REPUBLIC OF LITHUANIA LAW ON ASSOCIATIONS OF OWNERS OF MULTI-APARTMENT RESIDENTIAL BUILDINGS AND OTHER TYPES OF BUILDINGS

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1 REPUBLIC OF LITHUANIA LAW ON ASSOCIATIONS OF OWNERS OF MULTI-APARTMENT RESIDENTIAL BUILDINGS AND OTHER TYPES OF BUILDINGS 21 February 1995 No I-798 (As last amended on 12 April 2012 No XI-1967) Vilnius CHAPTER ONE GENERAL PROVISIONS Article 1. Purpose of the Law 1. This Law shall define the method of management of joint ownership of owners of multi-apartment residential buildings and other types of buildings in the case of the establishment of an association, govern the establishment, management, operation, reorganisation and liquidation of an association, and the rights and obligations of owners of apartments and other premises/buildings as members of an association. 2. This Law shall also define the rights and obligations of owners of multi-apartment residential buildings and other types of buildings, who have not declared their intentions regarding the establishment of an association and their involvement in its activities, related to the management, use and maintenance of the joint ownership and the procedure for their exercise and fulfilment. 3. This Law shall apply to associations established for the purpose of management, use and maintenance of objects of joint ownership, which are not regulated by special laws defining individual legal forms of legal persons. Article 2. Definitions 1. Administration of an association shall mean the organisation of common object management and handling of economic and financial issues by the management body of an association. 2. Representative of the members of an association shall mean a natural person elected and authorised by the members of an association of the same building or part thereof to act for the members of the association who have elected him.

2 3. Inventory of common objects shall mean a document of a standard form, as approved by an authority authorised by the Government, specifying the type, purpose, properties and location of a common object in a multi-apartment residential building or another type of a building/buildings, owners of apartments or other premises/buildings, associated with the object, and other details characterising the object. 4. Objects of joint ownership shall mean common premises within the building, main building structures, common mechanical, electrical, sanitary, technical and other installations and equipment, also other property held by owners of multi-apartment residential buildings or other types of buildings by the right of joint ownership. 5. Flat shall mean a part of a multi-apartment building consisting of one or several rooms and other premises detached from the common premises, other flats or non-residential premises by partition structures. 6. Owner of a flat and other premises shall mean a natural or legal person owning a flat or other premises and holding a part of an object of joint ownership by the right of joint ownership. 7. Association of owners of multi-apartment residential buildings or other types of buildings (hereinafter: the association ) shall mean a non-profit legal person with limited civil liability established to use, manage and maintain objects of joint ownership or develop the same for the needs of the members of an association or to meet other general needs. 8. Multi-apartment building shall mean a residential building of three or more flats. A multi-apartment building may also have non-residential premises, including those for commercial, administrative, public catering, etc. purposes. 9. Residential building shall mean a building at least half of the useful area of which is taken by residential premises. 10. Another type of a building shall mean a building personally used for recreational, creative (creative workshop) or domestic (garage, etc.) purposes, which is owned by three of more owners of flats and other premises by the right of joint ownership, also detached singlefamily houses or duplex residential buildings having a common plot and/or local engineering networks. 11. Other premises shall mean non-residential (administrative, commercial, etc.) premises within a multi-apartment building, formed and registered in the Real Property Register as an individual object of ownership, also premises personally used for recreational, creative (creative workshop) or domestic (garage, etc.) purposes, formed and registered in the Real Property Register as an individual object of ownership.

3 12. Building shall be used in the meaning defined by the Law of the Republic of Lithuania on Construction. 13. Building renovation shall mean refurbishment (modernisation) of a building and renovation of common objects within the building through the fulfilment of the obligatory requirements for the use and maintenance of structures. 14. Building modernisation shall be used in the meaning defined by the Law of the Republic of Lithuania on Construction. 15. Common objects within a building shall include the following: 1) common structures of a building: the main structures of the building, including foundations, all load-bearing walls and columns, exterior walls and interior partitions detaching common premises from flats and other premises owned by individual owners, floors, the roof, architectural façade elements, common projecting or recessed balconies, exterior (façade) structures of other projecting and recessed balconies, exterior doors, staircase structures, exterior stairs, pitches and roofing elements); 2) common engineering systems of the building: common mechanical, electrical, gas, heating and sanitary fixtures and other equipment of the building, including the distribution board of the building, heating unit, heat and hot water supply pipes and radiators, water supply and sewerage pipes and towel dryers; 3) common premises within the building: staircases, halls, corridors, galleries, attics, storerooms, sub-basements, basements and other premises, provided that these are not owned by individual owners; 4) local engineering networks within the meaning defined in the Law of the Republic of Lithuania on Construction; 5) common plot, meaning a plot used and/or managed by owners of multi-apartment residential buildings or other types of buildings by the right of joint ownership or on other grounds defined by laws. 16. Renovation of common objects within a building through the fulfilment of the obligatory requirements for the use and maintenance of structures (hereinafter: the renovation of common objects ) shall mean construction works ensuring the restoration of the physical properties and energy performance of a building and/or its engineering systems. 17. Room shall be used in the meaning defined by the Law of the Republic of Lithuania on Construction. Article 3. Legal Status of an Association

