Category: Lithuania

Adon Legal has advised the Lithuanian real estate developer Galio Group on a EUR 26 million loan from Citadele Bank.

According to Adon, “the financing was secured with the mortgage of the fourth building of the office complex S7 in Vilnius, which houses the service center of Danske Bank. The total area of the developed complex is almost 21,000 square meters in the central part of Vilnius. The financing provided by Citadele Bank will allow balancing investment flows better as Galio Group currently implements or intends to implement a number of residential projects.”

Adon’s team included Partners Marius Matiukas and Donatas Sliora.

The initially planned major changes to the security interest regime in Lithuania, which would remove notarial certifications of mortgage/pledge, have not materialized. However, certain amendments to Lithuanian laws governing security interests will enter into force from January 1, 2022.

No Separate Register

Currently, mortgages and non-possessory pledges have to be registered in the Mortgage Register. Sometimes, the security interest is additionally registered in the Real Estate Register. Following the amendments, the Mortgage Register will be liquidated. The new mortgages/pledges will be registered in either the Register of Contracts or the Register of Real Estate. The existing security interests will be transferred to the said registers as well.

The following security interests will be registered in the Register of Contracts: (1) movable property (rights) pledge; (2) mortgage over ships and aircraft; (3) enterprise mortgage; and (4) conditional mortgage. And the Real Estate Register will be used to register the following: (1) real estate mortgage (except for those described above); and (2) pledges of rights related to real estate.

More Flexibility in Pledge Perfection

Under current requirements, a security right in movable property (rights) is created by a pledge agreement. If the collateral is transferred to the creditor’s possession (possessory pledge), a simple written form agreement is sufficient. If the collateral is transferred to a third party or remains with the pledgor (non-possessory pledge), the pledge agreement must be notarized and registered in the Mortgage Register. As of January 1, 2022, the following main changes will be introduced:

The possibility to publicly register possessory pledges – currently, this type of pledge is not registrable (collateral transfer serves as a disclosure of security interest). Shortly, it will be possible to additionally disclose such a pledge in the Register of Contracts. It is anticipated that such registration could be achieved in two ways. The parties may submit their request directly to the register, or they may create the possessory pledge and subsequently register it by using IT tools.

The possibility to perfect non-possessory pledges by legal entities without a notary – currently, any non-possessory pledge has to be notarized (the notary confirms the validity of the pledge, e.g. checks collateral, compliance with the law, etc.) and registered in the Mortgage Register. Otherwise, the pledge is invalid. From January 1, 2022, notarial certification will not be mandatory for pledge agreements between legal entities. Such a pledge could be created using IT tools and thereafter registered in the register.

Although said changes will come into effect shortly, it is not yet clear how entering into pledge agreements by using IT tools will work in practice. The explanatory notes to the draft law indicate that the parties should be able to use the template pledge agreements available at the self-service portal of the Register of Contracts. However, these templates have not yet been published. It is also not clear whether it will be possible to amend such templates or whether any amendments will result in the need to formalize the non-possessory pledge with a notary.

According to the regulations of the Register of Contracts, this register will not verify the validity of pledges created via IT tools. Accordingly, even though legal persons will be able to create pledges without a notary, they might be willing to proceed with traditional (notarial) certification to have more legal certainty.

Simplified Procedure for Security Interest Release

According to Lithuanian law, the security interest is released once the secured obligation is performed or discharged, or if other grounds provided in the law exist. However, this does not automatically result in the security interest’s removal from the Mortgage Register. To do that, the notary must be provided with a relevant request and supporting documents (e.g., creditor’s confirmation, if the request is submitted by the pledgor or debtor).

As of January 1, 2022, the request to remove a mortgage (in certain cases) or pledge may be submitted by using IT tools (i.e., not through the notary). If the request is submitted by the pledgor or debtor, the creditor’s confirmation will have to be provided via said tools.

To conclude, the above changes should, to a certain extent, simplify perfection and release of the security interest. However, further changes might be anticipated shortly – as discussions are still ongoing on the need to significantly reduce the notary’s role and use well-developed IT tools and e-services to simplify procedures – and relevant new draft legislative proposals are on their way.

By Eva Suduiko, Partner and Co-Head in the Banking and Finance Practice Group, Cobalt

This Article was originally published in Issue 8.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

TGS Baltic has advised Myriad Capital on obtaining a category B financial brokerage company license from the Bank of Lithuania.

According to the firm, the license will “allow the company to trade securities on behalf of clients, provide securities’ accounting, and custody services.”

“Prior to this, Myriad Capital has had a category C license to engage in the distribution, acceptance, and transfer of financial instruments, portfolio management, and other investment services,” TGS Baltic informed.

Myriad Capital is a Vilnius-headquartered financial broker licensed by the Bank of Lithuania. The company provides an online platform for investment, stock, and currency exchange trading.

The TGS Baltic team included Partner Agnius Pilipavicius, Senior Associate Karolina Lapinskaite, Associate Elvinas Kizys, and Junior Associate Kotryna Visockyte.

Sorainen has advised the shareholders of the Dojus Group on investing in Walk15, which attracted EUR 268,500 in this financing round. Apex Legal reportedly advised Walk15 on the deal.

Lithuanian Business Angel Network LitBAN’s chairman of the board Vladas Lasas, venture capital fund 70Ventures, and several private individuals also invested in the company.

Walk15 is a mobile walking application and startup company founded by TV and radio host Vlada Musvydaite-Vilciauske. 

According to Sorainen, “Walk15 was valued at EUR 5 million during this investment round. The company, which has 260,000 users and employs about 15 people, plans to use the capital to develop its team and prepare for the next investment phase, which is scheduled for the summer.”

