Priority trends for the development of small and medium – sized business 1.Business bags 2.Small partnership 3.Business ABC 4.Start a business 1.Business Staircase 1.Entrepreneurship promotion events “ Enterprise Lithuania ” 2.Targeted youth entrepreneurship promotion projects 3.Business Day 4.Spread of business success stories 1. Preferential loans 2. Shared Risk Loans 3. Provision of guarantees 4. Portfolio guarantees 5. Risk capital instruments 6. Partial subsidizing of loan interest

2 Start of a business 1.Small partnership. On 28 December 2011, the Government approved the Draft Law on Small Partnerships submitted by the Ministry of Economy and aimed to establish legal regulation of small partnerships which are newly established legal entities seeking to accelerate start of a business and develop necessary legal presumptions to enter the market at the lowest cost. Small partnership would fill the niche between the individual enterprise and the limited liability company and would create a possibility to base business organisation and activities by the principal of cooperation (intuitu personae). The Draft Law seeks to define the main features of a small partnership, which include simplified procedure for a small partnership establishment., it’s management structure and performance environment. On 1 January 2012, the 28 December 2010 Government Resolution No “On submission of the Draft Law on Small Partnerships and the related draft legislation to the Seimas of the Republic of Lithuania“ came into force. Upon adoption of the Law on Small Partnerships and the related draft laws, legal acts necessary for their implementation will have to be approved, thus, the draft laws provide for the said laws to come into force as of 1 July Start a business was a project implemented in 2010 and aimed to promote the creation of new jobs; the main objective of the project was rendering of free information, consultation and training services to businessmen; the main focus of the project was promotion of new job creation in the municipal territory by means of business certificate or registration of individual activities. The project offered up to 9 thousand free hours of information, consultancy and training services to small and medium-sized business entities and individuals who intend to start a business, which resulted in 683 new jobs created in the territories of individual municipalities.

3. Business bags is a measure aimed to provide public services by offering the bag for the first business year, which makes up to LTL 6000 (under the voucher system the bag is intended for a newly established enterprise); it includes consultancy, training, etc. During the Business Lithuania events, free business bags were offered to those who were interested thus helping promote the creation of new enterprises. By means of the business bags 460 new enterprises were aimed to be established. In 2011, 1486 business bags were distributed and 286 enterprises were established, which makes 19% of the distributed business bags. The services were provided in 27 districts. 4.Business ABC. The Ministry of Economy plans to carry out the Business ABS project to be funded from the national budget and, following the procedure established by the Law on Public Procurement, buy by way of open tender consultancy, training and information event organization services in ten regions of Lithuania. The main objective of the Project is to ensure access to free services for nascent entrepreneurs in every region of Lithuania. In various regions and municipalities of Lithuania the nascent entrepreneurs are planned to be offered about 3 thousand hours of free consulting and training services and information events. Start of a business

4 Improvement of business environment Business Staircase – an inter-institutional project by the Ministry of Economy was run from April 2010 to June 2011 and resulted in the formulation of recommendations on how to improve business conditions. 1.Concerning review of the personal income tax system and narrowing of the list of activities to be carried out under business certificate. On 27 October 2011, the Government of the Republic of Lithuania Resolution No “Concerning the amendment of 19 November 2002 Government of the Republic of Lithuania Resolution No “Concerning the Regulations on the issue of business certificates” was adopted; the Resolution provisions will be enforced in two stages (as of 1 January 2012 and as of 1 May 2012). 2. Concerning electronic issue of business licences and individual activity certificates. The State Tax Inspectorate (STI) is currently running a project of Developing a System of Electronic Education, Guidance and Information Services for Taxpayers. The project will result in creating electronic services which facilitate purchasing of business licences and registration of individual activity. Proposals expressed during the Business Staircase project and business needs, will, among other things, serve as guidance in the service development process. The preliminary start of service provision is 18 April 2012.

5 3. Concerning social insurance of sole proprietors With Letter No. ( ) SD-7358 of 30 November 2011 “Regarding implementation of the Government meeting protocol” the Ministry of Social Security and Labour informed that the draft law on the amendment of Articles 4, 7, 8 and 16 of the Law on State Social Insurance with accompanying draft laws accepted by the Government of the Republic of Lithuania in April 2011 were filed to the Seimas of the Republic of Lithuania for reading. Renewal of the currently effective procedure could enable sole proprietors to decide by themselves upon the level of social insurance contributions they are willing to pay and upon the level of pension they may expect in the future. 4. Concerning profit tax On 22 November 2011, the Seimas adopted amendments to the Law on Profit Tax of the Republic of Lithuania that lift the income ceiling (with up to 10 employees), beyond which undertakings are no longer subject to the 5% profit tax, from LTL 500,000 to LTL 1 million. This provision will apply to the calculation of profit tax for 2012 and for subsequent years. Improvement of business environment

