the Republic of
Lithuania Law on Amending and Supplementing Article 3 of the
Law on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" that became
effective on 9 June 1999.
16. On the same day, i.e. 3 June 1999 the Seimas adopted
the Law on Amending the Republic of Lithuania Law on Loans from
Foreign Banks to Finance the Project of Būtingė Oil Terminal,
by which the Law on Loans from Foreign Banks to Finance the
Project of Būtingė Oil Terminal, adopted on 2 July 1997 (with
subsequent amendments) was amended. The title of the Law on
Loans from Foreign Banks to Finance the Project of Būtingė Oil
Terminal was also changed: since then it has been called the
Republic of Lithuania Law on Loans from Foreign Banks to
Finance the Project of the Reconstruction of the Mažeikiai Oil
Refining Factory of the Joint-stock Company "Mažeikių nafta"
and of the Construction of Būtingė Oil Terminal and to
Complement Current Assets of the Joint-stock Company "Mažeikių
nafta".
The provisions of the aforementioned law were amended by
the Republic of Lithuania Law on Amending and Supplementing
Articles 1 and 2 of the Law on Loans from Foreign Banks to
Finance the Project of the Reconstruction of the Mažeikiai Oil
Refining Factory of the Joint-stock Company "Mažeikių nafta"
and of the Construction of Būtingė Oil Terminal and to
Complement Current Assets of the Joint-stock Company "Mažeikių
nafta" which was adopted on 5 October 1999 and became effective
on 15 October 1999.
Later the said law was once again amended and set forth in
the new wording by the Republic of Lithuania Law on Amending
the Law on Loans from Foreign Banks to Finance the Project of
the Reconstruction of the Mažeikiai Oil Refining Factory of the
Joint-stock Company "Mažeikių nafta" and of the Construction of
Būtingė Oil Terminal and to Complement Current Assets of the
Joint-stock Company "Mažeikių nafta" which was adopted on 29
April 2003 and became effective on 15 May 2003: since then it
has been called the Republic of Lithuania Law on Taking Loans
from the Creditors in Order to Finance the Joint-stock Company
"Mažeikių nafta" and on Granting State Guarantees to the
Creditors.
17. Article 3 (wording of 29 September 1998) of the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was amended and supplemented
by Article 1 of the Law on Amending and Supplementing Article 3
of the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"; this
Article (wording of 3 June 1999) was set forth as follows:
"1. The strategic investor, recognised as such upon the
recommendation of the Government and by a decision of the
Seimas, shall be granted the right:
1) to acquire newly issued shares of the joint-stock
company 'Mažeikių nafta' which continues its activity after the
reorganisation upon the increase of the authorised capital of
this company; the general nominal value of these shares must
not exceed 33 percent of the authorised capital of the said
company;
2) within a 5-year period at any time from the acquisition
of the shares pointed out in Item 1 of Paragraph 1 of this
Article by the strategic investor, to acquire newly issued
shares of the joint-stock company 'Mažeikių nafta' upon the
increase of the authorised capital of this company, the nominal
value of which together with those pointed out in Item 1 of
Paragraph 1 of this Article does not exceed 49.5 percent of the
authorised capital of the joint-stock company 'Mažeikių nafta';
3) to purchase from the State, after the strategic
investor has acquired the shares pointed out in Item 2 of this
Article, the shares belonging to the State by right of
ownership the nominal value of which does not exceed 16.5
percent of the authorised capital of the joint-stock company
'Mažeikių nafta' which is registered at that time, and it shall
be established that the strategic investor may purchase these
shares in portions under the procedure established by the
Government of the Republic of Lithuania. The strategic investor
shall be entitled to make use of this right for 7 years from
the moment of the acquisition of the shares pointed out in Item
1 of Paragraph 1 of this Article.
2. In the course of the acquisition of the shares by the
strategic investor under Items 1 and 2 of Paragraph 1 of this
Article, the authorised capital of the joint-stock company
'Mažeikių nafta' shall be increased without application of the
provisions of Paragraph 4 of Article 43 of the Company Law and
Article 18 of the Law on Privatisation of State-owned and Local
Government Property. In the course of the sale of the shares,
belonging to the State by right of ownership, of the joint
stock-company 'Mažeikių nafta' which are pointed out in Item 3
of Paragraph 1 of this Article to the strategic investor, the
provisions of the Law on Privatisation of State-owned and Local
Government Property and those of Paragraph 2 of Article 8 and
Article 10 of the Law on Public Trading in Securities shall not
be applied. The rest of the shares of the joint-stock company
'Mažeikių nafta' which belong to the State by right of
ownership shall be privatised only under the procedure
established by the Law on Privatisation of State-owned and
Local Government Property. After the privatisation, the State
must retain in its ownership a block of shares of the
joint-stock company 'Mažeikių nafta' granting more than 25
percent of votes in the general meeting of the shareholders. If
the Seimas adopts a decision to privatise still a greater
portion of the shares of the joint-stock company 'Mažeikių
nafta', the strategic interests of the state will be secured by
law.
3. After the strategic investor has acquired the shares
under Item 1 of Paragraph 1 of this Article, state institutions
will not be permitted to present additional requirements, as
regards the period prior to the acquisition of the shares by
the strategic investor, to the joint-stock company 'Mažeikių
nafta' concerning the activities or failure of the joint-stock
company 'Mažeikių nafta' continuing its activities after the
reorganisation. The Government of the Republic of Lithuania, in
the agreement with the strategic investor, has the right to
assume liabilities in the name of the State to recover the
losses to the strategic investor, which may be incurred within
1 year from the acquisition of the shares pointed out in Item 1
of Paragraph 1 of this Article due to demands of other persons
for the joint-stock company 'Mažeikių nafta' continuing its
activities after the reorganisation concerning its activities
or failure in the period prior to the acquisition of the shares
by the strategic investor.
4. The notice about the first meeting of shareholders of
the joint-stock company 'Mažeikių nafta', which will take place
after the strategic investor has acquired the shares pointed
out in Item 1 of Paragraph 1 of this Article, shall be publicly
announced no later than 10 days prior to the day of the
meeting, while the announced draft agenda of the meeting shall
not be further specified. In this case the provisions of
Paragraph 6 of Article 21 and Paragraphs 1 and 3 of Article 22
of the Company Law shall not be applicable."
18. It is to be held that after having set forth Article 3
of the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" in the
wording of 3 June 1999, the following certain legal regulation
novels were entrenched inter alia in the law:
- the previously established requirements for one of the
owners of the blocks of shares, the strategic investor of the
joint-stock company "Mažeikių nafta" which continues its
activity after the reorganisation (which, as mentioned, was
recognised the United States of America company Williams
International Company) were changed without changing them for
other owners of the blocks of shares (the block of shares
entitling to more than 25 percent of votes in the general
meeting of shareholders had to belong to the state by right of
ownership, and a block of shares entitling to not more than 24
percent of votes in the general meeting of shareholders had to
belong to any other shareholder of the joint-stock company
"Mažeikių nafta" except the state and the strategic investor
together with its controlled entities), additionally, the newly
established requirements for the strategic investor as the
owner of the block of shares depended on whether the authorised
capital of this joint-stock company would be increased and
whether the strategic investor (i.e. Williams International
Company) would try to acquire even more shares of the
joint-stock company "Mažeikių nafta": (1) as previously, by
increasing the authorised capital of this joint-stock company
the strategic investor could acquire the newly issued shares
whose total nominal value does not exceed 33 percent of its
authorised capital; (2) by increasing the authorised capital
once more at any time within 5 years after the strategic
investor has acquired the shares of the joint-stock company
"Mažeikių nafta", newly issued after the authorised capital of
this joint-stock company is increased for the first time under
this law, the strategic investor could acquire the newly issued
shares whose total nominal value together with the shares
acquired during the said first increase of the authorised
capital does not exceed 49.5 percent of the authorised capital;
(3) the strategic investor who acquired the shares comprising
49.5 percent of the authorised capital of the joint-stock
company "Mažeikių nafta", within 7 years after the strategic
investor has acquired the shares of the joint-stock company
"Mažeikių nafta", newly issued after the authorised capital of
this joint-stock company is increased for the first time under
this law, could purchase (at once or in portions) the shares
that by right of ownership belonged to the state and whose
total nominal value does not exceed 16.5 percent of the then
registered authorised capital of the joint-stock company
"Mažeikių nafta"; (4) it was committed to establish by law the
securing of the strategic interests of the state in case if it
was decided to reduce the block of shares which belongs to the
state by right of ownership and which would entitle to not more
than 25 percent of votes in the general meeting of
shareholders;
- if the strategic investor made use of the said
possibility to purchase (at once or in portions) the shares
which by right of ownership belong to the state and whose total
nominal value would not exceed 16.5 percent of the then
registered authorised capital of the joint-stock company
"Mažeikių nafta" (theretofore, increasing the authorised
capital of this joint-stock company according to the Law,
respectively increased his block of shares to 49.5 percent of
the authorised capital), it would be done without applying
inter alia Article 10 (wording of 19 March 1998) of the Law on
Public Trading in Securities, i.e. even though the strategic
investor exceeded the 50 percent limit indicated in this
Article, he would not be obliged to submit an official offer to
acquire the securities of the issuer; besides, Paragraph 2
(where it is established that if the securities which are
registered with the Securities Commission when intending to
issue them to public trading are included in the official or
current list of the securities to be traded of the Stock
Exchange registered in the Republic of Lithuania, their
purchasing-sale transactions of the secondary trading are
concluded only with the Stock Exchange)-respective transactions
would be concluded not with the Stock Exchange, especially when
according to Paragraph 3 (wording of 19 March 1998) of Article
8 (wording of 19 March 1998) of the Law on Public Trading in
Securities, the provisions of Paragraph 2 of this article are
not applied if other laws establish a different procedure of
public trading in securities.
It is to be emphasised that by the provision stating that
when acquiring the shares of the joint-stock company "Mažeikių
nafta" the 50 percent limit of votes in the general meeting of
shareholders is exceeded, the official offer to acquire the
shares of this joint-stock company which belong to other
shareholders does not have to be submitted (differently than in
such cases required according to the then Law on Public Trading
in Securities) was for the first time established exactly in
Article 3 (wording of 3 June 1999) of the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis"; it is also to be noted that
the said official offer does not have to be submitted only
under all the conditions provided for in this Article: (1) 7
years may not pass since the strategic investor has acquired
the shares of the joint-stock company "Mažeikių nafta", newly
issued after the authorised capital of this joint-stock company
was under this Law increased for the first time; (2) under the
procedure established by the Law the strategic investor had to
acquire the shares of the joint-stock company "Mažeikių nafta"
whose total nominal value comprised 49.5 percent of the
authorised capital of the joint-stock company "Mažeikių nafta";
(3) the acquired shares had to belong to the state by right of
ownership and the strategic investor could only acquire them
from the state; (4) the total nominal value of the acquired
shares could not exceed 16.5 percent of the then registered
authorised capital of the joint-stock company "Mažeikių nafta".
19. On 5 October 1999, the Seimas adopted the Republic of
Lithuania Law on Amending and Supplementing Articles 3 and 4 of
the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" that
became effective on 15 October 1999.
Articles 1 and 2 of the Law on Amending and Supplementing
Articles 3 and 4 of the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" amended and (respectively) supplemented Articles
(and their Paragraphs (Items)) 3 (wording of 3 June 1999) and 4
(wording of 29 September 1998) of the Law on the Reorganisation
of Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis".
19.1. Article 3 (wording of 5 October 1999) of the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was set forth as follows:
"1. The strategic investor, recognised as such upon the
recommendation of the Government and by a decision of the
Seimas, shall be granted the right:
1) to acquire newly issued shares of the joint-stock
company 'Mažeikių nafta' which continues its activity after the
reorganisation upon the increase of the authorised capital of
this company; the general nominal value of these shares must
not exceed 33 percent of the authorised capital of the said
company;
2) after he has requested so, within a 5-year period at
any time from his acquisition of the shares pointed out in Item
1 of Paragraph 1 of this Article, to acquire newly issued
shares of the joint-stock company 'Mažeikių nafta' upon the
increase of the authorised capital of this company, the nominal
value of which together with those pointed out in Item 1 of
Paragraph 1 of this Article does not exceed 49.5 percent of the
authorised capital of the joint-stock company 'Mažeikių nafta';
3) to purchase from the State, after the strategic
investor has acquired the shares pointed out in Item 2 of this
Article, the shares belonging to the State by right of
ownership the nominal value of which does not exceed 16.5
percent of the authorised capital of the joint-stock company
'Mažeikių nafta' which is registered at that time. The
strategic investor may purchase these shares in portions under
the procedure established by the Government of the Republic of
Lithuania. The strategic investor shall be entitled to make use
of this right on request at any time within 7 years from the
moment of the acquisition of the shares pointed out in Item 1
of Paragraph 1 of this Article. The Government of the Republic
of Lithuania in its agreements with the strategic investor may
stipulate that part of the shares pointed out in this Item may
be transferred to the crude oil suppliers of the joint-stock
company 'Mažeikių nafta' and/or financial institutions.
2. In case that at any time until the acquisition of the
shares by the strategic investor under Item 2 of Paragraph 1 of
this Article the authorised capital of the joint-stock company
is increased by additional contributions of other persons but
not the strategic investor and in case the strategic investor
requests so, the Government of the Republic of Lithuania will
transfer him gratis a corresponding portion of shares of the
joint-stock company 'Mažeikių nafta', which belong to the State
by right of ownership, so that the nominal value of the shares
of the joint-stock company 'Mažeikių nafta', which belong to
him by right of ownership, would correspond to the same portion
in terms of percents of the authorised capital of this company
which was possessed by the strategic investor prior to the
increase of the authorised capital by means of the additional
contributions. In the course of the transfer of shares of the
joint-stock company 'Mažeikių nafta' in pursuance of the
requirements of this Paragraph, the provisions of the Law on
Privatisation of State-owned and Local Government Property
shall not be applicable. In the course of the acquisition of
shares of the joint-stock company 'Mažeikių nafta' by the
financial institutions pointed out in the concluded agreement
between the Government of the Republic of Lithuania and the
strategic investor, the authorised capital of the said company
shall be increased without application of the norms of
Paragraph 4 of Article 43 of the Company Law and those of the
Law on Privatisation of State-owned and Local Government
Property.
3. In the course of the acquisition of the shares by the
strategic investor under Items 1 and 2 of Paragraph 1 of this
Article, the authorised capital of the joint-stock company
'Mažeikių nafta' shall be increased without application of the
provisions of Paragraph 4 of Article 43 of the Company Law and
Article 18 of the Law on Privatisation of State-owned and Local
Government Property. In the course of the sale of the shares,
belonging to the State by right of ownership, of the joint
stock-company 'Mažeikių nafta' which are pointed out in Item 3
of Paragraph 1 of this Article to the strategic investor or
crude oil suppliers of the joint-stock company 'Mažeikių nafta'
and/or financial institutions, the provisions of the Law on
Privatisation of State-owned and Local Government Property and
those of Paragraph 2 of Article 8 and Article 10 of the Law on
Public Trading in Securities shall not be applied. With the
exception of the cases provided for in Paragraph 2 of Article 3
and Paragraph 3 of Article 4 of this Law, the rest of the
shares of the joint-stock company 'Mažeikių nafta' which belong
to the State by right of ownership shall be privatised only
under the procedure established by the Law on Privatisation of
State-owned and Local Government Property.
4. After the strategic investor has acquired the shares
under Item 1 of Paragraph 1 of this Article, state and local
government institutions will not be permitted to present
additional requirements, as regards the period prior to the
acquisition of the shares by the strategic investor, either to
the joint-stock company 'Mažeikių nafta' or its subsidiaries
concerning the activities or failure of the joint-stock company
'Mažeikių nafta' or its subsidiaries or other events. The
Government of the Republic of Lithuania, in the agreements with
the strategic investor and/or the joint-stock company 'Mažeikių
nafta', has the right to assume basic property liabilities in
the name of the State, including recovery of losses. Such
losses include or may be incurred due to that fact that the
Government of the Republic of Lithuania may not carry out its
agreement obligations because of changes in the laws of the
Republic of Lithuania and because of the fact that the
information, statements and/or confirmations pointed out in the
agreements concluded by the Government of the Republic of
Lithuania and annexes thereto (including the presented
information revealing documents of the joint-stock company
'Mažeikių nafta') were false or inexact.
5. The notice about the first meeting of shareholders of
the joint-stock company 'Mažeikių nafta', which will take place
after the strategic investor has acquired the shares pointed
out in Item 1 of Paragraph 1 of this Article, shall be publicly
announced no later than 10 days prior to the day of the
meeting, while the announced draft agenda of the meeting shall
not be further specified. In this case the provisions of
Paragraph 6 of Article 21 and Paragraphs 1 and 3 of Article 22
of the Company Law shall not be applicable.
6. In the course of the acquisition of the shares by the
strategic investor under the provisions of this Article, as
well as in the course of conclusion of agreements by the
joint-stock company 'Mažeikių nafta' on acquisition of the
right of control in the joint-stock company 'Klaipėdos nafta',
the provisions of Chapter 3 of the Law on Competition shall not
be applicable. The provisions of Paragraphs 3 and 4 of Article
30 and Paragraph 6 of Article 45 of the Company Law shall not
be applicable to the joint-stock company 'Mažeikių nafta'.
7. In the agreements with the strategic investor and the
joint-stock company 'Mažeikių nafta', the Government of the
Republic of Lithuania shall be granted the right independently
to establish the method and procedure under which the
joint-stock company 'Mažeikių nafta' would compensate the
strategic investor a possible decrease of value of the said
company. The compensation sum of the joint-stock company
'Mažeikių nafta' to the strategic investor may not exceed US$75
million."
It is to be noted that under the Constitutional Court
ruling of 18 October 2000, the provision of Paragraph 4 of
Article 3 (wording of 5 October 1999) of the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" stating (1) that in its
agreements with the strategic investor and the joint-stock
company "Mažeikių nafta" the Government has the right to assume
basic property liabilities in the name of the state before the
strategic investor and/or the joint-stock company "Mažeikių
nafta", including recovery of losses was recognised as being in
conflict with Paragraph 1 of Article 5 and Paragraph 1 of
Article 128 of the Constitution; (2) that in its agreements
with the strategic investor and the joint-stock company
"Mažeikių nafta" the Government has the right to assume basic
property liabilities in the name of the state before the
strategic investor and/or the joint-stock company "Mažeikių
nafta", including recovery of losses to the extent that it
establishes the right of the Government to assume liabilities
to also recover losses appearing because of the fault of the
strategic investor and the joint-stock company "Mažeikių nafta"
was recognised as being in conflict with Paragraph 3 of Article
46 of the Constitution, with the constitutional principle of a
state under the rule of law; (3) that in its agreements with
the strategic investor and the joint-stock company "Mažeikių
nafta" the Government has the right to assume basic property
liabilities in the name of the state before the strategic
investor and/or the joint-stock company "Mažeikių nafta",
including recovery of losses to the extent that it establishes
the right of the Government to assume liabilities to also
recover losses only in the event that they appear after having
adopted the laws by which the norms are implemented and/or the
values consolidated in the Constitution are protected, was
recognised as being in conflict with Article 4 of the
Constitution and with the constitutional principle of a state
under the rule of law.
