Algirdo str. 31, Vilnius, LT-03219
Tel. 8 5 2135657
Company code: 110069451
E-mail idf@idf.lt

Insurance object

Information prepared in line with Lithuanian Law on Deposit and Liabilities to Investors Insurance (the Law).

  1. What is the subject matter of the insurance of liabilities to investors?

The subject matter of the insurance of liabilities to investors are liabilities to return to investors securities, irrespective of what currency they are in, or money in all currencies. 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.

  1. Whose liabilities to investors are insured?

Liabilities to investor’s insurance system members who provide investment services must insure liabilities to investors. Currently in Lithuania liabilities to investors are insured by commercial banks, financial brokerage firms and management firms.

  1. Whose liabilities to investors are insured?

Financial brokerage companies and banks must insure liabilities to investors. This means that each insurer guarantees securities and monetary funds of one person according to the Law on Insurance of Deposits and Liabilities to Investors of the Republic of Lithuania.

  1. Who participates in the system of insurance of liabilities to investors?

Liabilities to investors are insured by insurers providing investment services. Currently in Lithuania liabilities to investors are insured by commercial banks and financial brokerage companies, management companies.

 

  1. Who insures liabilities to investors with Lithuanian Liabilities to investors insurance system?

Liabilities to investors insurance system of Republic of Lithuania member are the following subject that have the right to provide investment services:

  • Banks established in Republic of Lithuania;
  • Central credit union established in Republic of Lithuania
  • Financial brokerage firms established in Republic of Lithuania.
  • Management firms established in Republic of Lithuania.
  • Member state banks, financial brokerage firms, management firms which branches established in Republic of Lithuania, in which liabilities to investors are insured (compensated) or their security is ensured otherwise in line with member state legal acts, but council of the insurance company determines, that liabilities to investors insurance (compensation) or other security measures are worse than set by the Law, and who have voluntarily expressed interest in participating Republic of Lithuania liabilities to investors insurance system and insure liabilities to investors taken by these branches additionally.

 

  • Third country banks, financial brokerage firms, management firms which branches established in Republic of Lithuania, in which liabilities to investors are not insured (compensated) or their security is not ensured otherwise in line with member state to which jurisdiction banks, financial brokerage firms, management firms that established the branch, belong to, legal acts.
  • Third country banks, financial brokerage firms, management firms which branches established in Republic of Lithuania, in which liabilities to investors are insured (compensated) or their security is ensured otherwise in line with member state to which jurisdiction banks, financial brokerage firms, management firms that established the branch, belong to, legal acts, but council of the insurance company determines, that liabilities to investors insurance (compensation) or other security measures are worse than set by the Law
  1. When the insured event is declared?

Liabilities to investors insured event is considered as filing for a bankruptcy by member of liabilities to investors insurance scheme or a decision by supervisory authority to declare the liabilities to investors insurance scheme member insolvent, when liabilities to investors insurance scheme member due to its financial situation cannot honor its liabilities and there is reason to believe that it will not be able to do so in near future.

  1. What are the investors’ rights insured event is declared?

The investor gains the right to claim liabilities to investors insurance payout starting from the day of liabilities to investors insured event. Liabilities to investors insurance payouts are paid in euro. Investors gains the right to claim liabilities to investors insurance payout in case when liabilities to investors insurance scheme cannot honor its liabilities taken under legal acts or agreements:

1) Return investors’ money owned or held of his behalf, transferred to liabilities to investors insurance system member in order to use its investment services.

2) Return investors’ financial instruments owned or held of his behalf, handled or managed financial instruments, transferred to liabilities to investors insurance system member while using its investment services.

  1. In which cases liabilities to investors insurance payouts are not due?

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

1) Bank of Lithuania;

2) credit institutions;

3) financial brokerage firms;

4) financial institutions;

5) Insurance and reinsurance companies acting under Law of Insurance of Republic of Lithuania;

6) pension funds;

7) collective investment subjects. Investment risk is not object of  liabilities to investors insurance i.e. possibility of a loss because investment does not generate profit or lose its value.

Liabilities to investors insurance payouts also are not paid:

1) to investors regarding which financial instruments and (or) money a court conviction for money laundering has been made;

2) liabilities to investors insurance system members administration mangers, board (supervisory board) and board members, persons who holds no less that 5 percent liabilities to investors insurance scheme members‘ share of equity capital, persons, who perform audit of liabilities to investors insurance scheme member (who performed audit no more than 1 year prior to the liabilities to investors insurance event day).

3) close relatives and thirds persons, who act on behalf of persons named in paragraph 2.

  1. What is the size of insurance payout?

Liabilities to investors insurance scheme payout is equal to sum of values of financial instruments and money, that liberties to investors insurance scheme member is not able to return to the investor, but payout cannot exceed the sum of 22 000 euro. Liabilities to investors insurance payout size is calculated based on market value of financial instruments, that was on the day of liabilities to investors insurance event day.

  1. Who how and in what time pays out insurance payouts?

Liabilities to investors insurance payout is paid out over 3 months from the day of liabilities to investors insured event. The council of the Company in exceptional circumstances in coordination with Bank of Lithuania can decide to extend this period for no more than 3 months. In every case of paying out the payouts insurance company informs the public via mass media, where and how payouts are distrusted.

  1. Who calculates insurance payouts?

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.

  1. How insurance payout is calculated?

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. 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.

  1. In what time can an investor claim his insurance payout?

An investor has a right to receive an insurance payout for 5 years after insurance event day.

Please note, that state company „Indėlių ir investicijų draudimas“ is not authorized to interpret laws, therefore information provided is only an opinion of no legal consequences. Please also note, that Lithuanian courts or institutions applying legal acts can interpret them differently than above. In the event of a dispute final situation appraisal can be done by courts of Republic of Lithuania with respect to existing understanding of contents of legal acts.