Latvian Corporate Newsflash - Apr 2014
Latvijas korporatīvo tiesību ziņas latviešu valodā Jūs varat lasīt šeit: In Latvian
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  Eva Berlaus
   
 
Eva Berlaus
Office Managing Partner
eva.berlaus@sorainen.com
   
  Zane Paeglīte
   
 
Zane Paeglīte
Senior Associate
zane.paeglite@sorainen.com
   
Dear clients and cooperation partners,

The deadline for filing annual reports with the State Revenue Service (SRS) is approaching.

Under the Law on Annual Reports, all companies must file with the SRS an annual report approved by the shareholders’ meeting no later than one month after approval and no later than four months after the end of the reporting year. This means that if a company’s reporting year is the same as the calendar year, the deadline is 30 April. An exception is made for larger companies that comply with the criteria set by the Law on Annual Reports. These companies may file their annual report no later than seven months after the end of the reporting year.

In addition to the annual report and the auditor’s statement on the annual report (for those companies that satisfy the criteria set forth in the Law on Annual Reports, as well as companies whose articles of association or shareholders’ meeting requires the annual report to be reviewed by an auditor), the Commercial Law states that before approval of the annual report a board proposal must be prepared on distribution of profit (in case of losses – on improvement of financial status) and, if the company has a council, a report from the council on the annual report. Further, under the Law on Groups, dependent companies must prepare a statement of dependence, unless a group agreement has been concluded.

The annual meeting of shareholders for approval of the annual report must be held no later than by the deadline mentioned above, and the notice convening the meeting must be sent to shareholders of limited liability companies at least two weeks before the meeting, while for joint-stock companies the deadline is at least 30 days before the meeting. Along with the notice convening the meeting, the following must be sent to shareholders: the annual report, statement of dependence, auditor’s statement, a report from the council and board proposal. Joint-stock companies need not append these last mentioned documents to the notice convening the meeting as long as the notice contains information about the place and time where the shareholder may access them at the registered address of a company.

The annual report must be filed only with the SRS, along with explanations on approval of the annual report by the shareholder’s meeting or shareholders’ meeting minutes (or an extract) approving the annual report.

 

Amendments to corporate documents in relation to the euro

As a result of introduction of the euro a company’s share capital and the old nominal value of a share in lats must be expressed in euros. To do so, the board should convene a shareholders’ meeting as required by law and the articles of association. The agenda of the shareholders’ meeting must contain an item on changing the denomination of share capital from lats to the euro and another item on amendments to the articles of association.

The re-denominated nominal value of the share capital and the share in euros must be filed for registration with the Commercial Register.

Although the deadline for filing the documents with the Commercial Register in relation to changing the share capital to euro is still far ahead – only 30 June 2016 - we advise planning these changes well in advance. Starting from 1 July 2014 changes in a company’s articles of association will be accepted for registration with the Commercial Register only if they include the change of denomination of share capital from lats to the euro. Please consider including this issue of re-denominating the share capital in the agenda of the annual general meeting of shareholders approving the annual report (or in the agenda of any other upcoming shareholders’ meeting).

When changing the nominal value of the share capital and shares from lats to the euro, please be sure to remember the following principles:

  1. A capital share of a SIA must be expressed in whole euros (without a residual amount).
  2. The minimum amount of a share in a SIA can be EUR 1.
  3. A capital share of an AS may be expressed in euro and euro cents.
  4. The minimum amount of a share in an AS can be 10 euro cents.
  5. The official exchange rate (EUR 1 = LVL 0.702804) must be applied when recalculating the nominal value of a share from lats to the euro. Unlike general principles for rounding amounts, on denominating the nominal value of a share the amount is always rounded downwards.
  6. When changing the denomination of the nominal value of a share from lats to the euro, the proportion of shares existing between shareholders should be maintained.
  7. Changes implemented to the amount of share capital must be minimal.
  8. If necessary for complying with the principles mentioned in points 6 and 7 above, the nominal value of a share may be changed (ie set different from the value set when converting the nominal value of the share from lats to the euro) but with a condition that the nominal value of the share is not below the minimal value of the share allowed by law.
  9. A balance resulting from a denomination that cannot be expressed by new shares in the share capital can (on the basis of a resolution of the shareholders’ meeting) either be paid out to the shareholders in proportion to their holding in the company or transferred to the company reserves.

For more information on changing the denomination of the nominal value of shares from lats to the euro please follow the link.

 
ESTONIA
Karin Madisson
Partner
send e-mail
Pärnu mnt 15
10141 Tallinn
phone +372 6 400 900
estonia@sorainen.com
 
LATVIA
Eva Berlaus
Office Managing Partner
send e-mail
Kr. Valdemāra iela 21
LV-1010 Riga
phone +371 67 365 000
latvia@sorainen.com
 
LITHUANIA
Algirdas Pekšys
Partner
send e-mail
Jogailos g 4
LT-01116 Vilnius
phone +370 52 685 040
lithuania@sorainen.com
 
BELARUS
Maksim Salahub
Partner
send e-mail
ul Nemiga 40
220004 Minsk
phone +375 17 306 2102
belarus@sorainen.com

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