4 1. An association shall be a non-profit legal person with limited civil liability. The legal form of this legal person, as defined by this Law, shall be an association. 2. An association may have and acquire only the civil rights and duties which are not in conflict with laws, the statutes of an association and the objectives of its activities. 3. The following shall be prohibited to an association: 1) use of the funds of an association for the settlement of legal disputes between the management body and the members of an association concerning management of an association and for purposes other than defined by the statutes of an association; 2) granting of loans, provision of a guarantee or security, mortgage of the assets of an association or ensuring the fulfilment of obligations of other persons in other ways. 4. The activities of an association shall be mutatis mutandis governed by the provisions of Chapter XIV of Book Four of the Civil Code of the Republic of Lithuania (hereinafter: the Civil Code ) regulating simple administration of assets. 5. The name of an association shall include a word association referring to the legal form of this legal person. 6. An association shall have its bank accounts in banks registered in the Republic of Lithuania. 7. Documents of an association which are used in its relations with other entities shall contain information specified in Article 2.44 of the Civil Code. 8. The office of an association shall be established in a building managed by that association. 9. The functions of an association shall be defined by its statutes taking into account the characteristics of the objects managed by that association. CHAPTER TWO ESTABLISHMENT AND REGISTRATION OF AN ASSOCIATION Article 4. Basis for the Establishment of an Association 1. The objective of the establishment of an association is the implementation of the rights and obligations of owners of flats and other premises/buildings, related to the management, use and maintenance of objects of joint ownership, whether owned by such owners or newly created. 2. An association shall be established by the owners of flats and other premises in one or a few multi-apartment buildings and of objects of joint ownership in other types of buildings.

5 No more than one association shall be allowed in one building, except where a certain portion of the building has individual engineering network inlets and autonomous engineering systems. 3. The promoters of an association shall be owners of flats and other premises/buildings. The decision to establish an association shall be taken by the founding meeting of owners of flats and other premises/buildings. The promoters of an association shall become the members of the association established. 4. As regards the establishment of an association, the right of initiative shall be granted to each owner or a group of owners of flats or other premises/building, the developer of the building or his authorised representative, the representative of the administrator of common objects in the building appointed according to the procedure defined by the Civil Code or a person authorised by a municipal executive authority. 5. Before the planned date of the founding meeting of an association, the initiators of the establishment of an association shall produce a list of owners of flats and other premises/buildings, including their signatures, who favour the establishment of an association. Owners of flats and other premises/buildings, who have not given previously declared in writing their intentions concerning the establishment of an association, shall have the right to express their opinion in writing at the founding meeting of the association. 6. Where an association is established in a multi-apartment building the common objects in which are administered by an administrator of common objects appointed according to the procedure defined by the Civil Code, the initiators of the establishment of an association, prior to the planned date of the founding meeting, shall give a 30 day written notice to the administrator of common objects in the building and/or the developer of the building informing of the planned date of the founding meeting of an association. The administrator of common objects shall provide the initiators of the establishment of an association with the inventory of common objects and the list of owners of flats and other premises, including their addresses, no later than within 15 days of the receipt of the notice. 7. The administrator of common objects, a person authorised under a joint venture contract or the developer of the building shall, within 30 days of the registration of the association, transfer to the association established the accumulated and unused funds of the owners of flats and other premises/buildings, earmarked for the renovation of the building/buildings and other general needs, along with the available construction and technical inventory documents of the building/buildings. 8. The costs of the establishment of an association shall be paid by the promoters of the association in proportion to their fraction in joint ownership.