6 1. Entrepreneurship promotion events “Enterprise Lithuania” – March through May 2011, the Ministry of Economy and public institution Enterprise Lithuania held 10 entrepreneurship promotion events called “Enterprise Lithuania” across the regions with nearly 6,000 participants. On 7-8 October 2011, Vilnius hosted the closing event of the European Entrepreneurship Week 2011, “Enterprise Lithuania”, which received around 4,300 participants over the two days. These events were aimed to promote entrepreneurship and self-employment of all individuals by introducing and explaining the conditions for starting small business in Lithuania and the inspiring business success stories. This initiative will continue in Targeted youth entrepreneurship promotion projects – Based on the cooperation agreement with Lithuanian Junior Achievement, an action plan was signed and is in progress and the projects “Young Colleague”, “I'm the Boss of Successful Business” and “Business Experience Academy” were completed. There will also be school tours to the Ministry of Economy. 3. Business Day –To acknowledge, incentivise and thank representatives of the different industries, business and science for their contribution to the development of the Lithuanian economy and business, the Ministry of Economy, in cooperation with public and business organisations, holds a professional event for entrepreneurs – the Business Day every year. 4. Spread of business success stories – To support as many start-ups as possible, the Ministry of Economy is introducing business success stories. During the “ Enterprise Lithuania ” events (18 March - 27 May 2011) the participants were involved proactively in entrepreneurs ’ presentations of motivating business success stories. Entrepreneurship promotion

1. Preferential loans – The State has allocated funds to Lithuania-based credit institutions to provide loans to small and medium-sized businesses. Undertakings may apply to banks to obtain the following loans for the financing of investments and/or current assets: Very small loans (up to LTL 86,320); Small credits step I (up to LTL 175,000); Small credits step II (up to LTL 350,000); Open Lending Fund (loans up to LTL 1.5 million from the fund + 25% bank assets). The instruments are currently active. For more information please visit 2. Shared Risk Loans – Loans up to LTL 16.5 million for investments and for complementing the current assets where such financing is used to expand the activities of a small or medium-sized business. The instrument is currently active. For more information please contact the loan-issuing banks: Provision of guarantees – The guarantee institution UAB Investicijų ir verslo garantijos (hereinafter referred to as INVEGA) provides guarantees equated to state guarantees (up to 80% of the loan amount) to credit institutions for the investing loans of small and medium-sized businesses or for operating loans related to business development, thus resolving the issue of insufficient / unattractive to the bank collateral (the bank secures repayment of the outstanding non-guaranteed portion of the loan with collaterals proposed by the business undertaking and obtained by pledging the property purchased for the loan assets). The instrument is currently active. For more information please visit Business funding

4. Portfolio guarantees is the instrument to promote loans by guaranteeing 80% of the loan amount and thus seeking to minimize barriers for small and medium-sized businesses in obtaining funding when a collateral is insufficient. Selected banks offer more beneficial requirements for the collateral and lower interest rates to recipients of secured loans. For more information please contact the banks which run the instrument: Nordea Bank Finland Plc Lietuvos skyrius, AB Šiaulių bankas. 5. Risk capital instruments: - Risk capital funds are two risk capital funds set up in 2010: KŪB Lithuania SME Fund (BaltCap) and KŪB LitCapital I, which seek to invest in undertakings with a high growth potential, at the same time attracting at least 30% of private investor funds. The level of fund investment is up to LTL million per target undertaking. The instrument is currently active. For more information please visit Co-investment fund (“business angels”) – The fund, together with “Business Angels” (private investors), is investing in small and medium-sized businesses (up to LTL 1.38 million per undertaking). Investors share their know-how and expertise helping companies to improve their business management skills and to act successfully from the long-term perspective. The instrument is currently active. For more information please visit - Initial Stage Risk Capital and Risk Capital Funds – This new instrument will encompass the individual Initial Stage Capital and Risk Capital funds run by a single fund manager. The Initial Stage Risk Capital Fund will provide exclusively initial-stage risk capital (up to LTL 690,560 over 3 months) whereas the Risk Capital Fund, initial-stage, start-up and development capital (up to LTL 5,179,200 over 12 months). The instrument is not active yet. 6. Partial subsidizing of loan interest – INVEGA administrates one of the forms of state aid – partial compensation of interest. Loan interest is reimbursed for investing or operating loans intended for the development of a small or medium-sized business. The instrument is currently active. For more information please visit Business funding