Corporate Law at Latvia
Sure! Here’s an overview of Corporate Law in Latvia that covers the key points you might want to know:
Corporate Law in Latvia: Overview
1. Legal Framework
Corporate law in Latvia is primarily governed by the Commercial Law (Komerclikums), which regulates the formation, operation, restructuring, and dissolution of companies. Additional relevant laws include the Civil Law, Law on Accounting, and tax regulations.
2. Types of Business Entities
The main types of companies under Latvian law are:
SIA (Sabiedrība ar Ierobežotu Atbildību) – Limited Liability Company
The most common corporate form, similar to an LLC. It has separate legal personality and limited liability for shareholders.
AS (Akciju Sabiedrība) – Joint Stock Company
Suitable for larger enterprises, it can issue shares and is often used by publicly traded companies.
Partnerships – General Partnership (Pilnsabiedrība) and Limited Partnership (Komandītsabiedrība)
Branch and Representative Offices – Foreign companies can establish branches or representative offices in Latvia.
3. Formation of a Company
Requires registration with the Register of Enterprises (Uzņēmumu reģistrs).
A minimum share capital is required:
For SIA: minimum EUR 2,800 (can be reduced to EUR 1 for a small company regime, with some restrictions).
For AS: minimum EUR 35,000.
Founders can be individuals or legal entities, domestic or foreign.
4. Management Structure
SIA is managed by one or more directors appointed by the shareholders.
AS has a two-tier structure: Management Board (executive) and Supervisory Council (supervisory), although a one-tier system is also possible.
5. Shareholders’ Rights and Obligations
Shareholders have rights to dividends, voting at general meetings, and information about the company.
Liability is limited to the amount of their contributions.
6. Reporting and Compliance
Companies must maintain accounting records in accordance with Latvian accounting standards or IFRS (for certain companies).
Annual financial statements must be submitted to the Register of Enterprises.
Certain companies require audit.
7. Corporate Governance
Latvian companies must hold annual general meetings.
Decisions on significant matters such as amendments to statutes, capital increase, mergers, or liquidation require shareholder approval.
8. Mergers, Acquisitions, and Restructuring
Regulated under Commercial Law, requiring documentation, notifications, and registration.
Minority shareholder protections exist, including rights to exit and fair valuation.
9. Insolvency and Liquidation
Corporate insolvency procedures are governed by the Insolvency Law.
Liquidation can be voluntary or compulsory, with formal procedures to pay creditors and distribute remaining assets.
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