It is also to be noted that under the Constitutional Court
ruling of 17 October 2003, the provision "after the strategic
investor acquires the shares under Item 1 of Paragraph 1 of
this Article neither State nor municipal institutions will be
permitted to raise additional claims to the joint-stock company
'Mažeikių nafta' and its subsidiaries concerning activity or
failure to act of the joint-stock company 'Mažeikių nafta' or
its subsidiaries or as regards other events, all of which took
place prior to the acquisition of the shares by the strategic
investor" of Paragraph 4 (wording of 5 October 1999) of Article
3 (wording of 5 October 1999) of the Law on the Reorganisation
of Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" (1) was recognised as being in conflict with
Paragraphs 3, 4 and 5 of Article 46 of the Constitution and
with the constitutional principle of a state under the rule of
law; (2) to the extent that it established that the municipal
institutions will not be permitted to raise additional claims
specified in this provision was recognised as being in conflict
with Paragraph 2 of Article 120 and Article 122 of the
Constitution.
19.2. Article 4 (wording of 5 October 1999) of the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was set forth as follows:
"1. A block of shares of the joint-stock company "Mažeikių
nafta", entitling to more than 24 percent of votes cannot
belong to every shareholder of this joint-stock company, except
the state and the strategic investor, together with its
controlled entities, the notion of which is determined in the
Republic of Lithuania Law on Public Trading in Securities.
2. The state shall have the right of priority in
acquisition of the shares sold or transferred otherwise, which
belong to the other shareholders holding not less than 1
percent of the shares of the joint-stock company 'Mažeikių
nafta' which continues its activity after the reorganisation.
The Government shall have the right to establish the same right
of priority to the strategic investor as well. The period
during which the state has the right of priority to acquire the
shares of the joint-stock company 'Mažeikių nafta' from the
strategic investor and for the procedure of implementation of
such a right is established in the agreement between the
Government and the strategic investor. Under the procedure
established in the agreement with the Government the strategic
investor has the right to transfer the shares of the
joint-stock company 'Mažeikių nafta' which belong to him by
right of ownership to the enterprises whose all the shares
and/or capital (either directly or indirectly) belong to the
strategic investor by right of ownership.
3. In the case that the strategic investor has not sold or
transferred otherwise the shares of the joint-stock company
that he had acquired under Item 1 of Paragraph 1 of Article 3
of this Law (save transfer of the shares to the enterprises
whose all the shares and/or capital (directly or indirectly)
belong to the strategic investor by right of ownership) and it
is decided to privatise, sell or in any other way transfer the
number of shares which by right of ownership belong to the
state so that after such privatisation, selling or transfer the
total nominal value of the shares that by right of ownership
belong to the state would comprise less than 18 percent of the
authorised capital of this company, the strategic investor will
have the right of priority to acquire all or part of the shares
sold or in other way transferred by the state without applying
the Law on the Privatisation of State-owned and Municipal
Property. This provision of priority is also applied in such a
case when the total nominal value of the shares that by right
of ownership belong to the state continues to decrease due to
subsequent transfers of the shares that belong to the state."
It is to be mentioned that Paragraph 2 of Article 4
(wording of 5 October 1999) of the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" to the extent that it restricts the right of the
shareholders to transfer shares, by the Constitutional Court
ruling of 18 October 2000 was recognised as being in conflict
with Article 23 of the Constitution.
20. It is to be held that having set forth Articles 3 and
4 of the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" in the
wording of 5 October 1999, certain novels of legal regulation
were consolidated in the Law, inter alia:
- the previously established requirements for one of the
owners of the blocks of shares, strategic investor of the
joint-stock company "Mažeikių nafta" which continues its
activity after the reorganisation (which, as mentioned, was
recognised the United States of America company Williams
International Company) were particularised, however, these
particularised requirements for the strategic investor as the
owner of the block of shares, as before, depended on whether
the authorised capital of this joint-stock company would be
increased and whether the strategic investor (i.e. Williams
International Company) would seek to acquire more shares of the
joint-stock company "Mažeikių nafta": (1) as before, by
increasing the authorised capital of the joint-stock company
"Mažeikių nafta" the strategic investor could acquire the newly
issued shares, whose total nominal value does not exceed 33
percent of its authorised capital; (2) as before, by increasing
the authorised capital once more at any time within 5 years
after the strategic investor has acquired the shares of the
joint-stock company "Mažeikių nafta", newly issued after the
authorised capital of this joint-stock company is increased for
the first time under this law, the strategic investor could
acquire the newly issued shares whose total nominal value
together with the shares acquired during the said first
increase of the authorised capital does not exceed 49.5 percent
of the authorised capital; however, it was particularised that
it is done on demand by the strategic investor (therefore, not
by other investors, inter alia not by the state) declared at
any time within the established 5-year term; (3) as before, the
strategic investor who had acquired the shares comprising 49.5
percent of the authorised capital of the joint-stock company
"Mažeikių nafta", within the 7-year term after it had acquired
the shares of the joint-stock company "Mažeikių nafta", newly
issued after the authorised capital of this joint-stock company
had been increased for the first time under this law, could
purchase (at once or in portions) the shares that by right of
ownership belonged to the state and whose total nominal value
did not exceed 16.5 percent of the then registered authorised
capital of the joint-stock company "Mažeikių nafta"; however,
it was particularised that it is done on demand by the
strategic investor (therefore, not by other investors, inter
alia not by the state) declared at any time within the
established 7-year term;
- no requirement was left that the block of shares
entitling to more than 25 percent of votes in the general
meeting of shareholders would belong to the state by right of
ownership (moreover, no legal regulation novels that could be
interpreted as implementing the earlier provision, i.e. that
declared in Paragraph 2 (wording of 3 June 1999) of Article 3
of the Law stating that when the block of shares of the
joint-stock company "Mažeikių nafta" which belongs to the state
by right of ownership is decreased so, that it would entitle to
not more than 25 percent of votes in the general meeting of
shareholders, the securing of the strategic interests of the
state will be established by the law);
- certain potential owners of the blocks of shares of the
joint-stock company "Mažeikių nafta" were established, which
were not expressis verbis mentioned in the provisions of the
Law of previous wordings, and a way was established by which
these entities can acquire the shares of this joint-stock
company: (1) in the agreements between the Government and the
strategic investor one could provide that a part of the shares
that belong to the state by right of ownership would be
transferred to the oil suppliers of the joint-stock company
"Mažeikių nafta" and/or financial institutions; (2) in the
agreements between the Government and the strategic investor a
procedure could be established under which the strategic
investor has the right to transfer the shares of the
joint-stock company "Mažeikių nafta" which belong to him by
right of ownership to the enterprises whose all the shares
and/or capital belong (directly or indirectly) to the strategic
investor by right of ownership-the said provision is to be
assessed as obliging the Government under no circumstances to
conclude with the strategic investor any such agreements, which
would not secure the interests of Lithuania when privatising
the joint-stock company "Mažeikių nafta" which continues its
activity after the reorganisation of the joint-stock companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" and inter
alia proper investment into joint-stock company (e.g. such
agreements under which after transferring the shares of the
joint-stock company "Mažeikių nafta" that belong to the
strategic investor by right of ownership to the enterprises
whose all the shares and/or capital belong to him by right of
ownership, could avoid such liabilities that are arise to him,
as the strategic investor, from the legal acts of the Republic
of Lithuania and such agreements, according to which the
aforementioned enterprises whose all shares and/or capital
belong to the strategic investor by right of ownership, could
transfer the shares of the joint-stock company "Mažeikių nafta"
acquired under this provision of Paragraph 2 of Article 4
(wording of 5 October 1999) of this Law to other persons
without the will of the competent institutions of the Republic
of Lithuania, etc.);
- the legal regulation was established that the fact of
whether new owners of blocks of shares would appear in the
course of privatising, selling or transferring otherwise the
shares of the joint-stock company "Mažeikių nafta" that by
right of ownership belong to the state, and of what size these
blocks of shares would be, partially depended on the will of
the strategic investor: in such case, when the strategic
investor has not sold or transferred otherwise the shares of
the joint-stock company "Mažeikių nafta", whose total nominal
value does not exceed 33 percent of the authorised capital of
this joint-stock company and which were acquired after the
authorised capital was increased for the first time under this
law (except transferring of the shares to the enterprises,
whose all the shares and/or capital by right of ownership
belong to the strategic investor), and it is decided to
privatise, sell or transfer otherwise such a number of the
shares which by right of ownership belong to the state, so that
after such privatisation, sale or transferring the total
nominal value of the shares of the joint-stock company
"Mažeikių nafta" that by right of ownership belong to the state
would comprise less than 18 percent of the authorised capital
of this company, also in such case when the total nominal value
of the shares of the joint-stock company "Mažeikių nafta" that
belong to the state continues to decrease due to subsequent
transfers of shares of this joint-stock company that belong to
the state, the strategic investor had the right of priority to
acquire all the shares or part of them sold or transferred
otherwise by the state without applying the Law on the
Privatisation of State-owned and Municipal Property (thus, not
in the ways and under the procedure that were then established
or could be established in the future by the Law on the
Privatisation of State-owned and Municipal Property);
- the equalisation (presumed losses compensation)
mechanism of the part of the authorised capital that belongs to
the strategic investor was consolidated-the obligation of the
state to ensure that on the strategic investor's demand, the
part of the authorised capital of the joint-stock company
"Mažeikių nafta" that belongs to him, acquired after the
authorised capital of the company increased for the first time
was under this law, would remain unchanged: if at any time
before the strategic investor will acquire the newly issued
shares whose total nominal value together with those acquired
during the said first increase of the authorised capital did
not exceed 49.5 percent of the authorised capital of this
joint-stock company, its authorised capital would be increased
by additional contributions of not the strategic investor but
other persons and if the strategic investor requested, the
Government would and without applying the provisions of the Law
on the Privatisation of State-owned and Municipal Property (and
in case the newly issued shares are acquired by the financial
institutions specified in the concluded agreement between the
Government and the strategic investor-without applying certain
provisions of the Law on Companies) transfer gratis to the
strategic investor such a number of shares of the joint-stock
company "Mažeikių nafta" which by right of ownership belong to
the state that the total nominal value of the shares held by
the strategic investor by right of ownership would correspond
the same percentage of the authorised capital of this company
that the strategic investor held before the authorised capital
was increased by additional contributions;
- the list of cases when while acquiring the shares of the
joint-stock company "Mažeikių nafta" the official offer to
acquire the shares of this joint-stock company which belong to
other shareholders (otherwise than it was required under the
then Law on Public Trading in Securities) was not obligatory
was extended: besides the provision previously consolidated in
the Law under which the said official offer had not to be
submitted when the strategic investor makes use of the
possibility entrenched in the Law to purchase (at once or in
portions) the shares which by right of ownership belong to the
state and whose total nominal value does not exceed 16.5
percent of the then registered authorised capital of the
joint-stock company "Mažeikių nafta" (who has previously
increased his block of shares to 49.5 percent of the authorised
capital by increasing the authorised capital of this
joint-stock company under the Law) and when acquiring these
shares the 50 percent votes limit in the general meeting of
shareholders is exceeded; it was also consolidated that the
official offer was not obligatory also when a part of the
shares that by right of ownership belonged to the state has
been acquired by any crude oil supplier to the joint-stock
company "Mažeikių nafta" and/or financial institution (who, as
mentioned, were named in the Law as possible owners of blocks
of shares of the joint-stock company "Mažeikių nafta"); in the
second case, as well as in the first, the requirement to
conclude proper transactions only at the Stock Exchange
consolidated in the then Law on Public Trading in Securities
would not be applied-such transactions would be concluded not
with the Stock Exchange.
In this context it is to be emphasised that the
non-application clause of the obligatory official offer (to
acquire the securities of the issuer) did not include cases
when the strategic investor could make use of the right of
priority to acquire all or part of the shares of the
joint-stock company "Mažeikių nafta" that were decided to
privatise, sell or transfer otherwise, which was entrenched in
the Law: (1) it was mentioned that in the case when the
strategic investor has not sold or transferred otherwise the
shares of the joint-stock company "Mažeikių nafta" whose total
nominal value does not exceed 33 percent of the authorised
capital of this joint-stock company and which were acquired
after its authorised capital was increased for the first time
under this Law (except transferring of the shares to the
enterprises, whose all the shares and/or capital belong to the
strategic investor by right of ownership) and when it is
decided to privatise, sell or transfer otherwise such a number
of shares which by right of ownership belong to the state, so
that after such privatisation, sale or transferring the total
nominal value of the shares of the joint-stock company
"Mažeikių nafta" that by right of ownership belong to the state
would comprise less than 18 percent of the authorised capital
of this company; (2) in the case where the total nominal value
of the shares of the joint-stock company "Mažeikių nafta" that
belong to the state continues to decrease due to subsequent
transfers of shares of this joint-stock company that belong to
the state, the strategic investor had the right of priority to
acquire all the shares or part of them sold or transferred
otherwise by the state (without applying the Law on the
Privatisation of State-owned and Municipal Property). In the
said cases it was mandatory to submit the official offer (to
acquire the securities of the issuer).
21. Summing up the legal regulation consolidated in the
Law on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis", adopted by the
Seimas on 29 September 1998 and in the laws amending and
supplementing it-the Law on Amending and Supplementing Article
3 of the Republic of Lithuania Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" adopted by the Seimas on 3 June 1999 and the Law
on Amending and Supplementing Articles 3 and 4 of the Republic
of Lithuania Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" adopted by
the Seimas on 5 October 1999-it is to be held that by adopting
these laws new provisions for the privatisation and management
of the joint-stock company "Mažeikių nafta" were entrenched
every time which basically differ from the general provisions
regulating the privatisation and management of enterprises,
entrenched in other laws, i.e. in this respect more and more
legal regulation exceptions were established, where certain
provisions of other laws were not to be applied for the
privatisation and management of the joint-stock company
"Mažeikių nafta". It is especially to be noted that by the
aforementioned laws providing for the non-application of
certain provisions of other laws in privatisation and
management of the joint-stock company "Mažeikių nafta" which
continued its activity after the reorganisation, while
regulating the privatisation and management relations of this
joint-stock company, inter alia interrelations of the strategic
investor, the state and other shareholders, the obligations of
the state to the strategic investor into the joint-stock
company "Mažeikių nafta" were constantly being increased
(which, as mentioned, was recognised the United States of
America company Williams International Company) and an
exceptional situation of the strategic investor in comparison
with other shareholders of this joint-stock company was
consolidated.
It was mentioned that (as held by the Constitutional Court
in its ruling of 18 October 2000) peculiarities of the
development of this country, conditions of the state-owned
enterprises, the situation in the national economy and other
factors exert influence on the choice of methods of
privatisation, also that implementing the economic reform the
state may establish the differentiated legal regulation by not
violating constitutional principles and norms. It was also
mentioned that the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis",
under which in the provided cases certain provisions of
articles (paragraphs thereof) of other laws were to be not
applicable, was exactly the law entrenching an appropriate
differentiated legal regulation and (as held by the
Constitutional Court in its ruling of 18 October 2000) that
only the fact that this law consolidated a differentiated legal
regulation, in itself did not mean that it was in conflict with
the Constitution. These provisions are mutatis mutandis
applicable also to the laws that amended and/or supplemented
the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" adopted by
the Seimas on 29 September 1998, namely to the Law on Amending
and Supplementing Article 3 of the Republic of Lithuania Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" adopted by the Seimas on 3
June 1999 and the Law on Amending and Supplementing Articles 3
and 4 of the Republic of Lithuania Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" adopted by the Seimas on 5 October 1999.
On the other hand, as mentioned, by implementing the
economic reform and establishing the differentiated legal
regulation, the state cannot violate the principles and norms
of the Constitution. This requirement also has to be respected
when entrenching into laws new provisions meant for
privatisation and management of the joint-stock company
"Mažeikių nafta"-more and more legal regulation exceptions when
certain provisions of other laws are not applied for the
privatisation and management of the joint-stock company
"Mažeikių nafta", inter alia increasing the obligations of the
state to the strategic investor into the joint-stock company
"Mažeikių nafta" and consolidating an exceptional situation of
the strategic investor in comparison with other shareholders of
this joint-stock company.
In its ruling of 18 October 2000, the Constitutional Court
(while construing the provisions of Seimas Resolution No.
VIII-869 "On the Recognition of the Strategic Investor" of 29
September 1999) stated that "such practice of legislation when
legal norms following which agreements ought to be concluded
are not set but, rather, agreements are reached first, and
legal norms are determined later, reflecting the agreement, is
a vicious one as it denies one of the most important principles
of adoption of laws and other legal acts, meaning that legal
acts must establish rules of conduct, which must be followed by
entities in the future only". This description fully applies to
certain common exceptions to the legal regulation established
in the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis", adopted
by the Seimas on 29 September 1998 and in the laws amending and
supplementing it-the Law on Amending and Supplementing Article
3 of the Republic of Lithuania Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" adopted by the Seimas on 3 June 1999 and the Law
on Amending and Supplementing Articles 3 and 4 of the Republic
of Lithuania Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" adopted by
the Seimas on 5 October 1999, when certain provisions of other
laws are not applied for the privatisation and management of
the joint-stock company "Mažeikių nafta" and, in certain cases,
exceptional in comparison with other shareholders of this
joint-stock company, for consolidating the situation of the
strategic investor in the aforementioned laws.