6 Article 5. Joining an Active Association 1. Owners of flats and other premises in a multi-apartment building in which an association has not been established or owners of other types of buildings may initiate joining with an association established by the owners of flats and other premises of another building or owners of other types of buildings (hereinafter: an active association ) provided that they meet the requirements of Article 4(2) of this Law and have obtained the approval of the management body of the active association. 2. The decision to join an active association shall be taken by owners of flats and other premises/buildings at the meeting of owners of flats and other premises/buildings. The decision to join an active association shall be deemed valid if more than 1/2 of owners of flats and other premises in the multi-apartment building or another type of building/buildings, in which an association has not been established, is present at the meeting of owners of flats and other premises/buildings and more than 1/2 of the owners of flats and other premises/buildings present at the meeting vote in favour of the decision to join an active association. Where a multiapartment building, the owners of flats and other premises of which take the decision to join an active association, is administered by an administrator appointed according to the procedure defined by the Civil Code, the initiators of joining with an active association shall, prior to the planned meeting of the owners of flats and other premises, give a 30 day written notice to the administrator of common objects in this multi-apartment building. 3. Upon the decision to join an active association, the initiators of joining shall draft a joining agreement and authorise one of the owners of flats and other premises/building to sign it with the active association. 4. The joining agreement shall be approved by the general meeting/meeting of representatives of the active association according to the procedure established by the statutes of the association. 5. Following the approval of the joining agreement, the statutes of the active association shall be amended and registered with the Register of Legal Entities. Owners of flats and other premises/buildings who join an active association shall acquire the rights and assume the obligations of the members of this association. Article 6. Founding Meeting of an Association 1. The founding meeting of an association shall be convened by the initiator of the establishment of that association. He shall, prior to the meeting day, give at least 14 day public notice of the convening of the founding meeting of an association to the owners of flats and other premises/buildings specifying the goal of the establishment of an association and the place, date

7 and time of the meeting. The notice shall be accompanied by the agenda of the founding meeting of an association and the draft statutes of an association. 2. The founding meeting of an association shall be deemed valid if more than 1/2 of the owners of flats and other premises/buildings are present. 3. The decisions of the founding meeting of an association shall be taken by majority vote of the owners of flats and other premises/buildings present at the meeting. During the vote of the founding meeting of an association, each owner of a flat or other premises/building shall have one vote. Co-owners of a flat or other premises/building shall be represented by one person having one vote. 4. Participants of the founding meeting of an association shall be registered in a list. The list of the participants of the founding meeting of an association shall indicate the name and surname of each participant, the type of a personal identity document, its number and the date of issue, the name and number of a legal person, the address/addresses and unique number/numbers of the flat/flats or other room/premises or building/buildings owned by the participant of the meeting and the signature of the participant. Where a participant of the meeting acts for an owner of a flat or other premises/building, the list of the participants of the founding meeting of an association shall indicate the registration number and the date of his power of attorney. The list of the participants of the founding meeting of an association shall be signed by the chairperson and the secretary of the meeting. 5. Minutes shall be taken of the founding meeting of an association. The minutes of the founding meeting of an association shall be drafted within five working days of the day of the meeting. The minutes shall be signed by the chairman and the secretary of the meeting. The list of the participants of the founding meeting of an association, including their signatures, shall be attached to the minutes of the meeting. The sample form of the minutes and the founding meeting of an association and the list of the participants of the founding meeting of an association shall be approved by an institution authorised by the Government. 6. The conformity of the founding documents of an association to the laws shall be notarised. 7. If the founding meeting of an association is not held at the time planned, a repeat founding meeting of an association shall be convened no sooner than 14 days after the date of the originally planned founding meeting. The repeat founding meeting of an association shall be governed by the provisions of this Article. 8. The founding meeting of an association shall approve the statutes and elect the management body of the association. The founding meeting of an association may also elect other management bodies of the association.

8 Article 7. Statutes of an Association 1. The statutes of an association shall constitute a document governing the activities of an association. The statutes of an association shall contain the following particulars: 1) name of an association; 2) legal form: an association; 3) duration of an association, if limited; 4) essential characteristics of the object of joint ownership, i.e. actual or estimated details, including the name, address and cadastre number, if any; 5) goals of the association and a clear and comprehensive description of the areas of its activity; 6) procedure for the drawing up and amendment of the list of the members of the association; 7) where an association is established to create an object of joint ownership for the needs of the members of the association or other general needs, the procedure for and the terms and conditions of contribution payment, the procedure for the evaluation of non-monetary property contributions, if such evaluation is carried out by the promoters of the association; 8) procedure for and terms and conditions of entry into or withdrawal from an association by the owners of flats and other premises/buildings; 9) capacity of the general meeting of the members of the association (hereinafter: the general meeting ) or of the meeting of representatives and the procedure for convening of and voting at the meeting, including secret ballot and written procedure; 10) management and other bodies of the association, their capacity, the procedure of their election and removal; the procedure for forming a dispute settlement commission or electing a person settling disputes and the dispute settlement procedure, where such a commission is formed or a person elected; 11) procedure for the transfer of the voting right and conveying of the opinion on the items of the agenda of the general meeting before the meeting; 12) procedure for the use of funds and assets of the association; 13) procedure for the amendment of the statutes of an association and change of the office address; 14) procedure for and the terms and conditions of the reorganisation and liquidation of the association, also the procedure for the election and recalling of the liquidator of the association;

