Company formation and accounting in Latvia
Last updated: 2012-07-10
Each company has its own confidential information, which disclosure may harm the company.

According to the Commercial law, a merchant (company, sole trader and partnership) may provide the status of a trade secret to things/objects of economic, technical or scientific nature, as well as to information that meets all the following criteria:
• Things/objects and the information are a part of the enterprise, or are directly related to the enterprise,
• Things/objects and the information are not publicly available to third parties,
• Things/objects and the information have or may have a material value or goodwill,
• If things/objects or the information come into possession/availability of other persons, then it may cause damage/loss to the merchant,
• In relation to the things/objects and the information a merchant has taken reasonable measures to save a trade secret (measures that are appropriate to a particular situation).
The reasonable measures may be, for example, access passwords to specific content information. In contracts with business partners and in employment agreements or employee's job descriptions need to specify what information is considered a trade secret (Statement of Confidentiality).
Statement of Confidentiality example may be following: "The content of the contract and any annexes to the contract are confidential and are intended solely for parties of the contract. Any dissemination, use or reproduction of the confidential information for purposes other than to fulfill the contract is strictly prohibited.". The parties of a contract can define a fine for breach of confidentiality agreement. However regarding employees legislation sets restrictions to amount of a fine.
A merchant has the exclusive rights to the trade secret.

A merchant has the rights to claim the protection of a trade secret, as well as to claim compensation for the losses that have arisen as a result of the illegal disclosure or use of a trade secret.

According to the Accounting law, information that according to the legislation must be included in company's reports is not considered in accounting as a trade secret. All other information that exists in company's accounting is considered as a trade secret and is available only to auditors, tax administration (to check correctness of calculation of taxes) and to other institutions in the cases determined by legislation.

According to the Labor Law an employer in writing must define which information is considered as a trade secret. An employee has a duty not to disclose information that is a trade secret of the employer. Also an employee must take care that the trade secret of the employer concerning the work of an employee would not directly or indirectly available to third parties.

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