It is also to be held that by deciding upon the petition
of the petitioner whether Paragraph 2 (wording of 4 June 2002)
of Article 4 of the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
is not in conflict with the Constitution to the extent that it
establishes that the provisions of Article 19 of the Law on
Public Trading in Securities are not applied while concluding
and implementing the agreements specified in this paragraph;
the aforesaid exceptions of the general legal regulation
established in the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis",
adopted by the Seimas on 29 September 1998 and in the laws
amending and supplementing it-the Law on Amending and
Supplementing Article 3 of the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" adopted by the Seimas on 3 June 1999 and the Law
on Amending and Supplementing Articles 3 and 4 of the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" adopted by the Seimas on 5
October 1999 where certain provisions of other laws are not
applied to the privatisation and management of the joint-stock
company "Mažeikių nafta", and consolidation of the exceptional,
in comparison with other shareholders of this joint-stock
company, situation of the strategic investor in the said laws
are investigated only to the extent (differently from what it
was in such cases required under the then Law on Public Trading
in Securities) that it was established that it was not
mandatory to submit an official offer in order to acquire the
shares of the joint-stock company "Mažeikių nafta" that belong
to other shareholders. However, in itself this investigation
does not imply the investigation of the said provisions (not
effective at this time) in the aspect of their compliance with
the Constitution.
22. After the Seimas adopted the Law on Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" on 5 October 1999, the Government adopted the
following resolutions by which one attempted to implement the
provisions of the Law concerning conclusion of agreements with
the strategic investor into the joint-stock company "Mažeikių
nafta" and investments into this joint-stock company as well as
to implement the state obligations to the strategic investor:
Resolution No. 1154 "On Conclusion of Agreements with Williams
International Company" of 19 October 1999, Resolution No. 1192
"On the Confirmation of the Procedure of Sale of Shares of the
Joint-stock Company 'Mažeikių nafta'" of 27 October 1997(by
Item 1 whereof the Procedure of Sale of Shares of the
Joint-stock Company "Mažeikių nafta" was confirmed, which
regulated the sale of the shares of the joint-stock company
"Mažeikių nafta" that belonged to the state by right of
ownership, whose total nominal value did not exceed 16.5
percent of the then registered authorised capital of this
joint-stock company, to the strategic investor recognised by a
Seimas resolution (as mentioned, the United States of America
company Williams International Company was recognised as the
strategic investor) and to oil suppliers to the joint-stock
company "Mažeikių nafta" and/or financial institutions),
Resolution No. 1194 "On Representing the State at the
Joint-stock Company 'Mažeikių nafta'" of 27 October 1999,
Resolution No. 1195 "On Execution of Public Purchases" of 27
October 1999 (by Item 1 whereof it agreed that that the
joint-stock company "Mažeikių nafta" execute all purchases,
which, under the Republic of Lithuania Law on Public Purchases,
require consent by the Government, from a single source, or
otherwise as established in the Rules for Purchases Carried Out
by the Joint-stock Company 'Mažeikių nafta' confirmed by the
Board of the Joint-stock Company 'Mažeikių nafta' and without
violating the Law on Public Purchases), Resolution No. 1198 "On
Confirming the United States of America company Williams
International Company as the Creditor" of 27 October 1999,
Resolution No. 1200 "On Granting a Loan to the Joint-stock
Company 'Mažeikių nafta' and on Partial Amendment of Certain
Resolutions of the Government of the Republic of Lithuania
Related to Loans to the Joint-stock Company 'Mažeikių nafta'"
of 27 October 1999, Resolution No. 1203 "On Candidates to
Members of the Supervision Council and Those of the Board of
the Joint-stock Company 'Mažeikių nafta'" of 28 October 1999,
Resolution No. 1206 "On Consent to Carry Out the Public
Purchase from a Single Source" of 28 October 1999, Resolution
No. 1207 "On Draft Assenting Agreements with the United States
of America Company Williams International Company and on
Granting Respective Powers" of 28 October 1999, Resolution No.
1208 "On Partial Amendment of Resolution of the Government of
the Republic of Lithuania No. 1154 'On Conclusion of Agreements
with Williams International Company' of 19 October 1999" of 29
October 1999.
It needs to be emphasised that the content of legal
regulation established in laws cannot be construed on how it
used to be interpreted by the Government or other institutions
when they, within their competence, issued substatutory legal
acts by which one sought to implement the provisions of
corresponding laws.
Thus, the investigation into the compliance of the clause
on non-application of the obligatory official offer (to acquire
securities of the issuer) that was consolidated in the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" (with subsequent supplements
and amendments) which was adopted by the Seimas on 29 September
1998, with the Constitution cannot be grounded on how the
Government (inter alia when it was issuing the substatutory
legal acts) or other institutions interpreted the clause prior
to the signing of corresponding agreements with the United
States of America company Williams International Company and/or
after these agreements were signed.
23. The legal grounds to discharge the functions of the
strategic investor to the joint-stock company "Mažeikių nafta"
appeared to the United States of America company Williams
International Company after this company (together with the
Government and the joint-stock company "Mažeikių nafta"), on 29
October 1999, signed the agreements on subscription to the
shares, on the investments and other agreements the drafts of
which had been approved of by the Government (by means of a
corresponding resolution).
24. While executing the aforesaid agreements and
implementing the state obligations to the strategic investor,
the Government adopted the following resolutions (not all of
which were published in the official gazette Valstybės žinios):
Resolution No. 1311 "On Partial Amendment of Resolution of the
Government of the Republic of Lithuania No. 286 'On Confirming
the Distribution of the 1999 State Investments Provided for in
the 1999-2001 State Investments Programme, Which are Financed
from the Funds of the State Budget of the Republic of
Lithuania, the Privatisation Fund and Loans Received in the
Name of the State' of 17 March 1999" of 29 November 1999,
Resolution No. 1375 "On Transfer of Funds into the
Privatisation Fund Account" of 8 December 1999, Resolution No.
1384 "On Partial Amendment of Resolution of the Government of
the Republic of Lithuania No. 844 'On Confirming the Estimate
of Funds of the Privatisation Funds for the Second Half of
1999' of 22 July 1999" of 10 December 1999, Resolution No. 1404
"On Granting a Loan to the Joint-stock Company 'Mažeikių
nafta'" of 15 December 1999, Resolution No. 227 "On Granting a
Loan to the Joint-stock Company 'Mažeikių nafta'" of 28
February 2000, Resolution No. 232 "On Granting State Guarantees
to Creditors of the Joint-stock Company 'Ventus nafta'" of 29
February 2000, and Resolution No. 251 "On Transfer of the
Shares of the Joint-stock Company 'Mažeikių nafta' which Belong
to the State by Right of Ownership into a Special Account" of 3
March 2000.
As mentioned, the content of legal regulation established
in laws cannot be construed on how it used to be interpreted by
the Government when it, within its competence, issued
substatutory legal acts by which one sought to implement the
provisions of corresponding laws.
25. It is also to be mentioned that it was established in
Paragraph 4 of Article 3 (wordings of 23 April 1996 and 11 July
2000) of the Law on Public Trading in Securities that the
provisions of this law shall not apply to the secondary
securities offering, carried out outside the securities
exchange when privatising property under the Law on
Privatisation of State-owned and Municipal Property. Thus, the
provisions of Article 10 (wording of 19 March 1998) of the Law
on Public Trading in Securities regarding the official offer to
acquire securities of the issuer were also not to be applied to
the secondary securities offering, carried out outside the
securities exchange when privatising property under the Law on
Privatisation of State-owned and Municipal Property.
One is also to note that, under Item 2 of Paragraph 2 of
Article 3 (wordings of 23 April 1996 and 11 July 2000) of the
Law on Public Trading in Securities, the provisions of this law
shall not apply to securities which are issued into circulation
under the law providing non-application of this law.
It is to be held that until Article 3 of the Law on Public
Trading in Securities was in force in the aforementioned
wordings, the said legal situation did not exist, nor was there
any such legal situation where the strategic investor (the
United States of America company Williams International
Company) as a shareholder of the joint-stock company "Mažeikių
nafta" overstepped the 50 percent limit consolidated in Article
10 (wording of 19 March 1998) of the Law on Public Trading in
Securities and it did not have to present an official offer to
acquire the shares of the joint-stock company "Mažeikių nafta"
which belonged to other shareholders, since the strategic
investor had acquired the shares of the joint-stock company
"Mažeikių nafta" under the 29 September 1998 Law on the
Reorganisation of Joint-stock companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" (with subsequent supplements
and amendments), but not under Law on the Privatisation of
State-owned and Municipal Property.
26. On 17 May 2001, the Seimas adopted the Law on Amending
and Supplementing Articles 3 and 10 of the Law on Public
Trading in Securities.
26.1. By Article 2 of the Law on Amending and
Supplementing Articles 3 and 10 of the Law on Public Trading in
Securities, Paragraph 4 (wording of 19 March 1998) of Article
10 of the Law on Public Trading in Securities was amended and
it was inter alia established that the Securities Commission
has the right to adopt legal acts concerning granting of the
general exception, when the 50 percent limit specified in
Paragraph 2 of this article is exceeded and the obligatory
official offer is not submitted.
Thus, after the said amendment had been made, the
corresponding legal regulation was particularised in the
respect that it was expressis verbis established in the Law on
Public Trading in Securities that the exceptions when the
obligatory official offer is not submitted (after the specified
50 percent limit is exceeded) can be applied only following
legal acts of the Securities Commission, which establish
general rules of granting such exceptions; thus, such
exceptions could not be established ad hoc.
26.2. By Article 1 of the Law on Amending and
Supplementing Articles 3 and 10 of the Law on Public Trading in
Securities, Paragraph 4 of Article 3 (wording of 11 July 2000)
of the Law on Public Trading in Securities was amended and
supplemented. Paragraph 4 of Article 3 (wording of 17 May 2001)
of the Law on Public Trading in Securities was set forth as
follows:
"The provisions of Article 8 of this Law shall not be
applied to the secondary securities offering carried out
outside the securities exchange when privatising property under
the laws regulating privatisation. The requirement to submit an
obligatory official offer established in this Law shall be
applied only in case the corresponding amount of shares is
acquired in the course of property privatisation."
Thus, after the said amendment and supplement had been
made, the Law on Public Trading in Securities established a
narrower field than that of the institute of the
non-application of the official obligatory offer (after
exceeding the 50 percent limit established in the said law).
27. On 14 June 2001, the United States of America company
Williams International Company, the strategic investor to the
joint-stock company "Mažeikių nafta" signed a cooperation
agreement (with annexes) with the Russian Federation company
OAO Yukos Oil Corporation whereby it was inter alia agreed that
OAO Yukos Oil Corporation would acquire two separate issues of
shares of the joint-stock company "Mažeikių nafta" before it
decreased the authorised capital of the latter joint-stock
enterprise (explanatory note to the Republic of Lithuania draft
Law on Amending Articles 3 and 4 of the Law on the
Reorganisation of Joint-stock companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis", signed by the acting
Minister of Economy).
On 26 June 2001, the Government adopted Resolution No. 777
"On the Cooperation Agreement Between the United States of
America Company Williams International Company and the Russian
Federation Company OAO Yukos Oil Corporation". By Item 1 of
this resolution the Government virtually approved of the
conditions and provisions of the said agreement between the
United States of America company Williams International Company
and the Russian Federation company OAO Yukos Oil Corporation,
alongside, it made certain reservations and remarks, inter alia
that the conditions of the cooperation agreement and its
annexes could not have been implemented then, unless
corresponding amendments of laws of the Republic of Lithuania
had not been made, and that the Government would make
reasonable efforts to initiate and implement the amendments of
corresponding laws.
By its Resolution No. 938 "On Supplementing Resolution of
the Government of the Republic of Lithuania No. 777 'On the
Cooperation Agreement Between the United States of America
Company Williams International Company and the Russian
Federation Company OAO Yukos Oil Corporation' of 26 June 2001"
of 27 July 2001, the Government supplemented the said
Government inter alia with the provision (with new Item 2.3)
stating that "the advisor of the joint-stock company 'Mažeikių
nafta' on financial issues must submit a written confirmation
to the Government of the Republic of Lithuania that it is
expedient to sell the portion of the newly issued shares of the
joint-stock company 'Mažeikių nafta', which is equal to 10.1
percent of the shares of the enterprise, to the Russian
Federation Company OAO Yukos Oil Corporation, and that it is
necessary to do so in order to receive the long-term financing
of the financial plan".
In this context, it needs to be noted that under the
Constitution the Government shall execute laws and resolutions
of the Seimas concerning the implementation of laws (Item 2 of
Article 94 of the Constitution). It is also to be mentioned
that at the time of adoption of Government Resolution No. 777
"On the Cooperation Agreement Between the United States of
America Company Williams International Company and the Russian
Federation Company OAO Yukos Oil Corporation" of 26 June 2001
and Government Resolution No. 938 "On Supplementing Resolution
of the Government of the Republic of Lithuania No. 777 'On the
Cooperation Agreement Between the United States of America
Company Williams International Company and the Russian
Federation Company OAO Yukos Oil Corporation' of 26 June 2001"
of 27 July 2001, Seimas Resolution No. VIII-869 "On the
Recognition of the Strategic Investor" of 29 September 1998 was
in force, under Article 2 whereof it was suggested that the
Government provide in the final agreements on the investments
into the complex of oil enterprises concluded with the
strategic investor inter alia that at least one enterprise of a
European Union country would have an opportunity to be a
shareholder of the joint-stock company "Mažeikių nafta" (Item
6).
Approval (to any extent) of a contract concluded by other
entities (in this case, between a United States of America
company and a Russian Federation company), which, as is held by
the Government itself, is not in compliance with laws of the
Republic of Lithuania, is to be assessed as incorrect. However,
in themselves Government Resolution No. 777 "On the Cooperation
Agreement Between the United States of America Company Williams
International Company and the Russian Federation Company OAO
Yukos Oil Corporation" of 26 June 2001 and Government
Resolution No. 938 "On Supplementing Resolution of the
Government of the Republic of Lithuania No. 777 'On the
Cooperation Agreement Between the United States of America
Company Williams International Company and the Russian
Federation Company OAO Yukos Oil Corporation' of 26 June 2001"
of 27 July 2001 did not create any legal effects and, in
itself, their incorrectness alone does not provide with
sufficient grounds to hold that these Government resolutions
are in conflict with the Constitution.
The compliance of the said Government resolutions with the
Constitution in other aspects is not a matter of investigation
in the constitutional justice case at issue.
It is also to be mentioned that Government Resolution No.
777 "On the Cooperation Agreement Between the United States of
America Company Williams International Company and the Russian
Federation Company OAO Yukos Oil Corporation" of 26 June 2001
and Government Resolution No. 938 "On Supplementing Resolution
of the Government of the Republic of Lithuania No. 777 'On the
Cooperation Agreement Between the United States of America
Company Williams International Company and the Russian
Federation Company OAO Yukos Oil Corporation' of 26 June 2001"
of 27 July 2001 have not been published in the official gazette
Valstybės žinios. At the time of the adoption of these
Government resolutions Article 3 (wording of 18 May 1999) the
Republic of Lithuania Law "On Procedure of Publication and
Coming Into Force of Republic of Lithuania Laws and Other Legal
Acts" contained a provision whereby Government resolutions in
which legal norms are not established, amended or acknowledged
as no longer valid may, in the estimation of the persons who
have signed them, remain unpublished officially, and Paragraph
2 (wording of 18 May 1999) of Article 8 of the same law
contained a provision whereby the resolutions of the Government
of the Republic of Lithuania by which legal norms are not
established, amended or acknowledged as no longer valid may
come into force without their official publication; these
provisions of the Law "On Procedure of Publication and Coming
Into Force of Republic of Lithuania Laws and Other Legal Acts"
were recognised as being in conflict with the principle of a
state under the rule of law by the Constitutional Court ruling
of 29 November 2001.
28. On 2 August 2001, the Seimas adopted the Republic of
Lithuania Law on the Reorganisation of Joint-stock companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis", which
came into force on 4 August 2001.
By Article 1 of the Law on Amending and Supplementing
Articles 3 and 4 of the Law on the Reorganisation of
Joint-stock companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis", Article 3 (wording of 5 October 1999)
(Paragraphs 2 and 3 thereof) of the Law on the Reorganisation
of Joint-stock companies "Būtingės nafta", "Mažeikių nafta" was
amended, while by Article 2, Paragraph 1 of Article 4 (wording
of 5 October 1999) of the Law on the Reorganisation of
Joint-stock companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" was recognised as no longer valid.
28.1. Article 3 (wording of 2 August 2001) of the Law on
the Reorganisation of Joint-stock companies "Būtingės nafta",
"Mažeikių nafta" was set forth as follows:
"1. The strategic investor, recognised as such upon the
recommendation of the Government and by a decision of the
Seimas, shall be granted the right:
1) to acquire newly issued shares of the joint-stock
company 'Mažeikių nafta' which continues its activity after the
reorganisation upon the increase of the authorised capital of
this company; the general nominal value of these shares must
not exceed 33 percent of the authorised capital of the said
company;
2) after he has requested so, within a 5-year period at
any time from his acquisition of the shares pointed out in Item
1 of Paragraph 1 of this Article, to acquire newly issued
shares of the joint-stock company 'Mažeikių nafta' upon the
increase of the authorised capital of this company, the nominal
value of which together with those pointed out in Item 1 of
Paragraph 1 of this Article does not exceed 49.5 percent of the
authorised capital of the joint-stock company 'Mažeikių nafta';
3) to purchase from the State, after the strategic
investor has acquired the shares pointed out in Item 2 of this
Article, the shares belonging to the State by right of
ownership the nominal value of which does not exceed 16.5
percent of the authorised capital of the joint-stock company
'Mažeikių nafta' which is registered at that time. The
strategic investor may purchase these shares in portions under
the procedure established by the Government of the Republic of
Lithuania. The strategic investor shall be entitled to make use
of this right on request at any time within 7 years from the
moment of the acquisition of the shares pointed out in Item 1
of Paragraph 1 of this Article. The Government of the Republic
of Lithuania in its agreements with the strategic investor may
stipulate that part of the shares pointed out in this Item may
be transferred to the crude oil suppliers of the joint-stock
company 'Mažeikių nafta' and/or financial institutions.
