Latvia - Company Incorporation
The most common choice is a capital company (a company with share capital) – either in the form of a joint stock company (AS) – obligatory for banks and insurance companies, or a limited liability company (SIA), which is the most popular form of corporate presence in Latvia.
Registration requirements for Capital Companies
company names:
- General – it shall clearly and specifically differ from those of other companies, which have already been listed in either Register and it should not contain misleading information regarding commercial rights, etc.;
- Specific – it should not be immoral. It should not just contain names of the territories administered, except in the case of farmsteads, etc.
- Legal (registered) address – the legal address of a company shall be the address where the management of the company (headquarters) is located, and it shall be declared by company management for recording in the Register. As a result, all entities may consider that any correspondence sent to the registered address is received by the company.
All documents submitted have to be in the Latvian language, or with translations.
The foundation of each new merchant must be advertised in the official state gazette “Latvijas Vēstnesis” which publishes new legislation, as well as important information on merchants in Latvia.
Time Taken for Registration
In accordance with the law a 30 day term is set for review of the registration application, but in practice it takes less than 14 days (standard fee), 4 working days (doubled fee) or within 2 working days (triple fee).
General Provisions for Capital Companies
A capital company is a commercial company – a legal entity, the share capital of which consists of the total sum of the par value of capital shares or stock. Capital companies are limited liability companies (LLC), which are private companies (shares are not publicly tradable) and joint stock companies (JSC), which are public companies (with publicly tradable shares, as soon as they have received a permit from the Finance and the Capital Market Commission).
Founders can be one or more legal entities or individuals.
Share Capital
Share Capital is paid up by monetary investment or in material assets and it must be expressed in whole LVL. Any intention to invest material assets has to be clearly stated in the foundation agreement or in the internal regulation on the increase of share capital, otherwise it must be paid up by monetary investment. Material assets cannot be invested in parts and they have to be valued by an expert listed and approved by the Register.
The minimum share capital for LLCs is set at LVL 2000 (€3000) and is divided into indivisible shares with the same par value. At least 50% of the share capital must be paid up by the date of the submission of the registration documents.
Management of Companies
The main administrative body of both LLCs and JSCs is a participants meeting, which, in the case of LLCs is legitimate only if more than half of the share capital is represented, whereas for JSCs is legitimate regardless of the share capital represented, if not otherwise stated in the JSC's charter.
A Supervisory Board is an optional management institution for LLCs, while for JSCs it is a statutory requirement. Supervisory Boards consist of a minimum 3 or 5 members (5 for those having publicly-listed stocks) with a maximum of 20, and they are elected for 3 year periods. Meetings are legitimate if more than half the members are present. If an LLC chooses to form a council, then the provisions for JSC Supervisory Boards are applied.
An LLC’s Management Board may consist of one or more board members, while for JSC the Management Board should have a minimum 1 or 3 members (3 for those having publicly-listed stocks) – in both cases elected for a 3 year period. There are no limitations for composition of any of the boards in respect of citizenship or place of residence of the respective persons (see next section on entry and employment requirements).