9 15) procedure for the announcement and publication of notices, registration and publication of the decisions of the general meeting/meeting of representatives; 16) date of signing of the statutes of an association. 2. The statutes of an association may also contain other provisions which are not in conflict with the laws of the Republic of Lithuania. 3. The statutes of an association that is to be established shall be signed by the chairperson and the secretary of the founding meeting of the association. The amended statutes of an association shall be signed by the chairperson and the secretary of the general meeting/meeting of representatives. The signatures of natural persons signing the statutes of an association are not be notarised. 4. The statutes of an association to be established shall become invalid if not submitted to the manager of the Register of Legal Entities within 6 months of their approval by the founding meeting of the association. Article 8. Registration of an Association 1. An association shall be registered with the Register of Legal Entities. The application to register an association shall be submitted to the manager of the Register of Legal Entities by the chairperson/board of the association. The following are the documents that shall be submitted to the manager of the Register of Legal Entities along with the said application: 1) the minutes of the founding meeting of an association; 2) the list of the participants of the founding meeting of an association; 3) the statutes of an association; and 4) the list of the owners of flats and other premises/buildings who have given their prior written consent or approval at the founding meeting in relation to the establishment of an association, including their signatures. 2. The manager of the Register of Legal Entities shall, within 20 working days of the receipt of the application referred to in paragraph 1 hereof and other documents, register the association or inform the chairperson/board of the association in writing of the reasons for the refusal to register the association. The refusal to register the association may be appealed against at court according to the procedure established by laws. 3. An association shall be deemed established and acquire the rights of a legal person of the day of its registration with the Register of Legal Entities. 4. The amended statutes of an association shall be re-registered in the Register of Legal Entities. The statutes of an association shall be re-registered upon the submission of an application and the minutes of the general meeting/meeting of representatives concerning the

10 amendment of the statutes of an association to the manager of the Register of Legal Entities. The amended statutes of an association shall take effect on the day of re-registration in the Register of Legal Entities. SECTION THREE MANAGEMENT OF AN ASSOCIATION Article 9. Management Bodies of an Association 1. The supreme management body of an association shall be the general meeting of the members of an association. The statutes of an association may provide for the meeting of representatives of the members of an association having the part of the rights of the general meeting defined in the statutes of an association. 2. The management bodies of an association shall include the board and/or the chairperson of an association. An association shall acquire civil rights, assume civil obligations and fulfil them via its management bodies. 3. Where the board of an association is not formed, the functions assigned to the board shall be performed by the chairperson of the association. 4. For the purpose of the internal control, an association shall form a controllers commission or elect a controller. 5. An association having more than one hundred members owners of flats and other premises/buildings shall form a dispute settlement commission or elect a person settling disputes. Other associations shall form a dispute settlement commission or appoint a person settling disputes at their own discretion. Article 10. Competence of the General Meeting 1. The general meeting shall: 1) amend the statutes of an association; 2) elect and recall the chairperson of the association/members of the board; 3) elect and recall members of the controllers commission or the controller and approve the rules of procedure of the controllers commission or the controller; 4) take decisions in relation to the method of administration of the association and the organisation of regular service/maintenance and use of common objects; 5) have the authority to take the decision on the performance of the financial audit of the association;