2. If, at any time until the strategic investor acquires
the shares under Item 2 of Paragraph 1 of this Article, the
authorised capital of the joint-stock company 'Mažeikių nafta'
is increased by additional contributions by issuing new shares
of the joint-stock company 'Mažeikių nafta', comprising from
10.09 percent to 10.11 percent of the authorised capital of
this joint-stock company (after the issuance of these shares),
which will be acquired by the financial institution specified
in the agreement concluded between the Government of the
Republic of Lithuania and the strategic investor and/or any
other person indicated by the financial advisor to the
joint-stock company 'Mažeikių nafta', including the crude oil
supplier under a long-term crude oil supply agreement (and/or a
person, who is under control of the latter, or another person,
who is indicated by the financial advisor of the joint-stock
company 'Mažeikių nafta') and, if the strategic investor
requests so, the Government of the Republic of Lithuania will
transfer gratis the number of shares of the joint-stock company
'Mažeikių nafta' that belong to the state by right of ownership
to the strategic investor so that the nominal value of the
shares held by the strategic investor by right of ownership
would correspond to the percentage share of the authorised
capital of this company, which the strategic investor had held
until the increase of the authorised capital by the additional
contributions. When the shares of the joint-stock company
'Mažeikių nafta' are transferred subsequent to the requirements
of this Paragraph, the provisions of the Law on the
Privatisation of State-owned and Municipal Property shall not
be applied. If the general meeting of shareholders of the
joint-stock company 'Mažeikių nafta' adopts a decision to
reduce the authorised capital and the person who may be the
financial institution specified in the agreement concluded
between the Government of the Republic of Lithuania and the
strategic investor and/or any other person indicated by the
financial advisor to the joint-stock company 'Mažeikių nafta',
including the crude oil supplier under a long-term crude oil
supply agreement (and/or a person, who is under control of the
latter, or another person, who is indicated by the financial
advisor of the joint-stock company 'Mažeikių nafta'), had
expressed his intent, prior to the adoption of the aforesaid
decision by the general meeting of shareholders of the
joint-stock company 'Mažeikių nafta' to reduce the authorised
capital, to invest into the joint-stock company 'Mažeikių
nafta' by way of acquisition of newly issued shares of the
joint-stock company 'Mažeikių nafta' comprising from 10.09
percent to 10.11 percent of the authorised capital of this
enterprise (after the reduction of the authorised capital and
the issuance of these shares), and after that (the same person)
intends immediately to invest into the joint-stock company
'Mažeikių nafta' by way of acquisition of newly issued shares
of the joint-stock company 'Mažeikių nafta' comprising from
18.62 percent to 18.64 percent of the authorised capital of
this enterprise (after the issuance of these shares), all the
resolutions of the general meeting of the shareholders of the
joint-stock company 'Mažeikių nafta' concerning the reduction
of the authorised capital of the joint-stock company 'Mažeikių
nafta' and/or the two increases of the authorised capital
specified in this Paragraph may be adopted at the same general
meeting of the shareholders of the joint-stock company
'Mažeikių nafta' without applying the provisions of Paragraph 3
of Article 51 and Paragraph 4 of Article 54 of the Law on
Companies. When the persons specified in this Paragraph acquire
the newly issued shares of the joint-stock company 'Mažeikių
nafta', the authorised capital of this company is increased
without applying the Law on the Privatisation of State-owned
and Municipal Property. The issues of the structure of
shareholders, management of and supply of energy resources to
the joint-stock company 'Mažeikių nafta' are decided without
applying the limitations established in sub-chapter "Economic
Policy" of Chapter 4 of Part 1 of the Annex "The Basics of
National Security" to the Law on the Basics of National
Security.
3. In the course of the acquisition of the shares by the
strategic investor under Items 1 and 2 of Paragraph 1 of this
Article, the authorised capital of the joint-stock company
'Mažeikių nafta' shall be increased without application of the
provisions of Article 18 of the Law on Privatisation of
State-owned and Local Government Property. In the course of the
sale of the shares, belonging to the State by right of
ownership, of the joint stock-company 'Mažeikių nafta' which
are pointed out in Item 3 of Paragraph 1 of this Article to the
strategic investor or crude oil suppliers of the joint-stock
company 'Mažeikių nafta' and/or financial institutions, the
provisions of the Law on Privatisation of State-owned and Local
Government Property and those of Paragraph 2 of Article 8 and
Article 10 of the Law on Public Trading in Securities shall not
be applied. With the exception of the cases provided for in
Paragraph 2 of Article 3 and Paragraph 2 of Article 4 of this
Law, the rest of the shares of the joint-stock company
'Mažeikių nafta' which belong to the State by right of
ownership shall be privatised only under the procedure
established by the Law on Privatisation of State-owned and
Local Government Property.
4. After the strategic investor has acquired the shares
under Item 1 of Paragraph 1 of this Article, state and local
government institutions will not be permitted to present
additional requirements, as regards the period prior to the
acquisition of the shares by the strategic investor, either to
the joint-stock company 'Mažeikių nafta' or its subsidiaries
concerning the activities or failure of the joint-stock company
'Mažeikių nafta' or its subsidiaries or other events. The
Government of the Republic of Lithuania, in the agreements with
the strategic investor and/or the joint-stock company 'Mažeikių
nafta', has the right to assume basic property liabilities in
the name of the State, including recovery of losses. Such
losses include or may be incurred due to that fact that the
Government of the Republic of Lithuania may not carry out its
agreement obligations because of changes in the laws of the
Republic of Lithuania and because of the fact that the
information, statements and/or confirmations pointed out in the
agreements concluded by the Government of the Republic of
Lithuania and annexes thereto (including the presented
information revealing documents of the joint-stock company
'Mažeikių nafta') were false or inexact.
5. The notice about the first meeting of shareholders of
the joint-stock company 'Mažeikių nafta', which will take place
after the strategic investor has acquired the shares pointed
out in Item 1 of Paragraph 1 of this Article, shall be publicly
announced no later than 10 days prior to the day of the
meeting, while the announced draft agenda of the meeting shall
not be further specified. In this case the provisions of
Paragraph 6 of Article 21 and Paragraphs 1 and 3 of Article 22
of the Company Law shall not be applicable.
6. In the course of the acquisition of the shares by the
strategic investor under the provisions of this Article, as
well as in the course of conclusion of agreements by the
joint-stock company 'Mažeikių nafta' on acquisition of the
right of control in the joint-stock company 'Klaipėdos nafta',
the provisions of Chapter 3 of the Law on Competition shall not
be applicable. The provisions of Paragraphs 3 and 4 of Article
30 and Paragraph 6 of Article 45 of the Company Law shall not
be applicable to the joint-stock company 'Mažeikių nafta'.
7. In the agreements with the strategic investor and the
joint-stock company 'Mažeikių nafta', the Government of the
Republic of Lithuania shall be granted the right independently
to establish the method and procedure under which the
joint-stock company 'Mažeikių nafta' would compensate the
strategic investor a possible decrease of value of the said
company. The compensation sum of the joint-stock company
'Mažeikių nafta' to the strategic investor may not exceed US$75
million."
Attention is to be paid to the fact that Paragraph 4 of
Article 3 (wording of 2 August 2001) of the Law was set forth
in the same fashion as its previous wording of 5 October 1999.
It has been mentioned that by the Constitutional Court ruling
of 17 March 2003 the provision "after the strategic investor
acquires the shares under Item 1 of Paragraph 1 of this
Article, neither State nor municipal institutions will be
permitted to raise additional claims to the joint-stock company
'Mažeikių nafta' or its subsidiaries concerning activity or
failure to act of the joint-stock company 'Mažeikių nafta' or
its subsidiaries or as regards other events, all of which took
place prior to the acquisition of the shares by the strategic
investor" of Paragraph 4 (wording of 5 October 1999) of Article
3 of the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" (1) was
recognised to be in conflict with Paragraphs 3, 4 and 5 of
Article 46 of the Constitution; (2) to the extent that it is
established that municipal institutions will not be permitted
to raise the additional claims indicated in this provision was
recognised to be in conflict with Paragraph 2 of Article 120
and Article 122 of the Constitution.
28.2. Article 4 (wording of 2 August 2001) of the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was set forth as follows:
"1. The State shall have the priority in acquisition of
the shares sold or transferred otherwise belonging to the other
shareholders holding not less than one percent of shares of the
joint-stock company 'Mažeikių nafta' which continues its
activities after the reorganisation. The Government shall have
the right to establish the same right of priority to the
strategic investor as well. The period during which the State
has the right to acquire shares of the joint-stock company
'Mažeikių nafta' from the strategic investor and the procedure
for implementation of such right is established in the
agreement between the Government and the strategic investor.
Under the procedure established in the agreement with the
Government, the strategic investor has the right to transfer
the shares of the joint-stock company 'Mažeikių nafta' that
belong to it by right of ownership to enterprises whose all the
shares and/or capital, either directly or indirectly, belong to
the strategic investor by right of ownership.
2. In the case that the strategic investor has not sold or
transferred otherwise the shares of the joint-stock company
'Mažeikių nafta' acquired under Item 1 of Paragraph 1 of
Article 3 of this Law (save transfer of the shares to the
enterprises whose all the shares and/or capital (either
directly or indirectly) belong to the strategic investor by
right of ownership) and a decision has been adopted to
privatise, sell or transfer otherwise a certain portion of the
shares belonging to the State by right of ownership so that
after such privatisation, sale or transfer the total nominal
value of the shares belonging to the State by right of
ownership of the joint-stock company 'Mažeikių nafta' would
comprise less than 18 percent of the authorised capital of this
company, the strategic investor shall have the right of
priority to acquire all or part of the shares sold or otherwise
transferred by the State without application of the Law on
Privatisation of State-owned and Municipal Property. This
provision of priority shall also be applicable in cases when
the total value of the state-owned shares of the joint-stock
company 'Mažeikių nafta' further decreases due to subsequent
transfers of the state-owned shares."
29. It is also to be held that some of the provisions of
Paragraph 2 (wording of 2 August 2001) of Article 3 of the Law
were formulated not clearly, controversially and in an
ambiguous manner, thus, the entire legal regulation established
in the said paragraph is not sufficiently clear as well. For
instance, it is not quite clear as to when and how the intent
must be expressed to invest into he joint-stock company
"Mažeikių nafta" by way of acquisition of newly issued shares
of the joint-stock company "Mažeikių nafta" comprising from
10.09 percent to 10.11 percent of the authorised capital of
this enterprise (after the reduction of the authorised capital
and the issuance of these shares), as well as that to
immediately invest into the joint-stock company "Mažeikių
nafta" by way of acquisition of newly issued shares of the
joint-stock company "Mažeikių nafta" comprising from 18.62
percent to 18.64 percent of the authorised capital of this
enterprise (after the issuance of these shares); nor is it
clear what is meant by the words "after that" employed to
describe the second of these intents; it is not sufficiently
clear what investment is to be regarded as immediate; nor is it
clear whether if one decided to adopt resolutions concerning
the reduction of the authorised capital of the joint-stock
company "Mažeikių nafta" and/or the two increases of the
authorised capital not at the same general meeting of the
shareholders of the joint-stock company "Mažeikių nafta" (since
the adoption of these resolutions in the same general meeting
of shareholders is stipulated as probable, but not as
compulsory), would corresponding requirements of corresponding
articles (parts thereof) of the Law on Companies be applicable;
etc. The content of the legal regulation established in
Paragraph 2 (wording of 2 August 2001) of Article 3 of the Law
becomes clear in part only when the provisions of this
paragraph are construed in the context of other provisions of
the Law, when one takes account of the intentions of the
legislator recorded in the travaux pr?paratoires.
30. It is to be held that after Paragraphs 3 and 4 of the
Law on the Reorganisation of Joint-stock companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" had been set forth
in the wording of 2 August 2001, certain novels in the legal
regulation of the law were consolidated (although certain
provisions were formulated deficiently), inter alia:
- the requirement that the block of shares granting more
than 24 percent of votes in the general meeting of shareholders
may not belong to any other shareholder, save the state and the
strategic investor together with the entities that are
controlled by the latter, was withdrawn;
- a possibility was established for the financial
institution specified in the agreement concluded between the
Government and the strategic investor and/or any other person
indicated by the financial advisor to the joint-stock company
"Mažeikių nafta", including the crude oil supplier under a
long-term crude oil supply agreement (and/or a person, who is
under control of the latter, or another person, who is
indicated by the financial advisor of the joint-stock company
'Mažeikių nafta'), twice to acquire the newly issued shares of
this joint-stock company: (1) first, the shares may be acquired
by way of increasing the authorised capital of the joint-stock
company "Mažeikių nafta": the said financial institution or the
other person indicated by the financial advisor of the
joint-stock company "Mažeikių nafta" may acquire the newly
issued shares of this joint-stock company, which comprise from
10.09 percent to 10.11 percent of the authorised capital (after
the decrease of the authorised capital and the issuance of
these shares); (2) second, the shares can be acquired by again
increasing the authorised capital of the joint-stock company
"Mažeikių nafta": the same person may acquire the new shares
comprising from 18.62 till 18.64 percent of the authorised
capital (after the issuance of these shares) of this company;
- one established the legal regulation whereby the
authorised capital of the joint-stock company "Mažeikių nafta"
could be increased by issuing new shares of the joint-stock
company "Mažeikių nafta" comprising from 10.09 till 10.11
percent of its authorised capital (after the issuance of these
shares) only after reduction of the authorised capital of the
joint-stock company "Mažeikių nafta";
- it was established that the resolutions of the general
meeting of shareholders of the joint-stock company "Mažeikių
nafta" concerning reduction of the authorised capital of this
joint-stock company and/or the aforesaid two increases of the
authorised capital of the same joint-stock company by issuing
new shares of the joint-stock company "Mažeikių nafta" may be
adopted at the same general meeting of shareholders of this
joint-stock company without applying certain articles (parts
thereof) of the Law on Companies;
- it was established that the issues of the structure of
shareholders, management of and supply of energy resources to
the joint-stock company "Mažeikių nafta" are decided without
applying the limitations established in the Law on the Basics
of National Security (sub-chapter "Economic Policy" of Chapter
4 of Part 1 of the Annex "The Basics of National Security"
thereto) to one investor to dominate in one or several sectors
of economy, which are strategically important to national
security, inter alia in the energy sector, to transfer energy
resources supply to the control of entities of the countries
from which these resources are supplied, etc.;
- the earlier mechanism (established in the Law) of
equalising the part of the authorised capital belonging to the
strategic investor (that of compensation of presumed losses)
was particularised in the aspect that it was established that
the part of the authorised capital belonging to the strategic
investor would be equalised in the case when the authorised
capital of the joint-stock company "Mažeikių nafta" is
increased by additional contributions by issuing new shares of
the joint-stock company "Mažeikių nafta" comprising from 10.09
till 10.11 percent of the authorised capital of this company
(after the issuance of these shares), which would be acquired
by the financial institution specified in the agreement
concluded between the Government of the Republic of Lithuania
and the strategic investor and/or any other person indicated by
the financial advisor to the joint-stock company 'Mažeikių
nafta', including the crude oil supplier under a long-term
crude oil supply agreement (and/or a person, who is under
control of the latter, or another person, who is indicated by
the financial advisor of the joint-stock company "Mažeikių
nafta").
31. At the discussed time period Government resolutions
were adopted, whereby it was sought to implement the Law (with
the amendments made until and on 2 August 2001), inter alia
Resolution No. 964 "On Granting Powers to Vote in the General
Meeting of Shareholders of the Joint-stock Company 'Mažeikių
nafta'" of 6 August 2001 and Resolution No. 1172 "On Partial
Amendment of Government of the Republic of Lithuania Resolution
No. 1194 'On Representing the State at the Joint-stock Company
"Mažeikių nafta"' of 27 October 1999" of 26 September 2001.
One must separately mention Government Resolution No. 1367
"On Purchase of Legal Services from the Single Source" of 16
November 2001, whereby it was decided inter alia to agree that
the Ministry of Economy execute the public purchase from a
single source, i.e. that it purchase legal services from one
law office (specified in the resolution) related to the legal
assessment of final agreements among the Government, the United
States of America company Williams International Company, the
Russian open joint-stock company Yukos Oil Corporation and the
joint-stock company "Mažeikių nafta", which are mentioned in
the cooperation agreement between the United States of America
company Williams International Company and the Russian open
joint-stock company Yukos Oil Corporation that was signed on 14
June 2001, so that the maximum protection of state rights and
interests could be ensured with regard to the agreement
liabilities assumed by the Government and the requirements of
legal acts of the Republic of Lithuania. As regards this,
reasons were given that "there appeared an urgent need for the
legal services the legal assessment of final agreements among
the Government, the United States of America company Williams
International Company, the Russian open joint-stock company
Yukos Oil Corporation and the joint-stock company 'Mažeikių
nafta', which are mentioned in the cooperation agreement
between the United States of America company Williams
International Company and the Russian open joint-stock company
Yukos Oil Corporation that was signed on 14 June 2001, and it
was impossible to predict it in advance".
In this context, one is to note that it is clear from
Government Resolution No. 1367 "On Purchase of Legal Services
from the Single Source" of 16 November 2001 that in the said
cooperation agreement concluded between two private legal
persons one of which was a United States of America company and
the other was a Russian Federation company, it was decided that
the Government, an institution of the executive of the Republic
of Lithuania, would sign certain agreements; as mentioned, the
Government, approved of such an agreement between two private
legal persons by its Resolution No. 777 "On the Cooperation
Agreement Between the United States of America Company Williams
International Company and the Russian Federation Company OAO
Yukos Oil Corporation" of 26 June 2001, 12 days after the
conclusion of the aforementioned cooperation agreement.
Meanwhile, it is asserted in Government Resolution No. 1367 "On
Purchase of Legal Services from the Single Source" of 16
November 2001 that the need for the legal services related to
legal assessment of corresponding agreements is "urgent",
however, that was after the Government had approved of the
agreement between private legal persons, by which, as
mentioned, it had been decided that the Government would sign
those agreements (whose legal assessment, according to the
Government itself, became necessary).
32. On 17 December 2001, the Seimas adopted the Republic
of Lithuania Law on Amending the Law on Public Trading in
Securities by Article 1 whereof the Law on Public Trading in
Securities (wording of 16 January 1996 with subsequent
amendments and supplements) was set forth in a new wording and,
in addition, the title of the law was changed as well: this law
was titled the Republic of Lithuania Law on the Securities
Market. The Law on the Securities Market (save certain
exceptions) went into effect on 1 April 2002.
It needs to be noted that the institute of obligatory
official offer was consolidated both in the Law on the
Securities Market (wording of 17 December 2001) and in the Law
on Public Trading in Securities (wording of 16 January 1996
with subsequent amendments and supplements) which had been
valid until the former became effective.
