Insurance of Liabilities to Investors

Šiaulių Bankas AB is a participant of Liabilities to investors insurance system of the Republic of Lithuania.

Following the Law on Insurance of Deposits and Liabilities to Investors of the Republic of Lithuania (hereinafter referred to as the Law) liabilities to investors of Šiaulių Bankas AB are insured in the state company Deposit and Investment Insurance (hereinafter referred to as the Insurance company).

Up to EUR 22 000¹

In Euro (at euro cent accuracy - two decimals after comma and rounded according to mathematical rounding rules).

The subject matter of the insurance of liabilities to investors are  investor's financial instruments, irrespective of what currency they are in, or money in all currencies.

Liabilities to investors insurance payout is paid out over 3 months from the day of liabilities to investors insured event. The council of the Insurance company in exceptional circumstances in coordination with Bank of Lithuania can decide to extend this period for no more than 3 months.

Risk of investment i.e. possibility of a loss because investment does not generate returns or lose its` value is not the subject matter of the insurance of liabilities to investors are liabilities.

Liabilities to investors insurance objects are not liabilities to the following investors:

1. the Bank of Lithuania;
2. credit institutions;
3. financial brokerage companies;
4. financial institutions;
5. insurance undertakings and reinsurance undertakings operating in accordance with the Law on Insurance of the Republic of Lithuania;
6. pension funds;
7. collective investment entities.

Payment of the insurance indemnity for commitments to investors may be deferred for investors or other persons entitled to claim such indemnity as stated in Article 23(6) of the Law who have been charged with money laundering and/or terrorist financing in respect of lawfulness of acquisition of any money and/or financial instruments either owned by them and/or held in their name – until the court renders its decision.

Insurance indemnities for commitments to investors shall not be paid out to:

1. The Bank of Lithuania; credit institutions; financial brokers; financial institutions; insurance companies and reinsurance companies operating under the Republic of Lithuania Law on Insurance; pension funds; collective investment undertakings;
2. Investors with respect to whom a conviction has been handed down, in relation to lawfulness of acquisition of any money and/or financial instruments either owned by them and/or held in their name, in criminal proceedings on money laundering and/or terrorist financing;
3. Heads of administration and members of a council (supervisory council) and of a board of an entity – participant in the system of insurance of commitments to investors, persons holding at least 5% in the share capital of such participating entity, persons conducting independent audits of such participating entity (where an audit was carried out within one year preceding the date of the event insured under the system of insurance of commitments to investors); and
4. Close relatives and third parties acting on behalf of the persons referred to in (3) above.

Only to liabilities to investors insurance system security  shall always apply to the claims brought in respect with the financial instruments.

Monitory funds of the financial brokerage clients (investors) remitted to brokerage firm for purchase of financial instruments, and monitory funds of the clients (investors) acquired from the sale of the financial instruments belonging the client (investor) kept on the bank account opened on behalf of the brokerage firm are considered as the liabilities to investors and such funds shall be subject not to deposit insurance but to  liability to investors insurance system security.

1. The client in bank X has a variety of financial instruments with the market value on day Y being EUR 15 000 and EUR 3000 held in cash on behalf of a client, transferred to the bank in order to use its investment services. On day Y insured event occurs: bank X becomes insolvent and is unable to return the client money and financial instruments.  Is the client entitled to insurance compensations and of what size?
   Yes, the client is entitled to insurance compensation, which amounts to 18 000 euros.
    
2. The client in bank has X variety of financial instruments with the market value on day Y being EUR 15 000 and EUR 30 000 held in cash on behalf of a client, transferred to the bank in order to use its investment services. On day Y insured event occurs: bank X becomes insolvent and is unable to return the client money and financial instruments. Is the client entitled to insurance compensations and of what size?
   Yes, the client is entitled to insurance compensation, which amounts to 22 000 euros.
    