11 6) authorise one of the members of the association to sign for the association an employment contract with the chairperson of the association and determine the terms and conditions of salary payment and the salary amount, unless otherwise defined in the statutes of an association; 7) elect and recall members of the dispute settlement commission or the person settling disputes and approve the rules of procedure of the dispute settlement commission or the person settling disputes, if the dispute settlement commission/person settling disputes is formed/appointed; 8) approve the rates of contributions earmarked for the administration, regular service/maintenance of common objects of the association or payment of other costs; contributions or the procedure of calculation of contributions to the accumulation fund for the renovation of the building or common objects or the investment fund for the creation of new objects of joint ownership, and establish the procedure for the use of the funds; 9) approve the annual estimate of revenue and expenditure of the association; 10) approve the inventory of common objects; 11) take decisions on the borrowing of funds for the renovation of common objects or other credit obligations, except for the cases defined in paragraph 12 hereof; 12) approve other contributions related to the administration of the association and the use and maintenance of common objects, unless otherwise defined by the statutes of an association; 13) approve the annual financial statements and the annual activity report of the association; 14) take decisions on the association s entry to or withdrawal from association organisations or other public organisations; 15) take decisions to reorganise or liquidate the association; 16) elect or recall the liquidator of the association; 17) take decisions on payment losses and damages resulting from economic activities of the association. 2. The general meeting may also take decisions in relation to other issues falling within its remit, as defined by the statutes of an association. Article 11. Convening and Organisation of the General Meeting. Decision Making 1. General meetings shall be convened by the chairperson or the board of an association according to the procedure established by the statutes of the association. The general meeting shall also be convened where so required by the controllers commission/controller or more than

12 1/4 of the members of the association (if the association brings together a few multi-apartment buildings, more than 1/4 of the members of the association in each building, or more than 1/4 of the members of the association in at least one building, where the general meeting is convened upon the expiry of the term of office of the management bodies). In the event of the failure of the management body of an association to convene the general meeting within a month of the receipt of the request to convene one, it may be called by the controllers commission/controller or more than 1/4 of the members of the association (if the association brings together a few multiapartment buildings, more than 1/4 of the members of the association in each building, or more than 1/4 of the members of the association in at least one building, where the general meeting is convened upon the expiry of the term of office of the management bodies). 2. The initiator of the meeting referred to in paragraph 1 hereof shall, no later than 14 days before the day of the general meeting, post a notice of the meeting on the noticeboard of the association or in other noticeable places, specifying the time, date and place of the meeting and announce the agenda of the meeting, including the draft decisions, or indicate where and when the draft decisions will be available for consideration. Where the agenda of the general meeting includes the election or recalling of the management body of the association, amendment of the statutes of the association, handling of the issues of reorganisation or liquidation of the association or consideration of the annual estimate of revenue and expenditure of the association, the members of the association shall be notified of the general meeting in writing. If making the decisions defined in Article 12(1) hereof is on the agenda of the meeting, a written notice of the general meeting shall be given to all owners of flats and other premises in the building/buildings for which the association is established. 3. The general meeting shall be convened on an annual basis not later than within three months of the end of the financial year. Each general meeting shall elect the chairperson and the secretary of the meeting. 4. The members of the association present at the general meeting shall be registered and sign in the list of the participants of the meeting. The list of the participants of the general meeting shall be signed by the chairperson and the secretary of the general meeting. The members of the association may give their prior written opinion on the issues handled by the meeting according to the procedure established by the statutes of the association. The members of the association who give their prior written opinion shall be deemed present at the general meeting and registered in the list of the participants of the general meeting, while their votes shall be taken into account when determining the voting results. 5. The general meeting shall be deemed valid and have the power to take decisions if more than 1/2 of the members of the association are present at the meeting. Where the general

13 meeting is deemed failed due to the lack of quorum, a repeat meeting shall be convened in no less than two weeks with the right to consider and make decisions on the agenda of the meeting that failed. A repeat general meeting shall be deemed valid if more than 1/4 of the members of the association are present. 6. The decisions of the general meeting shall be deemed valid where more than 1/2 of the members of the association present at the meeting vote in favour, except for the cases defined in paragraph 7 hereof. 7. The decisions of the general meeting on the amendment of the statutes of an association, election or recalling of the management body or the members of the management body of the association, reorganisation or liquidation of the association shall be valid if more than 2/3 of all members of the association present at the meeting vote in favour (or 3/5 of all representatives in cases defined in Article 13 hereof). 8. Voting at the general meeting shall be open. Secret ballot shall be necessary in relation to the issues for which at least one member of the association requests secret ballot and the approval is given by more than 1/10 of the members of the association present at the meeting. Secret ballot shall be organised and held according to the procedure established by the statutes of an association. 9. Each member of an association shall have one vote at the general meeting of the association. At the meeting of the owners of a multi-apartment building/buildings or other types of buildings, each owner shall have the number of votes which is equivalent to the number of objects owned by him in that/those building/buildings which belong/belongs to the association and is/are registered in the Real Property Register. 10. Minutes shall be taken of general meetings. The minutes of the general meeting shall be signed by the chairperson and the secretary of the meeting. 11. The minutes of the general meeting shall be drawn up and signed not later than within five working days of the day of the meeting. The minutes of the general meeting shall be accompanied by the list of the participants of this meeting, powers of attorney and other documents certifying the authorisation to vote for the members of the association at the general meeting, also documents confirming that the members of the association have been notified of the convening of the general meeting. 12. The members of an association may take decisions by voting in writing, except for the decisions on the issues defined in paragraph 7 of this Article. The procedure for voting in writing shall be established by an institution authorised by the Government.