For instance, it was established in Article 19 of the Law
on the Securities Market (wording of 17 December 2001):
- if a person, acting either independently or together
with other persons, acquires more than 40 percent of votes at
the meeting of an accountable issuer, he must, within 30 days,
transfer the securities that exceed this limit or to submit an
official offer to buy up the remaining securities of the
accountable issuer, which grant the right to vote, and the
securities confirming the right to acquire the securities
granting the right to vote (Paragraph 1);
- the price of the obligatory offer must be not less than
the maximum price for securities acquired by the offeror during
12 months until exceeding the limit specified in Paragraph 1 of
this article; every shareholder of the issuer has the right to
apply to court with a demand that the person who has presented
the obligatory official offer increase the price of the
obligatory official offer so that it would not violate the
requirements of fairness; in such a case Articles 2.118, 2.119
and 2.127-2.130 of the Civil Code of the Republic of Lithuania
are applied mutatis mutandis (Paragraph 2);
- a person, acting independently, or persons who act
jointly, from the moment of overstepping the limit of votes
specified in Paragraph 1 of this article lose all votes in the
general meeting of shareholders; the right to vote is acquired
again on the day when the obligatory official offer is
registered with the Securities Commission or the number of
votes held decreases at least until the limit specified in
Paragraph 1 of this article due to a transaction of transfer of
securities or other reasons (Paragraph 3);
- the Securities Commission has the right to establish
general exceptions to the duty to announce the obligatory
official offer, if in such a case the requirement to submit the
obligatory official offer was not fair, reasonable or not in
line with the market interests (Paragraph 4).
33. If one compares the institute of obligatory official
offer consolidated in Article 19 of the Law on the Securities
Market (wording of 17 December 2001) with the institute of
obligatory official offer consolidated in Article 10 (wording
of 17 May 2001) of the Law on Public Trading in Securities, it
is clear, among other things, that, and also while deciding
whether Paragraph 2 (wording of 4 June 2002) of Article 4 of
the Law is not in conflict with the Constitution to the extent
that the provisions of Article 19 of the Law on the Securities
Market are not applied in the course of concluding and
implementing the agreements specified in this paragraph, one is
to note that:
- the duty to submit the obligatory official offer under
the conditions established in the Law on the Securities Market
to buy up the remaining securities of the accountable issuer,
which grant the right to vote, and the securities confirming
the right to acquire the securities granting the right to vote,
was an alternative one: the subject of this duty could choose
and execute not this, but another (alternative) duty-to
transfer the securities exceeding the limit established in this
law;
- under the Law on the Securities Market, differently from
the Law on Public Trading in Securities which was effective
prior to the latter, the said alternative duty to submit the
obligatory official offer to buy up the remaining securities of
the accountable issuer, which grant the right to vote, and the
securities confirming the right to acquire the securities
granting the right to vote, would appear if the person, acting
either independently or together with other persons, acquired
more than 40 percent of votes at the meeting of an accountable
issuer, but not more than 50 percent of votes at the meeting of
the issuer that had issued securities into public trading;
- the Law on the Securities Market established the right
of the Securities Commission to establish general exceptions to
the duty to announce the obligatory official offer, if in such
a case the requirement to submit the obligatory official offer
was not fair, reasonable or not in line with the market
interests, meanwhile, the Law on Public Trading in Securities,
which was effective prior to the entry into effect of the
former law, did not specify any criteria under which the
Securities Commission had the right to establish general
exceptions to the duty to announce the obligatory official
offer.
34. After the Seimas adopted Law on Amending the Law on
Public Trading in Securities on 17 December 2001 (whereby, as
mentioned, the Law on Public Trading in Securities (including
its title) (wording of 16 January 1996 with subsequent
amendments and supplements), which had been effective until the
entry into effect of the aforesaid law, was amended and set
forth in a new wording), on the same day (17 December 2001)
Paragraph 3 (wording of 2 August 2001) of Article 3 of the Law
on the Reorganisation of Joint-stock companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" was correspondingly
amended: it was amended by Article 1 of the Republic of
Lithuania Law on Amending Article 3 of the Law on the
Reorganisation of Joint-stock companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" (which went into effect on 1
April 2002).
It was established in Paragraph 3 (wording of 17 December
2001) of Article 3 of the Law on the Reorganisation of
Joint-stock companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis":
"In the course of the acquisition of the shares by the
strategic investor under Items 1 and 2 of Paragraph 1 of this
Article, the authorised capital of the joint-stock company
'Mažeikių nafta' shall be increased without application of the
provisions of Article 18 of the Law on Privatisation of
State-owned and Local Government Property. In the course of the
sale of the shares, belonging to the State by right of
ownership, of the joint stock-company 'Mažeikių nafta' which
are pointed out in Item 3 of Paragraph 1 of this Article to the
strategic investor or crude oil suppliers of the joint-stock
company 'Mažeikių nafta' and/or financial institutions, the
provisions of the Law on the Privatisation of State-owned and
Municipal Property and the requirements of the Law on the
Securities Market to submit the obligatory official offer and
to conclude transactions of purchase and sale of securities at
the securities exchange shall not be applied. With the
exception of the cases provided for in Paragraph 2 of Article 3
and Paragraph 2 of Article 4 of this Law, the rest of the
shares of the joint-stock company 'Mažeikių nafta' which belong
to the State by right of ownership shall be privatised only
under the procedure established by the Law on Privatisation of
State-owned and Local Government Property."
If one compares the legal regulation established in
Paragraph 3 (wording of 17 December 2001) of Article 3 of the
Law on the Reorganisation of Joint-stock companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" with the previous
legal regulation established in this paragraph (wording 2
August 2001), it is clear that the provision on non-application
of the obligatory official offer remained virtually the same:
when corresponding shares of the joint-stock company "Mažeikių
nafta" that belong to the state by right of ownership and are
sold to the strategic investor or the suppliers of crude oil to
the joint-stock company 'Mažeikių nafta' and/or the financial
institutions, the requirements to submit the obligatory
official offer and to conclude transactions of purchase and
sale of securities at the securities exchange are not applied.
35. During the discussed period other Government
resolutions were adopted as well whereby one was seeking to
further implement the provisions of the Law on the
Reorganisation of Joint-stock companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" (with the amendments and
supplements made until and on 17 December 2001), and Government
Resolution No. 778 "On Granting Powers" of 29 May 2002 was
among them, whereby inter alia the Vice-minister of Economy was
empowered to initial the draft Investment Agreement, the draft
Agreement on Yukos General Notions and Their Interpretation,
the draft Amended and New Wording Shareholders Agreement and
annexes to these agreements, while the Ministry of Economy was
empowered to submit these draft agreements together with the
initialled letter to the Seimas.
One must separately mention Government Resolution No. 576
"On Allocation of Funds" of 25 April 2002 whereby it was
decided to allocate LTL 950 thousand to the Ministry of Economy
so that legal services could be bought from one law office
(specified in the resolution) related to the legal assessment
of final agreements among the Government, the United States of
America company Williams International Company, the Russian
open joint-stock company Yukos Oil Corporation and the
joint-stock company "Mažeikių nafta", which are mentioned in
the cooperation agreement between the United States of America
company Williams International Company and the Russian open
joint-stock company Yukos Oil Corporation that was signed on 14
June 2001, and other related prepared legal documents. This
Government resolution is linked with Government Resolution No.
1367 "On Purchase of Legal Services from the Single Source" of
16 November 2001 whereby, as mentioned, it was inter alia
decided to agree that the Ministry of Economy execute the
public purchase from a single source, i.e. that it purchase
legal services from the said law office related to the legal
assessment of final agreements among the Government, the United
States of America company Williams International Company, the
Russian open joint-stock company Yukos Oil Corporation and the
joint-stock company "Mažeikių nafta", which are mentioned in
the cooperation agreement between the United States of America
company Williams International Company and the Russian open
joint-stock company Yukos Oil Corporation that was signed on 14
June 2001 by giving reasons that such legal assessment became
"urgent".
It needs to be noted that it is clear from Government
Resolution No. 576 "On Allocation of Funds" of 25 April 2002
and Government Resolution No. 1367 "On Purchase of Legal
Services from the Single Source" of 16 November 2001 that it
was decided in the aforesaid cooperation agreement concluded
between two private legal persons one of which was a United
States of America company and the other was a Russian
Federation company, that the Government, an institution of the
executive of the Republic of Lithuania, would sign certain
agreements; as mentioned, the Government, approved of such an
agreement between two private legal persons by its Resolution
No. 777 "On the Cooperation Agreement Between the United States
of America Company Williams International Company and the
Russian Federation Company OAO Yukos Oil Corporation" of 26
June 2001, 12 days after the conclusion of the aforementioned
cooperation agreement. On 25 April 2002, i.e. noticeably later,
by its Resolution "On Allocation of Funds" the Government
recognised that the final agreements among the Government, the
United States of America company Williams International
Company, the Russian open joint-stock company Yukos Oil
Corporation and the joint-stock company "Mažeikių nafta", which
are mentioned in the cooperation agreement between the United
States of America company Williams International Company and
the Russian open joint-stock company Yukos Oil Corporation that
was signed on 14 June 2001 and other prepared legal documents
which were related thereto had to be legally assessed and
allocated for this purpose LTL 950 thousand from the Government
reserve.
36. On 4 June 2002, the Seimas adopted the Law on Amending
and Supplementing Articles 3 and 4 of the Law on the
Reorganisation of Joint-stock companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" which went into effect on 7
June 2002.
Articles 1 and 2 of the Law on Amending and Supplementing
Articles 3 and 4 of the Law on the Reorganisation of
Joint-stock companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" amended (correspondingly) Articles 3 (wording of
17 December 2001) and 4 (wording of 2 August 2001) (paragraphs
(items) thereof.
36.1. Article 3 (wording of 4 June 2002) of the Law on
Amending and Supplementing Articles 3 and 4 of the Law on the
Reorganisation of Joint-stock companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was set forth as follows:
"1. The strategic investor, recognised as such upon the
recommendation of the Government and by a decision of the
Seimas, shall be granted the right:
1) to acquire newly issued shares of the joint-stock
company 'Mažeikių nafta' which continues its activity after the
reorganisation upon the increase of the authorised capital of
this company; the general nominal value of these shares must
not exceed 33 percent of the authorised capital of the said
company;
2) after he demands at any time within 5 years after it
has acquired the shares specified in Item 1 of Paragraph 1 of
this Article, to acquire, by increasing the authorised capital
of the joint-stock company 'Mažeikių nafta', the newly issued
shares whose total nominal value, when it is counted after such
increase of the authorised capital, comprises not more than
15.4 percent of the then registered authorised capital of the
joint-stock company 'Mažeikių nafta';
3) to purchase from the State, after the strategic
investor has acquired the shares pointed out in Item 2 of this
Article, the shares belonging to the State by right of
ownership the nominal value of which does not exceed 16.5
percent of the authorised capital of the joint-stock company
'Mažeikių nafta' which is registered at that time. The
strategic investor may purchase these shares in portions under
the procedure established by the Government of the Republic of
Lithuania. The strategic investor shall be entitled to make use
of this right on request at any time within 7 years from the
moment of the acquisition of the shares pointed out in Item 1
of Paragraph 1 of this Article. The Government of the Republic
of Lithuania in its agreements with the strategic investor may
stipulate that part of the shares pointed out in this Item may
be transferred to the crude oil suppliers of the joint-stock
company 'Mažeikių nafta' and/or financial institutions.
2. If, at any time until the strategic investor acquires
the shares under Item 2 of Paragraph 1 of this Article, the
authorised capital of the joint-stock company 'Mažeikių nafta'
is increased by additional contributions by issuing new shares
of the joint-stock company 'Mažeikių nafta', comprising from
10.09 percent to 10.11 percent of the authorised capital of
this joint-stock company (after the issuance of these shares),
which will be acquired by the financial institution specified
in the agreement concluded between the Government of the
Republic of Lithuania and the strategic investor and/or any
other person indicated by the financial advisor to the
joint-stock company 'Mažeikių nafta', including the crude oil
supplier under a long-term crude oil supply agreement (and/or a
person, who is under control of the latter, or another person,
who is indicated by the financial advisor of the joint-stock
company 'Mažeikių nafta'), in cases and under procedure
established in the agreement concluded between the Government
of the Republic of Lithuania and the strategic investor, the
Government of the Republic of Lithuania will transfer gratis
the number of shares of the joint-stock company 'Mažeikių
nafta' that belong to the state by right of ownership to the
strategic investor so that the nominal value of the shares held
by the strategic investor by right of ownership would
correspond to the percentage share of the authorised capital of
this company, which the strategic investor had held until the
increase of the authorised capital by the additional
contributions. When the shares of the joint-stock company
'Mažeikių nafta' are transferred subsequent to the requirements
of this Paragraph, the provisions of the Law on the
Privatisation of State-owned and Municipal Property shall not
be applied. If the general meeting of shareholders of the
joint-stock company 'Mažeikių nafta' adopts a decision to
reduce the authorised capital and the person who may be the
financial institution specified in the agreement concluded
between the Government of the Republic of Lithuania and the
strategic investor and/or any other person indicated by the
financial advisor to the joint-stock company 'Mažeikių nafta',
including the crude oil supplier under a long-term crude oil
supply agreement (and/or a person, who is under control of the
latter, or another person, who is indicated by the financial
advisor of the joint-stock company 'Mažeikių nafta'), had
expressed his intent, prior to the adoption of the aforesaid
decision by the general meeting of shareholders of the
joint-stock company 'Mažeikių nafta' to reduce the authorised
capital, to invest into the joint-stock company 'Mažeikių
nafta' by way of acquisition of newly issued shares of the
joint-stock company 'Mažeikių nafta' comprising from 10.09
percent to 10.11 percent of the authorised capital of this
enterprise (after the reduction of the authorised capital and
the issuance of these shares), and after that (the same person)
intends immediately to invest into the joint-stock company
'Mažeikių nafta' by way of acquisition of newly issued shares
of the joint-stock company 'Mažeikių nafta' comprising from
18.62 percent to 18.64 percent of the authorised capital of
this enterprise (after the issuance of these shares), all the
resolutions of the general meeting of the shareholders of the
joint-stock company 'Mažeikių nafta' concerning the reduction
of the authorised capital of the joint-stock company 'Mažeikių
nafta' and/or the two increases of the authorised capital
specified in this Paragraph may be adopted at the same general
meeting of the shareholders of the joint-stock company
'Mažeikių nafta' without applying the provisions of Paragraph 3
of Article 51 and Paragraph 4 of Article 54 of the Law on
Companies. When the persons specified in this Paragraph acquire
the newly issued shares of the joint-stock company 'Mažeikių
nafta', the authorised capital of this company is increased
without applying the Law on the Privatisation of State-owned
and Municipal Property. The issues of the structure of
shareholders, management of and supply of energy resources to
the joint-stock company 'Mažeikių nafta' are decided without
applying the limitations established in sub-chapter 'Economic
Policy' of Chapter 4 of Part 1 of the Annex 'The Basics of
National Security' to the Law on the Basics of National
Security.
3. In the course of the acquisition of the shares by the
strategic investor under Items 1 and 2 of Paragraph 1 of this
Article, the authorised capital of the joint-stock company
'Mažeikių nafta' shall be increased without application of the
provisions of Article 18 of the Law on Privatisation of
State-owned and Local Government Property. In the course of the
sale of the shares, belonging to the State by right of
ownership, of the joint stock-company 'Mažeikių nafta' which
are pointed out in Item 3 of Paragraph 1 of this Article to the
strategic investor or crude oil suppliers of the joint-stock
company 'Mažeikių nafta' and/or financial institutions, the
provisions of the Law on the Privatisation of State-owned and
Municipal Property and the requirements of the Law on the
Securities Market to submit the obligatory official offer and
to conclude transactions of purchase and sale of securities at
the securities exchange shall not be applied. With the
exception of the cases provided for in Paragraph 2 of Article 3
and Paragraph 2 of Article 4 of this Law, the rest of the
shares of the joint-stock company 'Mažeikių nafta' which belong
to the State by right of ownership shall be privatised only
under the procedure established by the Law on Privatisation of
State-owned and Local Government Property.
4. After the strategic investor has acquired the shares
under Item 1 of Paragraph 1 of this Article, state and local
government institutions will not be permitted to present
additional requirements, as regards the period prior to the
acquisition of the shares by the strategic investor, either to
the joint-stock company 'Mažeikių nafta' or its subsidiaries
concerning the activities or failure of the joint-stock company
'Mažeikių nafta' or its subsidiaries or other events. The
Government of the Republic of Lithuania, in the agreements with
the strategic investor and/or the joint-stock company 'Mažeikių
nafta', has the right to assume basic property liabilities in
the name of the State, including recovery of losses. Such
losses include or may be incurred due to that fact that the
Government of the Republic of Lithuania may not carry out its
agreement obligations because of changes in the laws of the
Republic of Lithuania and because of the fact that the
information, statements and/or confirmations pointed out in the
agreements concluded by the Government of the Republic of
Lithuania and annexes thereto (including the presented
information revealing documents of the joint-stock company
'Mažeikių nafta') were false or inexact.
5. The notice about the first meeting of shareholders of
the joint-stock company 'Mažeikių nafta', which will take place
after the strategic investor has acquired the shares pointed
out in Item 1 of Paragraph 1 of this Article, shall be publicly
announced no later than 10 days prior to the day of the
meeting, while the announced draft agenda of the meeting shall
not be further specified. In this case the provisions of
Paragraph 6 of Article 21 and Paragraphs 1 and 3 of Article 22
of the Company Law shall not be applicable.
6. In the course of the acquisition of the shares by the
strategic investor under the provisions of this Article, as
well as in the course of conclusion of agreements by the
joint-stock company 'Mažeikių nafta' on acquisition of the
right of control in the joint-stock company 'Klaipėdos nafta',
the provisions of Chapter 3 of the Law on Competition shall not
be applicable. The provisions of Paragraphs 4 and 5 of Article
39 and Paragraph 7 of Article 54 of the Company Law shall not
be applicable to the joint-stock company 'Mažeikių nafta'.
Until 1 January 2004 the joint-stock company 'Mažeikių nafta'
has the right to acquire its own shares without applying the
provisions of Item 12 of Paragraph 2 of Article 24, the second
sentence of Paragraph 1 and Paragraphs 2, 3, 4, and 9 of
Article 55 of the Company Law.
7. In the agreements with the strategic investor and the
joint-stock company 'Mažeikių nafta', the Government of the
Republic of Lithuania shall be granted the right independently
to establish the method and procedure under which the
joint-stock company 'Mažeikių nafta' would compensate the
strategic investor a possible decrease of value of the said
company. The compensation sum of the joint-stock company
'Mažeikių nafta' to the strategic investor may not exceed US$75
million.
