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New Requirements for Audit Committees of Lithuanian Listed Companies

05.10.2008

On 1 September 2008, a regulation entered into force to establish new requirements for the audit committees of the Lithuanian public limited liability companies. Except for banks and the Central Credit Union, the requirements apply to the companies, securities of which are traded on the regulated markets of Lithuania or other EU member states.

The companies are to establish rules, which define the rights and obligations of the audit committee, the number and term of office of its members, requirements for the education and experience of the members of the audit committee as well as other terms and conditions of its formation and organisation of work. According to the regulation the audit committee is to be formed of non-managerial administrative personnel and/or supervisory board members and/or persons elected by the general meeting of shareholders. The audit committee must have at least three members, at least one of whom must be independent and have at least five years of auditing or accounting experience. In certain cases the supervisory board may perform the functions of the audit committee. In exceptional cases, where the supervisory board of a company is small or has not been formed at all, the audit committee may consist of two members, at least one of whom must be independent and have at least five years of experience.

All members of the audit committee must be provided with full information about the company's accounting, finances and operations. If various accounting methods can be used for reporting important or extraordinary transactions, the management board should inform the audit committee about such accounting methods.

In Estonia, there is no obligation to form an audit committee and only few listed companies have opted for it.

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