14 13. The decisions of general meeting/meeting of representatives, including decisions made by voting in writing, shall be registered and published according to the procedure defined by the statutes of the association. Article 12. Convening and Organisation of the Meeting of All Owners of Flats and Other Premises/Buildings. Taking Decisions in Relation to the Safeguarding of Common Interests or Individual Common Objects 1. Decisions on the safeguarding of common interests of the owners of flats and other premises/buildings in a multi-apartment building/buildings or other type of building/buildings in which the association is established (choice of hot water supplier, heat distribution method or method of heating in the building/buildings, choice of payment method, determination of the consumption limits, conclusion or termination of contracts between the owners of the premises/buildings and service suppliers, etc.), also on the measures not related to the implementation of the minimum requirements of use and maintenance of the building/buildings, the renovation of the building/buildings, accumulation or borrowing of funds for this purpose and the terms and conditions of a credit agreement shall be taken by majority vote of all owners of that multi-apartment building/buildings or other type of building/buildings in which the association is established, without prejudice to the requirements of justice, reason and fairness. In this case the provisions of Article 11 hereof shall mutatis mutandis apply to the convening and decision making of the meeting of the owners of flats and other premises/buildings. 2. Decisions in relation to individual common objects which, according to the inventory of common objects, are or may be used to meet the needs of part of the owners rather than all owners of the multi-apartment building/buildings or other type of building/buildings, without prejudice to the rights of other owners of the multi-apartment building/buildings or other type of building/buildings and the decisions of the general meeting of the association on the management, use, repair or renovation of common objects and the accumulation or borrowing of funds for this purpose, may be taken by and shall be binding to that part of the owners of flats and other premises/buildings. Such decisions shall be taken mutatis mutandis according to the procedure for the convening of meetings and decision making established by Article 11 hereof. 3. Decisions of the meeting of all owners of flats and other premises/buildings shall be registered and published according to the procedure defined by the management bodies of the association. Article 13. Legal Status of the Representatives of the Members of an Association. Election of Representatives and the Convening and Organisation of Their Meeting

15 1. In the event of the failure of a repeat meeting, as defined in Article 11(5) hereof, which prevents the association from achieving its goals, or in other cases defined by the statutes of an association, the meeting of representatives of the members of an association (hereinafter: the meeting of representatives ) shall be convened according to the procedure established by this Law and the statutes of the association. 2. The meeting of representatives shall be convened by the chairperson/board of an association. The meeting of representatives shall also be convened where required by the controllers commission/controller or more than 1/4 of the representatives. Subject to the failure of the management body of an association to convene the meeting of representatives within a month of the receipt of the request to convene such a meeting, the meeting may be convened by the controllers commission/controller or more than 1/4 of the representatives. 3. Representatives shall be elected by the meetings of the members of the association of the part/division/section of the multi-apartment building for a four-year term. The number of the terms of office of a representative shall be unlimited. Representatives shall be elected from the members of the association. The number of the representatives of the members of an association shall be determined in the statutes of the association on the basis of the principle of adequate and proportionate representation. 4. A representative shall represent the interests of the members of the association who have elected him. Each representative shall have one vote. At the meeting of representatives, a representative shall vote on each individual item taking into account the intentions of the majority of the represented members of the association declared before the meeting in writing or in another form. 5. The meeting of representatives shall be deemed valid if no less than 3/5 of the representatives are present. Decisions shall be made by majority vote of the representatives present at the meeting, except for the decisions referred to in Article 11(7) hereof. 6. Members of an association shall have the right to recall their representative. A representative shall be deemed having lost trust and recalled if more than 1/2 of the members of an association whom he represents vote in favour of his recalling at the meeting of the members of the association of the relevant part/division/section of the multi-apartment building. A prompt notice of the decision to recall a representative shall be given by the members of the association to the recalled representative and the chairperson/board of the association. Article 14. Chairperson of an Association 1. The chairperson of an association shall be a natural person eligible according to the statutes of the association. If the members of an association determine that the chairperson of the