8. The announcement on the first meeting of the
shareholders of the joint-stock company 'Mažeikių nafta' that
will take place after the financial institution indicated in
the agreement between the Government of the Republic of
Lithuania and the strategic investor, and/or any other person
indicated by the financial advisor of the joint-stock company
'Mažeikių nafta', including the crude oil supplier under a
long-term crude oil supply contract (and/or a person who is
under his control or other person suggested by the crude oil
supplier, which is indicated by the financial advisor of the
joint-stock company 'Mažeikių nafta') has acquired the new
issued shares of the joint-stock company 'Mažeikių nafta'
indicated in Paragraph 2 of this Article, is publicly announced
not later than 10 days prior to the day of the meeting, and the
announced agenda of the meeting is not subject to revision. In
this case the provisions of Paragraphs 2 and 3 of Article 27,
Paragraphs 1 and 4 of Article 28 and Paragraphs 2 and 3 of
Article 30 of the Law on Companies are not applied."
36.2. Paragraph 2 of Article 4 (wording of 4 June 2002) of
the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" was set
forth as follows:
"1. The State shall have the priority in acquisition of
the shares sold or transferred otherwise belonging to the other
shareholders holding not less than one percent of shares of the
joint-stock company 'Mažeikių nafta' which continues its
activities after the reorganisation. The Government shall have
the right to establish the same right of priority to the
strategic investor as well. The period during which the State
has the right to acquire shares of the joint-stock company
'Mažeikių nafta' from the strategic investor and the procedure
for implementation of such right is established in the
agreement between the Government and the strategic investor.
Under the procedure established in the agreement with the
Government, the strategic investor has the right to transfer
the shares of the joint-stock company 'Mažeikių nafta' that
belong to it by right of ownership to enterprises, whose all
the shares and/or capital, either directly or indirectly,
belong to the strategic investor by right of ownership.
2. In the agreements between the Government and the
strategic investor, a party of which may also be the person who
will acquire the shares of the joint-stock company 'Mažeikių
nafta' according to Paragraph 2 of Article 3 of this Law, such
procedure may be established under which the parties of such
agreements and/or the successors to their rights under the laws
and/or agreements, including any and all the subsequent
successors to the rights, will transfer the shares of the
joint-stock company 'Mažeikių nafta' which belong to them by
right of ownership or will acquire them, will acquire newly
issued shares of the joint-stock company 'Mažeikių nafta' or
will implement their right of priority to acquire the shares of
the joint-stock company 'Mažeikių nafta' that belong to the
state by right of ownership. While concluding these agreements
and implementing their provisions, the Law on the Privatisation
of State-owned and Municipal Property and the provisions of
Article 19 of the Law on the Securities Exchange shall not be
applied."
37. It must be held that after Articles 3 and 4 of the Law
on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" had been set forth
in the wording of 4 June 2002, certain novels of legal
regulation were consolidated in the Law, inter alia:
- it was established that by additionally increasing the
authorised capital of the joint-stock company "Mažeikių nafta"
at any time within 5 years after the strategic investor has
acquired 33 percent of the shares of the joint-stock company
"Mažeikių nafta" which were newly issued by increasing, on the
grounds of the Law, the authorised capital of the said
joint-stock company for the first time, the strategic investor
could acquire the newly issued shares whose total nominal value
after the increase of the authorised capital comprised not more
than 15.4 percent of the then registered authorised capital of
the joint-stock company "Mažeikių nafta" (meanwhile, under the
previous legal regulation, during the said period the strategic
investor could acquire the newly issued shares whose total
nominal value did not exceed 16.5 percent of the authorised
capital of the joint-stock company "Mažeikių nafta");
- the mechanism of equalising of the part of the
authorised capital that belongs to the strategic investor (the
mechanism of compensation of presumed losses) which had been
established in the Law before was particularised in the aspect
that it was consolidated that the part of the authorised
capital belonging to the strategic investor is equalised only
in cases and under the procedure which are established in the
agreement concluded between the strategic investor and the
Government;
- it was consolidated that a procedure can be established
in the agreements between the strategic investor and the
Government (a party to which can be a financial institution
specified in the agreement concluded between the strategic
investor and the Government and/or any other person indicated
by the financial advisor to the joint-stock company "Mažeikių
nafta", including the crude oil supplier under a long-term
crude oil supply agreement (and/or a person, who is under
control of the latter, or another person, who is indicated by
the financial advisor of the joint-stock company "Mažeikių
nafta")) whereby the parties to such agreements and/or
successors to their rights according to laws and/or the
agreements, including any and all subsequent successors of the
rights, would either transfer the shares of the joint-stock
company "Mažeikių nafta" belonging to them by right of
ownership or would acquire them, would acquire the newly issued
shares of the joint-stock company "Mažeikių nafta" or would
implement the right of priority to acquire the shares of the
joint-stock company "Mažeikių nafta" which belong to the state
by right of ownership;
- it was consolidated that in the course of concluding and
implementing the said agreements between the Government and the
strategic investor (a party to which can be a financial
institution specified in the agreement concluded between the
strategic investor and the Government and/or any other person
indicated by the financial advisor to the joint-stock company
"Mažeikių nafta", including the crude oil supplier under a
long-term crude oil supply agreement (and/or a person, who is
under control of the latter, or another person, who is
indicated by the financial advisor of the joint-stock company
"Mažeikių nafta")) under which the parties to such agreements
and/or successors to their rights according to laws and/or the
agreements, including any and all subsequent successors of the
rights, would either transfer the shares of the joint-stock
company "Mažeikių nafta" belonging to them by right of
ownership or would acquire them, also would acquire the newly
issued shares of the joint-stock company "Mažeikių nafta" or
would implement the right of priority to acquire the shares of
the joint-stock company "Mažeikių nafta" which belong to the
state by right of ownership, inter alia the provisions of the
Law on the Securities Market concerning the submission of the
obligatory official offer are not applied.
38. On the same day (4 June 2002) when Law on Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" was adopted, the Seimas adopted the Republic of
Lithuania Law on Assuming State Basic Property Liabilities
Related to Investments into the Joint-stock Company "Mažeikių
nafta", which went into effect on 7 June 2002.
By this law, the state assumed all basic property
liabilities under the Yukos investment agreement and related
agreements between the Government and Williams International
Company, OAO Yukos Oil Corporation, Yukos Finance B.V. and the
joint-stock company "Mažeikių nafta". It was established that
the said agreements are concluded following Paragraph 2 of
Article 3 of the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
(Paragraph 1 of Article 1 of the Law on Assuming State Basic
Property Liabilities Related to Investments into the
Joint-stock Company "Mažeikių nafta") and that the state basic
property liabilities are established in the initialled Yukos
investment agreement and related agreements. It was
consolidated in Paragraph 3 of Article 2 of the said law that
the strategic investor was Yukos and it was particularised that
this strategic investor was OAO Yukos Oil Corporation, Yukos
Finance B.V. and other entities who either controlled or were
under control of OAO Yukos Oil Corporation, which were defined
in the Yukos investment agreement.
It needs to be noted that from the legal regulation
established in the Law on Assuming State Basic Property
Liabilities Related to Investments into the Joint-stock Company
"Mažeikių nafta" itself, it is impossible to notice what basic
property liabilities are assumed in the name of the state,
since references are made to the agreements between the
Government and Williams International Company, OAO Yukos Oil
Corporation, Yukos Finance B.V. and the joint-stock company
"Mažeikių nafta", while these agreements are defined in the
manner that it is not clear whether at the time of the adoption
of the law they were concluded (initialled), or whether they
were going to be concluded (initialled). Besides, the said
agreements were not and are not public. Thus, by formally
declaring and legislatively consolidating that the state
assumes all basic property liabilities under certain initialled
agreements, the Seimas in fact gave complete freedom to the
Government (persons authorised by it) to assume in the name of
the state all these liabilities that are not publicly
announced.
Paragraph 1 of Article 128 of the Constitution provides
that decisions concerning the State loan and other basic
property liabilities of the State shall be adopted by the
Seimas upon the motion of the Government. The Seimas, when it
transfers the powers on state basic liabilities to the
Government, which are ascribed to the Seimas by the
Constitution, violates the constitutional principle of
separation of powers (Constitutional Court ruling of 18 October
2000).
Paragraph 2 of Article 7 of the Constitution establishes
that only laws which are published shall be valid. Law may not
by not public (Constitutional Court ruling of 29 November
2001).
In this context it must be recalled that, as mentioned,
the provision of Paragraph 4 of Article 3 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" that the Government, in the
agreements with the strategic investor and/or the joint-stock
"Mažeikių nafta", has the right to assume basic property
liabilities in the name of the state for the strategic investor
and/or the joint-stock company "Mažeikių nafta" was recognised
to be in conflict with Paragraph 1 of Article 5 and Paragraph 1
of Article 128 of the Constitution.
39. On 13 June 2002, the Government adopted Resolution No.
888 "On the Drafts of Approval Agreements with the United
States Company Williams International Company, the Russian
Federation Open Joint-stock Company Yukos Oil Corporation, the
Netherlands Limited Liability Company Yukos Finance B.V. and
the joint-stock company 'Mažeikių nafta' and the Agreement on
Settlement with the United States Company Williams
International Company and the joint-stock company 'Mažeikių
nafta' and on Granting Corresponding Powers". By this
resolution, the Government inter alia approved of drafts of
various agreements on investments into the joint-stock
"Mažeikių nafta", management of this joint-stock company and
drafts of other agreements on the rights of the strategic
investor.
40. The agreements (the Investment Agreement and the
related agreements) on investments into the joint-stock
"Mažeikių nafta" were signed on behalf of the Government with
the Netherlands limited liability company Yukos Finance B.V. on
18 June 2002. These agreements were concluded among the Russian
Federation OAO Yukos Oil Corporation, the Netherlands limited
liability company Yukos Finance B.V., the United States company
Williams International Company, the joint-stock company
"Mažeikių nafta", and the Government (Article 2 of the Law on
Acquisition and Disposal of Shares of the Joint-stock Company
"Mažeikių nafta" which was adopted by the Seimas on 20 October
2005).
As mentioned, by Government Resolution No. 576 "On
Allocation of Funds" of 25 April 2002 whereby it was decided to
allocate LTL 950 thousand to the Ministry of Economy so that
legal services could be bought from one law office (specified
in the resolution) related to the legal assessment of final
agreements among the Government, the United States of America
company Williams International Company, the Russian open
joint-stock company Yukos Oil Corporation and the joint-stock
company "Mažeikių nafta", which are mentioned in the
cooperation agreement between the United States of America
company Williams International Company and the Russian open
joint-stock company Yukos Oil Corporation that was signed on 14
June 2001, and other related prepared legal documents. Thus,
one is to presume that in the course of the adoption of
Government Resolution No. 888 "On the Drafts of Approval
Agreements with the United States Company Williams
International Company, the Russian Federation Open Joint-stock
Company Yukos Oil Corporation, the Netherlands Limited
Liability Company Yukos Finance B.V. and the joint-stock
company 'Mažeikių nafta' and the Agreement on Settlement with
the United States Company Williams International Company and
the joint-stock company 'Mažeikių nafta' and on Granting
Corresponding Powers" of 13 June 2002 whereby the Government
inter alia approved of drafts of various agreements on
investments into the joint-stock "Mažeikių nafta", management
of this joint-stock company and drafts of other agreements on
the rights of the strategic investor and while signing the
agreements on investments into the joint-stock "Mažeikių nafta"
on behalf of the Government with the Netherlands limited
liability company Yukos Finance B.V. on 18 June 2002, one had
to receive corresponding legal assessment.
In this context it is to be mentioned that Government
Resolution No. 576 "On Allocation of Funds" of 25 April 2002
was amended and set forth in a new wording by Government
Resolution No. 1765 "On Amending Resolution of the Government
of the Republic of Lithuania No. 576 'On Allocation of Funds'
of 25 April 2002" of 11 November 2002, however, in the new
wording (11 November 2002) of Government Resolution No. 576 "On
Allocation of Funds" of 25 April 2002 the same task was
specified as well, i.e. to legally assess the final agreements
among the Government, the United States of America company
Williams International Company, the Russian open joint-stock
company Yukos Oil Corporation and the joint-stock company
"Mažeikių nafta", which are mentioned in the cooperation
agreement between the United States of America company Williams
International Company and the Russian open joint-stock company
Yukos Oil Corporation that was signed on 14 June 2001, and
other related prepared legal documents.
41. On 12 September 2002, the Seimas adopted the Republic
of Lithuania Law on the Amendment of Article 3 of the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" which went into effect on 18
September 2002. By Article 1 of the Law on the Amendment of
Article 3 of the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
Paragraph 1 of Article 3 (wording of 4 June 2002) of the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was amended: the notion of
the strategic investor was modified by establishing that the
investor who takes over the rights and duties of the strategic
investor under corresponding agreements, after the Seimas, upon
the presentation by the Government, confirms it as a strategic
investor, is a strategic investor.
42. At the period in question the Government adopted also
more resolutions which further sought to implement the
provisions of the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
(with the amendments and supplements made until and on 12
September 2002); among them was Resolution No. 1442 "On
Acquisition of Shares of the Joint-stock Company 'Mažeikių
nafta' and on Granting Powers" of 16 September 2002 (whereby
inter alia it was decided not to acquire the shares of the
joint-stock company "Mažeikių nafta" from Williams
International Company which were held by the latter and which
the Government was offered to acquire on the grounds and under
the procedure of the provisions of the 18 June 2002 Investment
Agreement among the Russian Federation open joint-stock company
Yukos Oil Corporation, the Netherlands limited liability
company Yukos Finance B.V., the United States of America
company Williams International Company, the joint-stock company
"Mažeikių nafta", and the Government of the Republic of
Lithuania and whereby the Ministry of Economy was commissioned
to conduct negotiations (together with the Ministry of Finance)
with the Russian open joint-stock company Yukos Oil Corporation
and the Netherlands limited liability company Yukos Finance
B.V., while the Minister of Economy was empowered to initial a
corresponding protocol of intent (without specifying the issues
to be dealt with by this protocol) and Resolution No. 1443 "On
Confirming the Netherlands Limited Liability Company Yukos
Finance B.V. as the Creditor" of 16 September 2002.
43. On 17 September 2002, the Seimas adopted Resolution
No. IX-1075 "On Confirming the Netherlands Limited Liability
Company Yukos Finance B.V. as the Creditor" by Article 1
whereof the Netherlands limited liability company Yukos Finance
B.V. (which, as mentioned, had already been recognised as a
strategic investor by the Law on Assuming State Basic Property
Liabilities Related to Investments into the Joint-stock Company
"Mažeikių nafta" which was defined in the Yukos Investment
Agreement, while this agreement, by the way, had not yet been
signed on the day of the adoption of the said law) was
confirmed as "the investor taking over the rights and duties of
the United States of America company Williams International
Company under corresponding 29 October 1999 and 18 June 2002
agreements on the investments into the joint-stock company
'Mažeikių nafta'". It was also established in the said
resolution of the Seimas that Article 1 thereof is valid and is
also applied to the companies which either control the
Netherlands limited liability company Yukos Finance B.V. or are
under control of the latter if and until the Netherlands
limited liability company Yukos Finance B.V. is controlled by
the Russian Federation open joint-stock company Yukos Oil
Corporation, and provided the Netherlands limited liability
company Yukos Finance B.V. transferred its rights and duties
under the agreements specified in Article 1 of the said Seimas
resolution to a company which either controls the said company
or is under its control, then said Article 1 would be applied
to the companies controlling the Netherlands limited liability
company Yukos Finance B.V. or which are under control of the
latter insofar as the companies which have taken over
corresponding rights and duties are controlled by the Russian
Federation open joint-stock company Yukos Oil Corporation. The
said Seimas resolution also established that it shall become
effective after the entry into effect of the Law on the
Amendment of Article 3 of the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" (No. IX-1073), which, as mentioned, went into
effect on 18 September 2002.
It needs to be noted that Seimas Resolution No. IX-1075
"On Confirming the Netherlands Limited Liability Company Yukos
Finance B.V. as the Creditor" of 17 September 2007 had been
adopted before the Law on the Amendment of Article 3 of the Law
on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" was officially
published, thus, before the latter went into effect, since, as
mentioned, this law became effective on 18 September 2002; it
was the provisions of this law that were being implemented by
the said Seimas resolution.
44. While seeking to implement the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" (with the amendments and
supplements made until and on 4 June 2002), the Law on Assuming
State Basic Property Liabilities Related to Investments into
the Joint-stock Company "Mažeikių nafta" (wording of 4 June
2002) and Seimas Resolution No. IX-1075 "On Confirming the
Netherlands Limited Liability Company Yukos Finance B.V. as the
Creditor" of 17 September 2007 and to fulfil the state
liabilities related to the investments into the joint-stock
company "Mažeikių nafta", also while further regulating the
relations linked with the activity of the joint-stock company
"Mažeikių nafta" and the implementation of the agreements
related to the investments into the said company, the
Government adopted certain resolutions, out of which one is to
mention inter alia Resolution No. 1468 "On the Consent to
Transfer Rights and Duties Subsequent to the Agreement" of 18
September 2002 (whereby it was decided to agree that all the
rights and duties of the United States Company Williams
International Company under the agreements specified in this
resolution be transferred to the Netherlands Limited Liability
Company Yukos Finance B.V.), Resolution No. 1763 "On the
Approval of the Protocol of Intent and on Granting Powers" of
11 November 2002 (whereby the Government approved of the
protocol of intent initialled by the Minister of Economy, which
provided for negotiations on terms of certain agreements
concluded in relation with the investments into the joint-stock
company "Mažeikių nafta" and granted powers to the Minister of
Economy to sign, on behalf of the Government, to sign a
corresponding protocol of intent), Resolution No. 464 "On the
Approval of Changes in the Preliminary Plan of Financing the
Joint-stock Company 'Mažeikių nafta'" of 14 April 2003,
Resolution No. 688 "On Transfer of the Rights and Duties
Subsequent to the State Guaranteed Loan Agreements of the
Joint-stock company 'Mažeikių nafta'" of 29 May 2003,
Resolution No. 871 "On the Approval of Draft Amendments to the
Agreements with the Russian Federation Open Joint-stock Company
Yukos Oil Corporation, the Netherlands Limited Liability
Company Yukos Finance B.V. and the Joint-stock Company
'Mažeikių nafta' and on Granting Powers" of 2 July 2003,
Resolution No. 1249 "On the Letter of Project Assent to the
Russian Federation Open Joint-stock Company Yukos Oil
Corporation, the Netherlands Limited Liability Company Yukos
Finance B.V. and the Joint-stock Company 'Mažeikių nafta'" of 9
October 2003, Resolution No. 1180 "On the Assent to Management
Plans of the Joint-stock Company 'Mažeikių nafta'" of 2
December 2004, and Resolution No. 1548 "On the Letter of
Project Assent to the Netherlands Limited Liability Company
Yukos Finance B.V." of 2 December 2004.