Sorainen’s team included Partner Sergejus Butovas and Senior Associate Matas Maciulaitis.

Ellex has advised Lords LB Asset Management-owned company Vilniaus Miesto Projektai on its EUR 8 million bond issuance.

According to Ellex, the bonds for the Vilnius real estate project have a maturity of 12 months, at an annual interest rate of 6,5%. “The bonds were purchased by more than 40 private and institutional investors from all Baltic countries. The total amount of bonds subscribed by the investors exceeded the number of bonds offered [by] EUR 2.4 million,” the firm informed.

“The money raised in this bond issuance will be used for the refinancing and development preparation phase of the former Audejas real estate complex conversion project in Vilnius,” Lords LB Asset Management announced. 

Vilniaus Miesto Projektai aims to develop offices and co-living and shopping spaces in Lithuania’s capital. The buildings are expected to provide 508 units for rent, 30,000 square meters of office space, as well as various commercial premises for trade and services.

The Ellex team was led by Partners Ieva Dosinaite and Giedrius Stasevicius and Associate Egle Radvilaite.

TGS Baltic has advised medical clinic chain InMedica on the acquisition of Saulius Viksraitis’ Plastic Surgery Center in Kaunas.

According to TGS Baltic, “this transaction is InMedica’s first investment in the field of plastic surgery in Kaunas, so far services have been provided only in Vilnius.”

Established in 1992, Saulius Viksraitis Plastic Surgery Center has 33 employees. In 2021, the company’s turnover amounted to EUR 1.58 million.

InMedica is a private medical center in Lithuania, providing diagnostic, outpatient, surgery, dentistry, and other medical services. In 2020 the group’s revenue amounted to EUR 18 million. The company operates a network of 35 clinics in several cities.

“As the range of medical service offering is being expanded, we can clearly see the growing demand for plastic and reconstructive surgery services in the market,” InMedica CEO Kestutis Broniukaitis commented. “Saulius Viksraitis’ Plastic Surgery Center is one of the first private plastic surgery clinics in Lithuania, and its founder is one of the most experienced surgeons in the market, a pioneer of facial aesthetic endoscopic surgery in Lithuania.”

The TGS Baltic team included Partner Dalia Tamasauskaite-Ziliene and Associate Paulius Dabulskis.

Former Associate Partner Marius Rindinas has been promoted to Partner at SPC Legal.

Rindinas’s main areas of specialization are migration and employment, data protection, betting and gambling, commercial transactions, and dispute resolution.

Rindinas joined the firm in 2020 as an Associate Partner (as reported by CEE Legal Matters on September 24, 2020). Prior to that, he was a Partner at ZRG Law Firm between 2016 and 2020, an Attorney-at-Law at Marius Rindinas Law Firm between 2014 and 2016, and an Associate at Cobalt Legal between 2013 and 2014.

“The goal of our law firm is continuous growth and strengthening of the competencies by attracting experienced professionals. That is what I’ve based my work on since joining the SPC Legal team in 2020,” commented Rindinas.

Motieka & Audzevicius has advised Linas Agro Group on its acquisition of Agro Logistic Service from Kauno Grudai. Cobalt advised Kauno Grudai on the deal.

UAB Agro Logistic Service is a feed material and additives trading company. The company sells goods in the Czech Republic, Poland, Latvia, Estonia, Italy, Germany, Finland, Norway, Denmark, Russia, Belarus, Uzbekistan, and Tajikistan. Its revenue exceeded EUR 33 million in 2020. 

Last year, in July, Motieka & Audzevicius advised Linas Agro Group on competition clearance in Lithuania for its acquisition of the AB Kauno Grudai group of companies (as reported by CEE Legal Matters on July 8, 2021).

Motieka & Audzevicius’ team included Partners Giedrius Kolesnikovas and Rokas Jankus and Associates Laurynas Ramonas and Darius Amsiejus.

Cobalt’s team included Managing Partner Irmantas Norkus, Partners Rasa Zasciurinskaite and Rokas Daugela, Senior Associate Justinas Sileika, and Associate Milda Vaznelyte.

Ellex has advised Japanese venture capital fund Mistletoe on its investment in Lithuanian startup Bee Loop. Aliant Tarvainyte Vilys reportedly advised Bee Loop on the deal.

The value of the first stage of the investment is EUR 150,000.

According to Ellex, “Bee Loop is a Lithuanian startup, which has attracted the market’s attention with its sustainable and original product – bee honey packaging from beeswax. Bee Loop honey pot is made from the beehives wax that remains after the honey has been spun. The original packaging is organic, recyclable, renewable, edible, self-degrading, antifungal, antiviral, antibacterial, and antiseptic. 99.9% of it, excluding flax twine, is edible.”

Ellex’s team included Partner Ruta Armone, Senior Associates Aleksandr Asovskij and Edvinas Beikauskas, Junior Associate Brigita Ruibyte, and Legal Assistant Dominykas Kirsis.

Sorainen, working Linklaters, has carried out a study on the development of a sustainable finance action plan in Lithuania, commissioned by the Lithuanian Ministry of Finance.

The European Bank for Reconstruction and Development and Richard Kemmish Consulting Limited worked on the study as well.

According to Sorainen, the study is a part of a wider endeavor to facilitate the implementation of the National Energy and Climate Action Plan of Lithuania by 2030, for which “at least EUR 4 billion will have to be attracted from private investors in addition to EUR 10 billion of public funds.” 

According to the firm, the proposals drawn for Lithuania’s sustainable finance action plan “will help encourage private investors (banks, insurance companies, and companies managing pensions and other funds) to participate in funding sustainable projects together with public investors or through direct loans of various forms.”

Sorainen’s team included Partner Tomas Kontautas and Senior Associate Dalia Augaite.