16 association should be a person who does not have a flat or other premises in this/those building/buildings for the management of common objects of which the association has been established, the association shall have a collegial management body the board. 2. The chairperson of an association shall be elected and recalled, his job description shall be approved and the salary determined by the general meeting/meeting of representatives for a three-year period according to the procedure established by the statutes of the association. The number of the terms of office of the chairperson of an association shall be unlimited. The chairperson of an association shall assume office on the day of election, unless otherwise determined in his employment contract. 3. An employment contract with the chairperson of an association shall be signed and the amendments or termination thereof approved by the person authorised by the general meeting/meeting of representatives. 4. The chairperson of an association shall act in accordance with the laws, governmental resolutions, other legal acts, the statutes of the association, the job description of the chairperson of the association and decisions of the general meeting/meeting of representatives. 5. The chairperson of an association shall arrange operations of the association to achieve its goals, employ and dismiss members of the staff and conclude and terminate their employment contracts. 6. The chairperson of an association shall be responsible for: 1) arrangement of operations of the association and achievement of its goals; 2) drawing up of annual financial statements and annual report of the association; 3) conclusion of an agreement with an audit firm, where there is a decision of the general meeting/meeting of representatives on financial auditing of the association; 4) provision of information and documents to the general meeting/meeting of representatives in the cases defined herein or at the request of the general meeting/meeting of representatives; 5) submission of the documents and details of the association to the manager of the Register of Legal Entities; 6) provision of information to the owners of flats and other premises/buildings at their request; 7) drawing up and handling of the list of the members of the association or the list of the representatives of the members of the association elected according to the procedure defined by Article 13 hereof. The list/lists shall include contact details of the members of the association or their representatives/proxies, such as name, surname, correspondence address and/or

17 address and phone number. Details of the list of the members of the association or their representatives/proxies shall be revised no less than once a year; 8) drawing up and handling of the inventory of common objects; 9) organisation of maintenance of the building/buildings, its/their appurtenances and common objects, drawing up, completion and handling of maintenance documents, also the use and management of common plot/plots according to laws and other legal acts; 10) drafting and submission of annual and long-term plans for renovation of common objects of the building/buildings to the general meeting/meeting of representatives or the board; 11) management of the accumulation account of the owners of flats and other premises/buildings and use of these funds for the intended purpose; 12) making and submission of an annual estimate of revenue and expenditure of the association to the general meeting/meeting of representatives or the board; 13) submission of documents to the controllers commission/controller and/or the auditor. 7. All requests, claims and other documents submitted to the chairperson of an association by the owners of the flats and other premises/buildings shall be registered and handled according to the procedure established by the statutes of the association. The chairperson of an association shall, within ten working days of the receipt of the inquiry of an owner of a flat or other premises/building, provide full information about the decisions of the management bodies of the association, assets of the association, accumulation funds, contributions and other obligatory payments related to the operation of the association. 8. The chairperson of an association shall be responsible for proper performance of his functions delegated by the general meeting/meeting of representatives and defined by legal acts. The chairperson of an association shall pay damages incurred by the association in relation to his decisions made in breach of this Law and other laws of the Republic of Lithuania or the statutes of the association. 9. Before the end of the term of office of the chairperson of an association, the general meeting/meeting of representatives shall elect a new chairperson of the association. In the event of the failure to elect the chairperson of an association within 12 months of the end of the term of office of the former chairperson of the association, no less than 1/4 of the members of the association (or no less than 1/4 of the members of the association in each multi-apartment building, where the association brings together a number of multi-apartment buildings) or 1/4 of the representatives and the chairperson of the association shall have the right to refer to the municipal executive authority concerning the liquidation of the association and appointment of