45. As mentioned, at the time when the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was adopted and became
effective, there was no law in which the strategic significance
to national security of the joint-stock companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" or the company,
continuing its activity after the reorganisation of the said
joint-stock companies, was stated, because of which the
participation of the foreign capital that meets the European
and Transatlantic integration criteria in them should be
related to appropriate conditions.
Such legal regulation was consolidated in the law at the
time when the privatisation (selling of shares) of the
joint-stock company "Mažeikių nafta" had been taking place for
a number of years, which had been based on different
(differentiated) legal regulation from the legal regulation
regarding other enterprises: corresponding transactions had
been made (inter alia those on investments into this
enterprise), certain state basic property liabilities had been
assumed, etc.-this regulation was established by the Republic
of Lithuania Law on Enterprises and Facilities Which are
Strategically Important to National Security and Other
Enterprises Significant to Ensuring National Security which was
adopted by the Seimas on 10 October 2002 (which went into
effect on 30 October 2002) by Item 1 of Paragraph 1 of Article
4 whereof the joint-stock company "Mažeikių nafta" was
recognised as "an enterprise significant in ensuring national
security", but not "an enterprise strategically important to
national security". Later, when amendments and/or supplements
were made to the said law (articles (parts) thereof), the
provisions on attributing the joint-stock company "Mažeikių
nafta" to "enterprises significant in ensuring national
security" were not changed.
46. On 20 October 2005, the Seimas adopted the Law on
Amending Articles 1 and 3 of the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" which went into effect on 5 November 2005.
46.1. By Article 1 of the Law on Amending Articles 1 and 3
of the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" Paragraph
2 (wording of 29 September 1998) of Article 1 of the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was amended.
Paragraph 2 (wording of 20 October 2005) of Article 1 of
the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" provides:
"The procedure of the reorganisation of joint-stock
companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
and the activity of the company which continues its activities
after the reorganisation shall be regulated by the Law on
Companies, while their privatisation-by the Law on the
Privatisation of State-owned and Municipal Property if this Law
or other laws do not provide otherwise."
46.2. By Article 21 of the Law on Amending Articles 1 and
3 of the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" Paragraph
3 (wording of 17 December 2001) of Article 3 of the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was amended.
Paragraph 3 (wording of 20 October 2005) of Article 3 of
the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" provides:
"In the course of the acquisition of the shares by the
strategic investor under Items 1 and 2 of Paragraph 1 of this
Article, the authorised capital of the joint-stock company
'Mažeikių nafta' shall be increased without application of the
provisions of Article 18 of the Law on Privatisation of
State-owned and Local Government Property. In the course of the
sale of the shares, belonging to the State by right of
ownership, of the joint stock-company 'Mažeikių nafta' which
are pointed out in Item 3 of Paragraph 1 of this Article to the
strategic investor or crude oil suppliers of the joint-stock
company 'Mažeikių nafta' and/or financial institutions, the
provisions of the Law on the Privatisation of State-owned and
Municipal Property and the requirements of the Law on the
Securities Market to submit the obligatory official offer and
to conclude transactions of purchase and sale of securities at
the securities exchange shall not be applied. With the
exception of the cases provided for in Paragraph 2 of Article 3
and Paragraph 2 of Article 4 of this Law, the rest of the
shares of the joint-stock company 'Mažeikių nafta' which belong
to the State by right of ownership shall be privatised only
under the procedure established by the Law on Privatisation of
State-owned and Local Government Property if other laws do not
provide otherwise."
47. On the same day, i.e. on 20 October 2005, the Seimas
adopted the Law on Acquisition and Disposal of Shares of the
Joint-stock Company "Mažeikių nafta" which went into effect on
5 November 2005.
It was inter alia established therein:
- the purpose of this law is to create legal
pre-conditions to secure the public interest of the Republic of
Lithuania in national security in the strategically important
sector of economic activity in which the joint-stock company
"Mažeikių nafta" conducts its activities, to promote reliable
foreign investments, which contain no threats to national
security, into this company, to ensure a long-term opportunity
to the Republic of Lithuania to import and refine oil on its
territory, also to seek to ensure effective management of the
joint-stock company "Mažeikių nafta" and its results (Article
1);
- if the Netherlands limited liability company Yukos
Finance B.V sells the block of shares of the joint-stock
company "Mažeikių nafta" possessed by it, whose nominal value
at the time of the entry into effect of this Law comprises 53.7
percent of the authorised capital of the company, the
Government, taking account of the purposes established in
Article 1 of this Law, following the provisions of the 18 June
2002 Investment Agreement concluded among the Russian
Federation OAO Yukos Oil Corporation, the Netherlands limited
liability company Yukos Finance B.V., the United States company
Williams International Company, the joint-stock company
"Mažeikių nafta", and the Government of the Republic of
Lithuania or according to a different procedure coordinated
between the Government of the Republic of Lithuania and the
Netherlands company Yukos International U.K. B.V., has the
right to acquire under the name of the state the block of
shares of the joint-stock company "Mažeikių nafta" sold by the
Netherlands company Yukos International U.K. B.V. and the
rights and duties possessed by the Netherlands company Yukos
International U.K. B.V. within the said Investment Agreement
and related agreements; the rights of priority of the
Government to acquire the shares of the joint-stock company
"Mažeikių nafta" sold by the Netherlands company Yukos
International U.K. B.V. which are established in the Investment
Agreement and the rights and duties of the Government under
other concluded agreements or those that will be concluded in
the future regarding acquisition of shares of the joint-stock
company "Mažeikių nafta" may be transferred according to the
procedure established in laws of the Republic of Lithuania and
the said agreements; while taking account of the purposes
established in Article 1 of this Law, the Government or an
institution authorised by it shall, by way of negotiations with
one or several bidders, choose the successor to the rights and
duties, establish the terms of the transfer transaction and
conclude an agreement on transfer of the rights and duties
(Article 2);
- the shares of the joint-stock company "Mažeikių nafta"
sold to the Netherlands company Yukos International U.K. B.V.
and the shares transferred under other agreements or those on
acquisition of shares of the joint-stock company "Mažeikių
nafta" that will be concluded in the future, if they are
acquired by the state by right of ownership, and other shares
of the joint-stock company "Mažeikių nafta" that belong to the
state by right of ownership may, by a Government resolution, be
sold without applying the Law on the Privatisation of
State-owned and Municipal Property; after the shares are sold
by means of the specified manner, the state must "keep as
ownership" not less than the block of shares comprising 10
percent of the authorised capital of the said company at the
time of the entry into effect of this law and must have an
opportunity to exert influence on essential management
decisions in this company; the requirements of the Law on the
Securities Market to submit an official offer and to conclude
transactions of purchase and sale of securities at the
securities exchange are not applied (Article 3).
48. After the Law on Amending Articles 1 and 3 of the Law
on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" and the Law on
Acquisition and Disposal of Shares of the Joint-stock Company
"Mažeikių nafta", which were adopted on 20 October 2005, came
into effect, the overall regulation of the relations linked
with disposal of the shares of the joint-stock company
"Mažeikių nafta" (inter alia their transfer to the strategic
investor or other investor who will takes over the rights and
duties of the strategic investor under corresponding
agreements, when the Seimas, on the submission of the
Government, confirms it as a strategic investor) was changed in
essence.
48.1. Until then the legal regulation established in the
Law on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis", if compared with
the general legal regulation applicable to other enterprises,
had been treated as special (differentiated) one; such
differentiation of legal regulation was based on the
exceptional significance of the joint-stock company "Mažeikių
nafta" to the Lithuanian economy and the necessity to create
favourable conditions as soon as possible in order to attract
investments into it; besides, as mentioned, the legal
regulation established in the Law was differentiated only in
certain respects and was temporary in the respect that after
the strategic investor had acquired the issue of shares of the
joint-stock company "Mažeikių nafta" continuing its activity
after the reorganisation, further privatisation of this company
should have been conducted according to the Law on the
Privatisation of State-owned and Municipal Property, while this
joint-stock company should have been managed according to the
laws which consolidate general legal regulation. Although, by
the amendments and supplements to the Law made after 1999 the
beginning of the application of general legal regulation was
postponed, the temporary character of the said differentiated
legal regulation was not essentially denied.
In the context of the constitutional justice case at
issue, one is to emphasise that the same can be said also as
regards the exceptional provisions established in the Law
concerning non-application of the requirements of the Law on
the Securities Market to submit an official offer and to
conclude transactions of purchase and sale of securities at the
securities exchange.
48.2. After the Law on Amending Articles 1 and 3 of the
Law on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" and the Law on
Acquisition and Disposal of Shares of the Joint-stock Company
"Mažeikių nafta", which were adopted on 20 October 2005, came
into effect, the legal regulation of the relations consolidated
in the Law on Acquisition and Disposal of Shares of the
Joint-stock Company "Mažeikių nafta" which are related with
acquisition and disposal of shares of the joint-stock company
"Mažeikių nafta" is special (exceptional) if compared with the
legal regulation of the same relations consolidated in the Law
on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" which, as it has
been mentioned, is special (exceptional) legal regulation
itself if compared with the general legal regulation
established in other laws (inter alia regulating privatisation
of enterprises, the activities and management of joint-stock
companies, the protection of property and non-property rights
of shareholders etc.).
In addition, after the Law on Amending Articles 1 and 3 of
the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" and the
Law on Acquisition and Disposal of Shares of the Joint-stock
Company "Mažeikių nafta", which were adopted on 20 October
2005, came into effect, the exceptionality of the legal
regulation previously established in the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" virtually lost is temporary character.
It needs to be emphasised that the same can be said also
about the provisions consolidated not only in the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" but also in the Law on
Acquisition and Disposal of Shares of the Joint-stock Company
"Mažeikių nafta" related with non-application of the
requirements of the Law on the Securities Market to submit an
official offer and to conclude transactions of purchase and
sale of securities at the securities exchange.
49. In summary, it is to be held that the regulation (by
means of laws and other legal acts) of the relations linked
with the reorganisation of joint-stock companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" and the activity and
management of the joint-stock company "Mažeikių nafta"
continuing its activity after the reorganisation has been and
is grounded on the expediency considerations in the first
place, i.e. by the object of securing of creation of the legal
environment favourable as much as possible to the joint-stock
company "Mažeikių nafta" (which, as mentioned, is exceptionally
significant to the Lithuanian economy and which has been
recognised an enterprise important to national security by the
law), to create favourable conditions to attract investments
into this joint-stock company, to guarantee the continuity of
its activity, its effectiveness, etc.
Alongside, it needs to be noted that when the said legal
relations (inter alia the relations linked with disposal of
shares of the joint-stock company "Mažeikių nafta") have been
regulated by legal acts since 1998, the expediency
considerations would frequently overshadow the legal ones,
including the imperatives arising from the Constitution.
Doubtlessly there are grounds permitting one to hold that when
the said relations were being regulated by legal acts, the
Constitution neither was nor is sufficiently paid heed to; this
is also evident from the Constitutional Court rulings whereby
certain provisions of laws were recognised to be in conflict
with the Constitution, as well as from the fact that legal acts
contain provisions which are analogous to those recognised to
be in conflict with the Constitution or by which the official
constitutional doctrine consolidated in the jurisprudence of
the Constitutional Court is clearly disregarded. The same can
be said about the succession of adoption of corresponding legal
acts, the speed of their drafting, consideration (including the
assessment of these drafts made by state institutions) and
adoption (inter alia their adoption by special urgency
procedure), especially when one bears in mind the ex post facto
assessment of the novels in the legal regulation (besides, by
inviting private persons to help, and not assigning state
institutions, which enjoy corresponding powers, to do that),
the reasoning of the legal regulation established therein, and
the deficiency (vagueness, ambiguity, inconsistency etc.) of
the formulations employed therein. One is especially to
emphasise that one can also notice the legal regulation where
state legal acts, inter alia laws and Government resolutions,
establish not new legal regulation, but, in a blanket manner,
without specifying nothing or almost nothing in particular,
approve of certain agreements already concluded with private
legal persons or even agreements concluded between private
legal persons themselves (without participation of institutions
of the State of Lithuania) on the grounds other than laws of
the Republic of Lithuania, but, on the contrary, presuming
amendment of laws of the Republic of Lithuania. One can also
notice the legal regulation where state legal acts, inter alia
laws and Government resolutions, officially approve agreements,
whose content is not known to the public, although sometimes it
is such agreements whereby basic property liabilities are
assumed on behalf of the state.
It means that the overall legal regulation of the
aforesaid relations lacks constitutional grounds.
On the other hand, it is possible to hold the
anti-constitutionality of certain norms of laws and other legal
acts only in corresponding cases of constitutional justice.
In the constitutional justice case at issue the other
provisions, which are not pointed out by the petitioner, are
not a matter of investigation in the aspect of their compliance
with the Constitution.
50. It has been mentioned that the petitioner had doubts
on the compliance of Paragraph 2 (wording of 4 June 2002) of
Article 4 of the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
with the Constitution (Articles 1, 23, 29 and 46 and the
constitutional principle of a state under the rule of law) to
the extent that it provides that provisions of Article 19 of
the Law on Securities Exchange are not applied in the course of
conclusion and implementation of the agreements specified in
this paragraph.
51. As mentioned, the article of the Law on the Securities
Market (wording of 17 December 2001) consolidated the institute
of obligatory official offer inter alia: if a person, acting
either independently or together with other persons, acquires
more than 40 percent of votes at the meeting of an accountable
issuer, he must, within 30 days, transfer the securities that
exceed this limit or to submit an official offer to buy up the
remaining securities of the accountable issuer, which grant the
right to vote, and the securities confirming the right to
acquire the securities granting the right to vote (Paragraph
1); the price of the obligatory offer must be not less than the
maximum price for securities acquired by the offeror during 12
months until exceeding the limit specified in Paragraph 1 of
this article; every shareholder of the issuer has the right to
apply to court with a demand that the person who has presented
the obligatory official offer increase the price of the
obligatory official offer so that it would not violate the
requirements of fairness (Paragraph 2).
52. It is generally recognised that the obligatory
official offer is one of the measures of protection of the
rights of ownership of small shareholders. The purpose of this
institute is to protect the rights of small shareholders, first
of all rights of ownership, in cases when a certain subject
(shareholder) either alone or together with other subjects
acquires the portion of the joint-stock company which enables
him (either alone or together with other subjects) to control
the activity of the joint-stock company in question and due to
this the opportunities of small shareholders to influence the
activity of this joint-stock company decrease, thus the value
of shares belonging to them may decrease as well.
The essence of the obligatory official offer is that the
subject who has acquired (either alone or together with other
subjects) the portion of shares of a joint-stock company that
enables him to control the activity of the company must submit
the obligatory official offer to buy up the shares belonging to
the small shareholders, while the latter must be given an
opportunity to sell their shares for not any but a fair price.
The fair price is generally to be considered the biggest price
which was given for the shares during a certain period
established in the law until the submission of the obligatory
official offer (as a rule, it is the average price within a
certain period). The said rule of the fair price, as the
institute of obligatory official offer in general, permits the
small shareholders to choose whether to sell his shares and
withdraw from the company after a certain subject (shareholder)
either alone or together with other subjects acquires the
portion of the joint-stock company which enables him (either
alone or together with other subjects) to control the activity
of the joint-stock company in question, or to remain small
shareholders.
53. The institute of obligatory official offer, as a
measure of protection of the rights of small shareholders, is
widespread in a number states in Europe and all over the world.
This institute has been consolidated in legal acts the European
Union as well, as, for instance, in Directive 2004/25/EC of the
European Parliament and of the Council of 21 April 2004 on
takeover bids.
54. In this Constitutional Court ruling it has been stated
that the Law according to which in the established cases the
provisions of certain articles (their paragraphs) were not to
be applied, was a law consolidating the differentiated legal
regulation, and that a mere fact that the Law consolidated the
appropriate differentiated legal regulation does not mean in
itself that it is in conflict with the Constitution. It was
also held that implementing the economic reform and
establishing the differentiated legal regulation the state may
not violate the principles and norms of the Constitution.
54.1. It is to be noted that establishment of the
exceptions of certain general regulation may be
constitutionally justifiable, if one seeks to ensure the
constitutionally grounded universally important interest, the
values protected and defended by the Constitution and only
inasmuch as it is sought. The said exceptions have to be
proportional to the constitutionally grounded objective sought
and not to restrict the rights of entities more than it is
necessary to ensure the constitutionally grounded universally
significant interest.
54.2. While construing these constitutional imperatives in
the context of protection of the ownership rights entrenched in
Article 23 of the Constitution, it is to be noted that the
legislator, consolidating such exceptions of the general legal
regulation that in certain cases certain provisions of laws
protecting ownership rights of persons are not applicable and
because of the non-application of such provisions damage to the
ownership rights of the person can be made, has a duty also to
establish such legal regulation that would allow to ensure the
protection of the ownership rights of the person by other
means. Otherwise, the provisions of Article 23 of the
Constitution that guarantee the protection of the ownership
rights by law would be disregarded.
54.3. In this context it is to be noted that if an
institute of obligatory official offer as one of the protective
means of the ownership rights of the shareholders is entrenched
in the laws, then by establishing in certain laws that such
obligatory official offer is not to be submitted (even though
some subject (shareholder) either alone or together with other
subjects, acquires such a number of shares of the joint-stock
company that he (either alone or together with other subjects)
can control the activity of that joint-stock company), it is
necessary to establish by laws also such legal regulation that
would allow to by other means ensure that the rights of the
small shareholders, first of all the ownership rights, would be
protected. If such legal regulation, which could compensate
possible losses, is not established, the provisions of Article
23 of the Constitution that guarantee the legal protection of
the ownership rights would be disregarded and the preconditions
to violate the rights of the small shareholders could be made.
It is to be noted that the legislator enjoys broad
discretion to choose the aforementioned legal regulation that
would compensate possible losses, he can inter alia establish a
reasonable, grounded period within which the possible losses
are estimated (calculated) (if they really appear and if it
happens exactly due to the non-submission of the obligatory
official offer under the law), he may also choose various ways
of compensation of the said losses, etc.
55. When deciding, whether Paragraph 2 (wording of 4 June
2002) of Article 4 of the Law is not in conflict with the
Constitution to the extent that it establishes that the
provisions of Article 19 of the Law on Securities Market are
not applicable while concluding and implementing the agreements
specified in this paragraph, it is to be noted that after the
exception of the said general legal regulation was established
and consolidated in the Law on Securities Market, no
compensating legal regulation was established that would allow
to ensure by other means that the rights of the small
shareholders, first of all their rights of ownership, will be
protected.