3. The client in bank X has a variety of financial instruments with the market value on day Y being EUR 15 000 and EUR 15 000 held in cash on behalf of a client, transferred to the bank in order to use its investment services. On day Y insured event occurs: bank X becomes insolvent and is unable to return the client money, however financial instruments can be transferred to another financial instruments account manager. Is the client entitled to insurance compensations and of what size? Is the client entitled to insurance compensations and of what size?
   The client is entitled to insurance compensation, which amounts to 15 000 euros.
    
4. The client in bank X has a variety of financial instruments: company’s A ordinary nominal shares with market value on the day Y being EUR 150 000. On day Y company A declares bankruptcy and its shares become worthless. After the bankruptcy proceedings are completed, the company's A shares registration is terminated, the shares are written off from all financial instruments accounts of the investors who have such shares.  Is the client entitled to insurance compensations and of what size?
   The client shall not be entitled to insurance compensation as the market risk is not a subject matter of insurance.
    
5. The client in bank X on day Y acquired the company's A ordinary nominal shares for EUR 70 000. Following the very bad performance of the company, within 1 month, shares lost in value and total market value of the shares purchased by the client fell down to EUR 45 000. Is the client entitled to insurance compensations and of what size?
   The client shall not be entitled to insurance compensation as the market risk is not a subject matter of insurance.

Liabilities to investors insurance payout is calculate and paid by the insurance company, based on liabilities to investors insurance members’ data on liabilities to investors insurance event day about investors, their liabilities to investors and additionally insured liability sums and liabilities to investors insurance system member’ transferred data about inventors value paper market value, that was on the day of liabilities to investors insurance event.

In calculation of liabilities to investors insurance payout sum, all financial instruments and money of a single investor (including investor legal person or other organization branches, offices, other structural units) are summed, that liabilities to investors insurance system member cannot return to the investor, but total liabilities to investors insurance payout to a single investor does not exceed 22 000 euro. 

If right of claim to money and (or) financial instruments under agreements had a group of persons (join investment), every member of the group is considered an investor and financial instruments and money is divided in equal shares, if in agreements from which the right of claim rises, or court rulings do not regulate otherwise. 

If investors manages other persons’ money or financial instruments under an agreement, then the right of claim belongs to the person to whom under right of ownership, right of trust or other basis belongs money and (or) financial instruments and which is known or can be identified prior to liabilities to investors insurance event day.  If money and (or) financial instruments belong to several persons, financial instruments and money is divided to each according to agreements from which right of claim rises share.  This provision is not applicable to management firm, when it manages collective investment subjects and pension funds.

Liabilities to investors insurance payout is calculate and paid based on data about  market value of the investor's financial instrument, that was on the day of liabilities to investors insurance event. For liabilities to investors in foreign currency liabilities to investors insurance payout sum is calculated based on liabilities to investors insured event day European Central Bank last announced foreign exchange reference rate, when euro and foreign currency exchange rate is no announced by  European Central Bank, then based on Bank of Lithuania last announced foreign exchange reference rate.

An investor has a right to receive an insurance payout for 5 years after insurance event day. Disputes arising from the investor's right to claim for the insurance benefit from the liabilities to investors shall be tackled by the general jurisdiction courts according to the procedure prescribed by the law.

Person to whom the liabilities to investors insurance benefit was paid illegally or by mistake must repay it to the Liabilities to Investors Insurance Fund. The Liabilities to Investors Insurance Fund's right to claim for the return of the illegally or mistakenly paid insurance  benefit for liabilities to investors shall be effective within 5 years since the day of payout of the insurance benefit for liabilities to investors. Repaid amounts or amounts payable shall be credited to the Liabilities to Investors Insurance Fund.

The insurance benefits for liabilities to investors shall be paid without investor's application to the insurance company. Within the period of the insurance benefit for liabilities to investors the Insurance company shall publicly inform the investors on the insurance event related to liabilities to investors as well as on the insurance benefit payout procedure and shall publish this information on its website as well.

State company "Indėlių ir investicijų draudimas": Algirdo str. 31, LT-03219 Vilnius; telephone (+370 5) 213 5657; fax (+370 5) 213 5546; e-mail [email protected]; website www.iidraudimas.lt.