18 an administrator for the objects of joint ownership according to Chapter XIV, Book Four of the Civil Code. 10. Where a one-man management body of an association the chairperson of an association is unable to perform his duties, according to the procedure established by the statutes of the association he may be temporarily substituted by one member of the association until the election of a new chairperson of the association. Article 15. Formation of the Board of an Association 1. The board of an association shall consist of the chairperson and the members of the board of the association. The chairperson of an association shall be the chairperson of the board of the association. The number of the members of the board of an association shall be defined in the statutes of the association. It may not be less than three. 2. The board of an association shall be elected by the general meeting/meeting of representatives for the term of office defined in the statutes of the association, which shall not be more than three years. A member of the board of an association shall be a natural person having a flat or other premises in the building/buildings for the management of common objects of which the association has been established and eligible according to the criteria defined in the statutes of the association. The number of terms of office of a member of the board of an association shall not be limited. 3. Before the end of the term of office of the board of an association, the general meeting/meeting of representatives shall elect a new board of the association. In the event of the failure to elect a new board of an association within 12 months of the end of the term of office of the former board, no less than 1/4 of the members of the association (or no less than 1/4 of the members of the association in each multi-apartment building, where the association brings together a number of multi-apartment buildings) or 1/4 of the representatives and the board of the association shall have the right to refer to the municipal executive authority concerning the liquidation of the association and appointment of an administrator for the objects of joint ownership according to Chapter XIV, Book Four of the Civil Code. 4. A member of the board of an association may resign his position with at least 14 day written notice to the board of the association. Article 16. Competence and Responsibility of the Board of an Association 1. The board of an association shall perform the following functions: 1) convene general meetings/meetings of the representatives according to the procedure established by this Law and the statutes of the association;

19 2) analyse and submit annual and long-term plans for the economic activities of the association, estimates of revenue and expenditure, financial statements and annual activity report for the approval of the general meeting/meeting of representatives; 3) analyse and approve the management structure of the association, functions of the staff (except for the management bodies of the association) and their salary; 4) analyse and submit the inventory of common objects and the internal rules of the building/buildings managed by the association for the approval of the general meeting/meeting of representatives; 5) analyse and submit for the approval of the general meeting/meeting of representatives proposals for the accumulation of funds, the amount of accumulation contributions and borrowing for the purpose of renovation of the building/buildings. Drafted decisions on economic activities of the association or the method of administration shall ensure the implementation of the obligatory requirements for the use and maintenance of common objects defined by laws and other legal acts; 6) analyse and evaluate the financial condition of the association and the results of its economic operations; 7) approve the terms and conditions of purchase of services and contracted works and purchase reports; 8) other functions delegated to the board according to the statutes of the association. 2. The procedure of work of the board of an association shall be defined by the rules of procedure approved by the board. 3. Meetings of the board of an association shall be convened by the chairperson of the association. As regards the convening of the meeting of the board of an association, each member of the board of the association shall have the right of initiative. 4. Decisions of the board of an association shall be taken by majority vote of the members of the board in a roll call vote. Each member of the board of an association shall have one vote. In the event of a tie in vote on the decision of the board of an association, the chairperson of the board of the association shall have the casting vote. Each member of the board of an association may express his opinion on the decision in writing before the meeting. 5. The meeting of the board of an association shall be deemed valid and the board shall have the right to make decisions provided that more than 2/3 of the members of the board of the association are present at the meeting. The members of the board of an association, who have given their written opinion before the meeting, shall be deemed present at the meeting of the board of the association, and their votes shall be taken into account when determining the voting results.

20 6. Minutes shall be taken of the meetings of the board of an association. Minutes of the meetings of the board of an association shall be kept according to the procedure established by legal acts. 7. The board of an association shall be responsible for proper performance of its functions, delegated by the general meeting/meeting of representatives and defined by legal acts, and the financial condition of the association. 8. The members of the board of an association shall pay damages incurred by the association in relation to the decisions of the board made in breach of the statutes of the association, this Law and other laws of the Republic of Lithuania. The members of the board of an association shall have a solidary obligation to pay damages to the association. The obligation to pay damages shall not be imposed on the members of the board of an association who voted against the decision that caused damages or were not present at the meeting of the board that took such a decision, provided that, within seven days of the moment they learned or had to become aware of such a decision, they submitted to the board/chairperson of the association a written objection to such decision making. 9. Where the chairperson of an association is unable to perform his duties or his term of office has expired, the board of the association shall appoint one of its members to perform the functions of the chairperson of the association until a new chairperson of the association is elected. Article 17. Accounting and Financial Statements of an Association 1. The accounting of an association, organisation and management of accounting and drawing up of financial statements of an association shall be regulated by laws and other legal acts. 2. The annual financial statements of an association shall be approved by its general meeting/meeting of representatives according to the procedure established by the statutes of the association. 3. Before the approval by the general meeting/meeting of representatives, the annual financial statements of an association shall be reviewed by the controllers commission/controller of the association. The general meeting/meeting of representatives may determine to contract an audit firm to audit the annual financial statements of the association. The audit report shall be submitted to the chairperson/board and the general meeting/meeting of representatives of the association. The audit report shall be made available to all owners of flats and other premises/buildings. 4. The financial year of an association shall coincide with the calendar year.