Draft amendments to the Commercial Law of Latvia have just gone through third reading in Latvia's Saeima (parliament), and though they have not yet been proclaimed it may be useful to consider what kind of amendments we may reasonably expect to see in due course. Here they (possibly) are:
Annual reports will need to be submitted to the State Revenue Service only, as opposed to both the Enterprise Register and the State Revenue Service. The State Revenue Service under the proposed amendments will be required to deliver an electronic copy of the annual reports to the Enterprise Register. It is expected that the amendment will enter into force at the same time as other amendments to the Law on Annual Reports and the
Law on Consolidated Annual Reports. Other draft amendments that may be of interest:
- E-filing: Conditions for the submission and receipt of documents in electronic form, also providing for a special online form, which is to be available on the Internet homepage of the Commercial Register, to be used for submission of applications in electronic form;
- The obligation of a person engaged as a broker or commercial agent (as stipulated in Sections 45 and 64 of the Commercial Law accordingly, without reference to the criteria set in Paragraph one of Section 75 of the Commercial Law) to apply for registration with the Enterprise Register as an individual merchant, or by establishing a company by the end of 2008;
- A procedure for cross-border merger of companies, intended to reduce the administrative burden connected with the merger of a Latvian company with that of a company registered in another EU member state. Such a procedure is thought necessary to ensure freedom of commercial activity and free capital circulation in accordance with the provisions of Council Directive 2005/56/EC;
- Provision for joint stock companies to make respective amendments to their articles of association by including the main types of their commercial activity and submission of such amendments to the commercial register institution for registration of the same not later than by Dec. 31, 2009;
- Where shares in a company are alienated, an updated copy of the shareholders' register, which must be submitted by the board of directors of the company to the commercial register enterprise, will have to be signed by both the alienators and the beneficiaries of the shares, unless other sufficient evidence is submitted in addition to the shareholders' register certifying transfer of shares. Such other evidence could be, for example, an agreement regarding alienation of shares;
- Restrictions upon a relative, spouse, brother-in-law or sister-in-law or an individual having some other interest in evaluation of the property from serving as the appraiser of property investment in the company;
- A registration requirement on suspension or renewal of economic activity of a merchant is to be registered with the commercial register;
- An auditor who has been elected for verification of a reorganization agreement will no longer require approval by the commercial register. The requirement remains valid that only an auditor who is on the approved list of the commercial register may be appointed to examine a reorganization agreement;
- The provision of the Commercial Law waiving the requirement that an auditor examine a reorganization agreement if all the members or shareholders of a company agree with the same, will be applicable not only to limited liability companies and partnerships, but also to joint stock companies;
- The rights granted by an acquiring company to the members of the supervision and executive body of a company to be merged, divided or reorganized, must be specified in a reorganization agreement;
- Articles of association of a joint stock company may provide that the board of directors is authorized to increase the company's equity to the amount stipulated in the articles of association or by the shareholders' meeting.
In sum, the proposed reforms are a mixed bag of measures, some of which will presumably ease the bureaucratic burden upon businesses, and some of which will strengthen controls upon businesses. As it is sometimes said, the proof will be in the pudding.
Elina Rubeze is an associate at Kronbergs & Cukste, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms which includes Glikman & Partnerid in Estonia and Jurevicius, Balciunas & Bartkus in Lithuania, dedicated to providing a quality 'one-stop shop' approach to clients' needs in the Baltics.