Company formation and accounting in Latvia
Last updated: 2016-02-27
Joint stock company (JSC) in Latvia, - it is open commercial company, equity capital of which consists from nominal sum (amount) of stocks (investments of stockholders).
Joint stock company is legal person (independent / separated person).

A stock.

A stock is a security (financial asset), that confirms participation of a stockholder in equity capital of JSC, as well as gives rights to make certain decisions with respect to JSC and gives rights to receive dividends and liquidation quota (in case of liquidation).

JSC can issue shares of different categories, with different scope of rights (for example, rights to vote, rights to receive dividends etc.). Shares of one category gives the same rights.
JSC may issue preference shares that give special rights to receive dividends and liquidation quota. But the preference shares do not give the right to vote.
Shares may be registered and bearer. Information about the owners of registered shares must record in the internal register of stockholders. Issue of bearer shares must register in Latvian Central Depository and a holder of shares has rights arising from the shares.

Shares may be the object of public circulation (shares can be sold in the regulated market of financial instruments).
Shares may be dematerialized or paper form. Bearer shares may be only dematerialized.

The minimum nominal value of one share is 10 euro cents. The nominal value of shares of different categories may be different. The nominal value of any shares to be evenly divisible by the minimum nominal value, as well as by 10 euro cents.

Owners of shares (shareholders).

As well as in relation to a limited liability company, owners of JSC shares can be legal and natural persons.
Minimum number of shareholders - one. The maximum number of shareholders is not limited.
Foreign natural and legal persons also can be shareholders of Latvian JSC (but in relation to certain activities nuances may exist).
Rights (including voting rights) of shareholders depends on the category of shares. If the articles of association or the law does not state otherwise, then a meeting of shareholders makes decisions by a majority of the votes of the present of those shareholders who have the right to vote.
The shareholders make decisions on the appointment of members of a council, on the distribution of profit, on the remuneration for the board of directors and the council.
The shareholders' meeting must convene in the administrative territory where is located a legal address (registered office) of JSC unless the articles of association states otherwise. For example, if the registered office of JSC is in Riga and the articles of association contains nothing about the place of the meeting, then the meeting of shareholders must convene in Riga.

The authorized capital (equity capital) of JSC.

The equity capital of JSC must be at least 35 000 EUR.
Until submission of the registration application, shareholders must sign on full amount of the equity capital, defined in the memorandum of association.
Until submission of the registration application, shareholders must pay the equity capital in amount of at least 35 000 EUR and 25% of the signed equity capital.
Equity capital, defined in the articles of association must be fully paid during a year after day when the memorandum of association is signed.

Legal address.

Legal address (registered office) must be located in Latvia. From owner of the immovable property (where legal the address is registered) must receive a written consent to register the legal address in the property.

A board of directors (valde).

The board of directors is the executive body that manages and represents the company.
Members of the board of directors manage JSC only jointly. That means that, for example, a decision to conclude (take part in) some transaction, makes all members of the board of directors (in general by majority of the votes).
Members of the board of directors jointly represents JSC, unless the articles of association states otherwise (for example, each member has rights to represent (sign documents on behalf of) JSC).
Minimum number of members of the board of directors is one (if shares are publicly traded, then minimum number is three).
Only private (natural) legally capable person can be a member of the board of directors (legislation also states additional restrictions).
A council elects and revokes members of the board of directors.

A council (padome).

A Council is a supervisory body that represents interests of shareholders between meetings and monitors (supervises) activities of a board of directors.
A council has rights at any time to require from a board directors a report about situation of JSC. Also a council has rights to get information about all activities of a board of directors.
But a council can not take decisions about questions that are in the competence of a board of directors.
Only a capable natural person can become a member of a council. Legislation also contains additional requirements for a member of a council.
Minimum number of members of a council is three (if shares are publicly traded, then minimum number is five). Maximum number is twenty.
Shareholders elect a council on the term not longer than five years.
If the articles of association does not require more votes, then a council makes decisions by the majority of votes.

A name (a firm).

A firm is JSC name, that is registered in the commercial register.
A name of a company must be clearly and definitively different from already registered and declared names.
Legislation contains additional requirements and restrictions. For example, name must contain only Latvian and Latin letters.

What documents you can receive after registration?

You will receive decision of governmental notary about registration.
For additional payment can receive registration certificate.
All documents by default are in Latvian.
Any person for a fee has rights to receive from the Register of enterprises copies of documents (available in a file of JSC).

What information is necessary to prepare registration documents?

  • A name (firm).
  • Types of commercial activities.
  • Legal address in Latvia.
  • Amount of equity capital, type and procedure for payment.
  • Information about the categories of shares (if for JSC exists more than one category).
  • Information about the shareholders (for private (natural) persons need name, surname, place of residence, date of birth, passport details).
  • Information about a board of directors and a council of JSC.

Main differences between JSC and a limited liability company.

  • JSC shares (stock) can be publicly traded. JSC can issue shares of different categories with different rights. Shares of a limited liability company (LLC) can not be publicly traded (LLC is a closed company) and all shares of LLC give the same rights.
  • Amount of minimum equity capital of JSC is much higher (35 000 euro). Minimum equity capital of LLC is 1 euro.
  • JSC must have a supervisory body (council). LLC no obligation to create a supervisory body.
  • Registration costs of JSC is higher that registration costs of LLC.
  • Process of registration of JSC is complicated than process of registration of LLC.
  • Information about owners of LLC is publicly available. Information about stockholders of JSC is not available in the Register of enterprises (governmental register).

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