Amendments to the Latvian Commercial Law, which will enter into force on 1 July 2023, set a number of important dates to be taken into account by all public limited liability companies (PLLC) (in Latvian – Akciju sabiedrība or AS) in order to comply with the obligations imposed by the amendments, i.e., to submit to the Company Register updated articles of association of the PLLC, as well as folios of shareholders’ registers or information on the central securities depository where shares of the PLLC are registered. If the PLLC fails to take the above-mentioned actions within the set deadlines, the Company Register will be entitled to adopt a decision on termination of activity of the PLLC by applying the so-called simplified liquidation process.

The summary of the most important amendments to the Commercial Law with respect to the PLLC is provided below.

Share capital

  • The minimum share capital of the PLLC will henceforth be EUR 25,000 (instead of EUR 35,000).

Types of shares

  • The types of shares will be changed and henceforth will be divided into registered and dematerialised shares:
  • – registered share – a share which is entered in a register of shareholders;
  • – dematerialised share – a share which is registered with a central securities depository.
  • The PLLC will only be able to have one type of shares (either registered or dematerialised shares). For those PLLCs which have issued both types of shares, there is a transition period until 30 June 2024 to decide on the most appropriate type of shares. However, as of 1 January 2024, if other changes to the articles of association are filed with the Company Register, the PLLC will have to simultaneously file amendments to the articles of association providing for the issuance of only one type of shares.
  • From now on, the articles of association will only have to contain information on the type of shares, while information on the form of shares and their conversion, which was previously required, will no longer have to be provided. For PLLCs whose articles of association provide for the issuance of one type of shares, amendments to the articles of association providing an update on the above-mentioned information will have to be submitted to the Company Register, along with other amendments to the articles of association, no later than 1 July 2026.

Relevant for PLLCs which will have registered shares

  • Shareholders’ registers in which registered shares are recorded will now consist of folios, in which entries will be made in chronological order, with each share being assigned an individual serial number. Each folio of the shareholders’ register will have to be signed by a chairman of a management board or an authorised member of a management board, and, in case of share transfer, also by an alienator and an acquirer of the shares.
  • The folios of the shareholders’ registers will also have to contain an e-mail address of a shareholder, if the shareholder has requested the PLLC to use it for communication (e.g. for sending a notice on convening a general meeting of shareholders).
  • The PLLC must file a folio of the shareholders’ register reflecting the current composition of shareholders with the Company Register by 30 June 2024. However, as of 1 January 2024, if any other changes regarding the share capital are applied to the Company Register, the PLLC will have to simultaneously submit the above-mentioned folio of the shareholders’ register.

Relevant for PLLCs which will have dematerialised shares

  • Dematerialised shares will have to be registered in a central securities depository. The decision on the depositary to be used for registration of the shares should be taken by a general meeting of shareholders, by the qualified majority (not less than three quarters of shares with voting rights of shareholders present at a meeting) unless the articles of association provide for a higher number of votes.
  • A shareholder holding more than 5% of the dematerialised shares in the PLLC will be required to notify the PLLC thereof, including on any subsequent increase or decrease in the 5% shareholding (including, if the shareholding becomes less than 5% of the total amount of shares in the PLLC). Otherwise, a shareholder will not be able to exercise voting rights arising from shares whose acquisition the PLLC has not been notified of.
  • The PLLC shall submit to the Company Register information on the central securities depository, where shares are registered, and major holders of dematerialised shares by 30 June 2024. However, as of 1 January 2024, if any other changes regarding share capital are applied to the Company Register, the PLLC will also have to submit information on the central securities depository where the shares are registered.

Notice on convening a general meeting of shareholders

  • A notice on convening a general meeting of shareholders will have to be sent 21 days, or 14 days in case of a reconvened general meeting of shareholders, before the meeting is to be held (instead of the previous 30 days).
  • Henceforth, a reconvened general meeting of shareholders with the same agenda will be entitled to adopt decisions irrespective of the number of votes represented at the meeting.
  • A notice on convening a general meeting of shareholders will be required to be sent to the holders of registered shares, to the contact addresses (e.g., e-mail addresses) indicated in the shareholders’ register.
  • In case of dematerialised shares, a management board will have to send a notice to the central securities depository where shares in the PLLC are registered.
  • Both in cases of registered and of dematerialised shares, it will be possible for shareholders of the PLLC to determine a different notification procedure in the articles of association (except for listed PLLCs).

Access to documents to be considered at a general meeting of shareholders

  • The PLLC will be required to provide shareholders with free-of-charge uninterrupted electronic access to documents to be considered at a general meeting of shareholders. Electronic accessibility to the documents (including the possibility to save and print the documents) shall be ensured by the PLLC from the date of sending the notice on convening the general meeting of shareholders and for a period of not less than one year after the general meeting of shareholders.
  • If the PLLC is unable to provide the access due to technical or other reasons, or if a shareholder is unable to access documents for justified reasons, the documents must be sent to the shareholder free of charge or otherwise made available free of charge at least 14 days before a meeting.
  • The listed PLLC will have to make these documents available on their website.

Information on holders of dematerialised shares

  • The management board of the PLLC will be entitled to request information about holders of dematerialised shares in the PLLC from the central securities depository where the dematerialised shares in the PLLC are registered. The management board of the PLLC will be required to provide a shareholder, upon a relevant request of the shareholder, with the information at its disposal about the dematerialised shares, including holders of the shares.

Information on ultimate beneficial owners, restrictions on voting rights, restrictions on receiving dividends, exclusion of shareholders

  • A shareholder will be required to provide information on ultimate beneficial owners exercising control through that particular shareholder upon request of the management board of the PLLC. In addition, until the shareholder has provided the requested information, the shareholder will have no voting rights at the general meeting of shareholders and the PLLC will not pay dividends to the shareholder. In the event of failure to provide the information, the PLLC will also be able to request a court to exclude the shareholder from the PLLC.