This alone is sufficient grounds to state that to the
extent that it establishes that the provisions of Article 19 of
the Law on Securities Market are not applicable while
concluding and implementing the agreements specified in this
paragraph and that there are no other provisions which would
consolidate other protective means of the ownership rights of
the small shareholders, Paragraph 2 (wording of 4 June 2002) of
Article 4 of the Law is in conflict with the provision of
Paragraph 2 of Article 23 of the Constitution that ownership
rights are protected by laws and with the constitutional
principle of a state under the rule of law.
56. Taking account of the arguments set forth, a
conclusion is to be made that Paragraph 2 (wording of 4 June
2002) of Article 4 of the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" to the extent that it does not establish any
other means to protect the ownership rights of the small
shareholders which would compensate the losses that they can
have due to the fact that the provisions of Article 19 of the
Law on Securities Market are not applicable while concluding
and implementing the agreements specified in this paragraph, is
in conflict with Paragraph 2 of Article 23 of the Constitution
and the constitutional principle of a state under the rule of
law.
57. Having held that Paragraph 2 (wording of 4 June 2002)
of Article 4 of the Law on the Reorganisation of Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
to the extent that it does not establish any other means to
protect the ownership rights of the small shareholders which
would compensate the losses that they can have due to the fact
that the provisions of Article 19 of the Law on Securities
Market are not applicable while concluding and implementing the
agreements specified in this paragraph, is in conflict with
Paragraph 2 of Article 23 of the Constitution and the
constitutional principle of a state under the rule of law, in
this case of constitutional justice the Constitutional Court
will not investigate whether this paragraph (to the indicated
extent) is not in conflict with Articles 1, 29 and 46 of the
Constitution.
58. Having held this, one is also to hold that the
legislator, while paying heed to the rights of the small
shareholders as well as the constitutionally defended (public)
interest of all society, according to the Constitution has the
duty to establish such legal regulation by law that in case
that within the reasonable and grounded period the small
shareholders of the joint-stock company "Mažeikių nafta" really
experienced losses and if these losses were experienced
precisely due to the non-submission of the obligatory official
offer under Paragraph 2 (wording of 4 June 2002) of Article 4
of the Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis", the
aforementioned losses would be estimated (calculated) and
compensated.
It is to be noted that, while paying heed to the rights of
the small shareholders as well as the constitutionally defended
(public) interest of all society, the mere fact that Paragraph
2 (wording of 4 June 2002) of Article 4 of the Law to the
extent that one did not establish other means to protect the
ownership rights of the small shareholders which would
compensate the losses that they can have due to the fact that
the provisions of Article 19 of the Law on Securities Market
are not applicable while concluding and implementing the
agreements specified in this paragraph is recognised by this
Constitutional Court ruling as being in conflict with the
Constitution, in itself cannot be the basis for questioning the
legal actions or decisions done while implementing the
provisions of the Law after corresponding amendments and
supplements were made to the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" on 4 June 2002.
II
On the petition of the Mažeikiai District Local Court, the
petitioner, requesting to investigate whether Paragraph 8
(wording of 4 June 2002) of Article 3 of the Law on the
Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" is not in conflict with
Articles 1, 23, 29 and 46 of the Constitution and the
constitutional principle of a state under the rule of law.
1. The petitioner had doubts on whether inter alia
Paragraph 8 (wording of 4 June 2002) of Article 3 of the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis", according to which after
the obligatory official offer to buy up the rest of the shares
was not submitted, a general meeting of the shareholders of the
joint-stock company "Mažeikių nafta" was convened on 19 June
2002, is not in conflict with Articles 1, 23, 29 and 46 of the
Constitution and with the constitutional principle of a state
under the rule of law.
2. It was mentioned that in Paragraph 8 (wording of 4 June
2002) of Article 3 of the Law it was established:
"The announcement on the first meeting of the shareholders
of the joint-stock company 'Mažeikių nafta' that will take
place after the financial institution indicated in the
agreement between the Government of the Republic of Lithuania
and the strategic investor, and/or any other person indicated
by the financial advisor of the joint-stock company 'Mažeikių
nafta', including the crude oil supplier under a long-term
crude oil supply contract (and/or a person who is under his
control or other person suggested by the crude oil supplier,
which is indicated by the financial advisor of the joint-stock
company 'Mažeikių nafta') has acquired the new issued shares of
the joint-stock company 'Mažeikių nafta' indicated in Paragraph
2 of this Article, is publicly announced not later than 10 days
prior to the day of the meeting, and the announced agenda of
the meeting is not subject to revision. In this case the
provisions of Paragraphs 2 and 3 of Article 27, Paragraphs 1
and 4 of Article 28 and Paragraphs 2 and 3 of Article 30 of the
Law on Companies are not applied."
3. The petitioner grounds his doubts on the compliance of
Paragraph 8 (wording of 4 June 2002) of Article 3 of the Law on
the Reorganisation of Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" with Articles 1, 23, 29 and
46 of the Constitution and the constitutional principle of a
state under the rule of law on the fact that the legal
regulation established in Paragraph 8 (wording of 4 June 2002)
of Article 3 of the Law as well as in Paragraph 2 (wording of 4
June 2002) of Article 4, in the opinion of the petitioner, is
generally meant to implement private interests of individual
persons, and the general norms valid for all other persons
which are consolidated in other laws, are not applicable; that
the small shareholders can no longer possess the shares of the
joint-stock company "Mažeikių nafta" that belong to them, nor
sell them to the strategic investor, because they were not
provided with the obligatory official offer to buy up the rest
of the shares; that by means of the disputed provisions the
state, without use to society and justly compensating the small
shareholders, totally devalued their property and deprived them
of their essential rights which are provided by the shares,
etc.
4. It was mentioned that in Paragraph 8 (wording of 4 June
2002) of Article 3 of the Law it is consolidated that "the
provisions of Paragraphs 2 and 3 of Article 27, Paragraphs 1
and 4 of Article 28 and Paragraphs 2 and 3 of Article 30 of the
Law on Companies are not applied".
At the time when the provision" the provisions of
Paragraphs 2 and 3 of Article 27, Paragraphs 1 and 4 of Article
28 and Paragraphs 2 and 3 of Article 30 of the Law on Companies
are not applied" was entrenched in Paragraph 8 (wording of 4
June 2002) of Article 3 of the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis", the Law on Companies (wording of 13 July 2000)
was in force.
In Paragraph 2 of Article 27 of the Law on Companies
(wording of 13 July 2000) it was established:
"The agenda of the general meeting of the shareholders may
be supplemented upon the proposal to include new issues, put
forward by the Supervision Council, the Board (if the Board is
not formed-the head of the Administration), the institution
holding special shares or shareholders with not less than 1/10
of all votes. The proposal to supplement the agenda may be
submitted not later than 15 days before the general meeting.
The company management bodies and persons specified in this
paragraph may also submit new drafts of resolutions, propose
additional candidates to the company management bodies, the
firm of auditors. The Articles may also provide for less votes
entitling the shareholders to supplement the agenda of the
general meeting, propose new draft resolutions, additional
candidates to the members of company management bodies elected
by the general meeting of the shareholders, the firm of
auditors."
According to Paragraph 3 of Article 27 of the Law on
Companies (wording of 13 July 2000), if the agenda of the
meeting referred to in the notice on the calling of the meeting
has been changed, the shareholders must be notified of the
changes in the agenda in the same manner in which the notice of
the general meeting of the shareholders is given no later than
10 days before the meeting.
In Paragraph 1 of Article 28 of the Law on Companies
(wording of 13 July 2000) it was established:
"The management body of the company or the institution
which passed a decision to convene the general meeting of the
shareholders shall present to the head of the administration
information and documents required for giving a notice of the
general meeting of the shareholders. The head of the
administration must publish the notice of the general meeting
of the shareholders in the periodical publications specified in
the articles of association or hand in the notice to every
shareholder against by his signature or send the notice by
registered mail no later than 30 days before the day of the
meeting. The general meeting of the shareholders may be
convened without observing the above time limits if all voting
shareholders or their proxies give their written consent
thereto. The shareholders of private limited liability
companies shall in all cases be delivered the notices upon
their signed acknowledgement of the delivery or by a registered
letter. The head of the administration shall inform the
shareholders at the opening of the meeting of the documents
proving that the shareholders have been given notice of the
general meeting of the shareholders. The documents must be
attached to the minutes of the general meeting of the
shareholders."
In Paragraph 4 of Article 28 of the Law on Companies
(wording of 13 July 2000) it was established:
"At least 30 days before the general meeting of the
shareholders the shareholders must be granted access to the
documents available to the company, relating to the agenda of
the meeting, including drafts of the resolutions, as well as
the application filed with the Board (or the head of the
administration) by the persons who initiated the convening of
the general meeting of the shareholders. If the shareholder so
desires in writing, the head of the administration shall within
3 days from the receipt of the written request deliver to him
upon his signed acknowledgement all draft resolutions of the
meeting or shall send him the above drafts by a registered
letter. A notice must be given with the drafts of the
resolutions indicating on whose initiative they have been
included. Where the person who initiated the draft resolution
has submitted explanations of the draft resolution, these must
be attached to the draft resolutions."
According to Paragraph 2 of Article 30 of the Law on
Companies (wording of 13 July 2000), all draft resolutions and
candidates to the members of the company's management bodies
elected by the general meeting of the shareholders, the
candidate firms from which the firm of auditors has to be
approved, which have been put forward by the persons on whose
initiative the meeting has been convened and the company's
management bodies or persons specified in Paragraph 2 of
Article 27 of this Law must be entered in the general ballot
not later than 15 days before the general meeting of the
shareholders.
In Paragraph 3 of Article 30 of the Law on Companies
(wording of 13 July 2000) it was established that the company
must not earlier than 15 days and not later than 10 days before
the general meeting of the shareholders send the general
ballots by registered mail or hand them in personally against
signature to the shareholders entitled to vote should the
shareholders so request in writing.
5. It is to be noted that in the specified provisions of
the Law on Companies very diverse, different in their legal
contents rights of the shareholders of the joint-stock
companies are entrenched.
It is to be held that in the petition of the petitioner no
concrete legal arguments are provided that would allow to
identify which of the rights of the shareholders (in this
case-of the small shareholders of the joint-stock company
"Mažeikių nafta") entrenched in disputed Paragraph 8 (wording
of 4 June 2002) of Article 3 of the Law, in the opinion of the
petitioner, were violated or are violated due to the fact that
according to this paragraph, "the provisions of Paragraphs 2
and 3 of Article 27, Paragraphs 1 and 4 of Article 28 and
Paragraphs 2 and 3 of Article 30 of the Law on Companies are
not applied", and in case they were violated or are violated,
then in what way.
6. Besides, as in the Constitutional Court hearing the
representative of the petitioner additionally explained, there
were doubts on the compliance of Paragraph 8 (wording of 4 June
2002) of Article 3 of the Law with the Constitution in the
aspect, that after the obligatory official offer to buy up the
rest of the shares was not submitted, a general meeting of the
shareholders of the joint-stock company "Mažeikių nafta" was
convened on 19 June 2002.
7. It is to be noted that in none of the articles
(paragraphs thereof) of the Law on Companies to which the
reference is made in Paragraph 8 (wording of 4 June 2002) of
Article 3 of the Law, i.e. neither in Paragraphs 2 and 3 of
Article 27, nor in Paragraphs 1 and 4 of Article 28, nor in
Paragraphs 2 and 3 of Article 30 can one find the provisions to
be attributed to the institute of the obligatory official offer
to buy up the rest of the shares. In the said paragraphs the
ownership relationships of shareholders are not regulated,
either.
It is to be held that in the petition of the petitioner no
concrete legal arguments are provided that would allow to
identify which of the rights of the shareholders (in this
case-of the small shareholders of the joint-stock company
"Mažeikių nafta") entrenched in Paragraphs 2 and 3 of Article
27, Paragraphs 1 and 4 of Article 28 and Paragraphs 2 and 3 of
Article 30, to which reference is made in disputed Paragraph 8
(wording of 4 June 2002) of Article 3 of the Law, were violated
or are violated due to the fact that according to this
Paragraph, "the provisions of Paragraphs 2 and 3 of Article 27,
Paragraphs 1 and 4 of Article 28 and Paragraphs 2 and 3 of
Article 30 of the Law on Companies are not applied", and in
case they were violated or are violated, then in what way.
8. According to Item 8 of Paragraph 1 of Article 66 of the
Law on the Constitutional Court, a petition for the
investigation of the compliance of a legal act with the
Constitution must contain the position of the petitioner
concerning the compliance of an appropriate act with the
Constitution and legal support of such position containing
references to laws. When construing this item of the Law on the
Constitutional Court, in its decision of 16 April 2004 the
Constitutional Court has stated that "the position of the
petitioner concerning the compliance of a legal act (part
thereof) with the Constitution according to the content of the
norms and/or the scope of regulation must be indicated clearly,
unambiguously, the petition must contain the arguments and
reasoning grounding the doubt of the petitioner that the legal
act (part thereof) is in conflict with the Constitution. Thus,
the petition requesting to investigate the compliance of a
legal act (part thereof) with the Constitution according to the
content of norms and/or the scope of regulation must clearly
indicate concrete articles (parts thereof), items of the legal
act the compliance of which with the Constitution is doubtful
from the petitioner's viewpoint, also concrete provisions-norms
and/or principles-of the Constitution, to which, in the opinion
of the petitioner, contradict the concretely indicated articles
or items of the disputed legal act. The petition requesting to
investigate the compliance of a legal act (part thereof) with
the Constitution according to the content of norms and/or the
scope of regulation must also clearly indicate the legal
arguments grounding the doubt of the petitioner as regards
every concretely indicated article (part thereof) or item of
the disputed legal act, the compliance of which with the
concretely indicated provision of the Constitution is doubtful
to the petitioner. Otherwise, the request to investigate the
compliance of a legal act (part thereof) with the Constitution
according to the content of norms and/or the scope of
regulation must be considered to be not in line with the
requirements of Article 66 of the Law on the Constitutional
Court."
In Article 67 of the Law on the Constitutional Court it is
established what has to be indicated in the petition to
investigate the compliance of the law or other legal act with
the Constitution when courts apply to the Constitutional Court
with such a petition. According to Item 5 of Paragraph 2 of
Article 67 of the Law on the Constitutional Court, in the
ruling of the court by the means of which the court applies to
the Constitutional Court requesting to investigate whether the
legal act is not in conflict with the Constitution, the legal
arguments presenting the opinion of the court on the conflict
of a law or other legal act with the Constitution must be
submitted.
It is to be emphasised that the construed of Item 8 of
Paragraph 1 of Article 66 of the Law on the Constitutional
Court presented in the Constitutional Court decision of April
16 2004 is to be applied mutatis mutandis also to Item 5 of
Paragraph 2 of Article 67 of this Law. In the context of the
constitutional justice case at issue, it is to be emphasised
that the requirement to indicate the legal arguments presenting
the opinion of the court on the conflict of a law or other
legal act with the Constitution arising from Item 5 of
Paragraph 2 of Article 67 of the Law on the Constitutional
Court, means that the courts that apply to the Constitutional
Court with the request to investigate whether the law or other
legal act (part thereof) is not in conflict with the
Constitution, while arguing their opinion presented in the
petition that the law or other legal act (part thereof) is in
conflict with the Constitution, may not confine themselves to
general reasoning or statements that the law or other legal act
(part thereof), in their opinion, is in conflict with the
Constitution, but must clearly indicate which disputed articles
(paragraphs, items thereof) and to what extent, in their
opinion, are in conflict with the Constitution, and to reason
their position on the compliance of every disputed provision of
the legal act (part thereof) with the Constitution with clearly
formulated legal arguments.
Otherwise, the petition of the court requesting to
investigate into the compliance of the law or other legal act
(part thereof) with the Constitution is to be considered as not
meeting the requirements of Article 67 of the Law on the
Constitutional Court.
9. According to Article 70 of the Law on the
Constitutional Court, in case that a petition or attachments
thereto fail to comply with inter alia requirements set forth
in Article 67, the petition is to be returned to the
petitioner. The return of a petition shall not take away the
right to apply to the Constitutional Court according to the
common procedure after removal of the deficiencies thereof.
10. Taking account of the arguments set forth, it is to be
held that the part of the case on Paragraph 8 (wording of 4
June 2002) of Article 3 of the Law on the Reorganisation of
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis", according to which after the obligatory official
offer to buy up the rest of the shares was not submitted, a
general meeting of the shareholders of the joint-stock company
"Mažeikių nafta" was convened on 19 June 2002 in the aspect of
its compliance with the Constitution is to be dismissed and the
petition to that extent is to be returned to the petitioner.
Conforming to Articles 102 and 105 of the Constitution of
the Republic of Lithuania and Articles 1, 53, 54, 55, 56, 67
and 70 of the Law on the Constitutional Court of the Republic
of Lithuania, the Constitutional Court of the Republic of
Lithuania has passed the following
ruling:
1. To recognise that Paragraph 2 (wording of 4 June 2002)
of Article 2 of Article 4 of the of the Republic of Lithuania
Law on the Reorganisation of Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" to the extent that
it does not establish any other means to protect the ownership
rights of the small shareholders which would compensate the
losses that they can have due to the fact that the provisions
of Article 19 of the of the Republic of Lithuania Law on
Securities Market are not applicable while concluding and
implementing the agreements specified in this paragraph is in
conflict with Paragraph 2 of Article 23 of the Constitution of
the Republic of Lithuania and the constitutional principle of a
state under the rule of law.
2. To dismiss the part of the case on Paragraph 8 (wording
of 4 June 2002) of Article 3 of the of the Republic of
Lithuania Law on the Reorganisation of Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis", according
to which, "after the obligatory official offer to buy up the
rest of the shares was not submitted, a general meeting of the
shareholders of the joint-stock company 'Mažeikių nafta' was
convened on 19 June 2002" in the aspect of its compliance with
the Constitution of the Republic of Lithuania and to that
extent to return the petition to the petitioner.
This ruling of the Constitutional Court is final and not
subject to appeal.
The ruling is promulgated in the name of the Republic of
Lithuania.
Justices of the Constitutional Court: Armanas Abramavičius
Egidijus Kūris
Kęstutis Lapinskas
Zenonas Namavičius
Ramutė Ruškytė
Vytautas Sinkevičius
Stasys Stačiokas
Romualdas Kęstutis Urbaitis