One of the reasons for the introduction of the Commercial Law in 2002, which replaced the already existing company law, was that the Commercial Law was to diminish bureaucratic procedures for company registration and amendments of registered data.
Despite the initial objective of simplification, with the passing of time the following additional requirements surfaced in late 2008: (1) the requirement for inclusion in official documents of the applicable address set out in the Address Register, and (2) the requirement of updates to changes in foreign ownership particulars. Although both requirements are somewhat formal by nature, failure to adhere to such formalities may result in delays to registration.
Since the end of 2008, the Enterprise Register has been entitled to delay the registration of submitted documents if the documents refer to an address within Latvia that is out of compliance with the Cabinet of Ministers Regulation Nr.384 "On Address Regulations." The regulation applies to the legal address of commercial enterprises and the addresses of board and council members and shareholders.
In practical terms the regulation can sometimes cause problems for entities that have set out their office address in residential premises. It is not uncommon for residential addresses to have only the name of the premises registered in the Landbook without the inclusion of street addresses in an Address Register. The Address Register is a publicly accessible data base maintained by the State Land Service and reflects information that is held by municipal government authorities regarding municipal addresses. Prior to setting out the address in documents to be submitted to the Enterprise Register, it is advisable to check the address in the data base of the State Address Register.
Another relatively new development is with respect to documents is in connection with the change of shareholders in a limited liability company where a shareholder is a foreign registered commercial entity. Under Latvian law, a commercial entity is obliged to submit information to the commercial register where the company shareholders change. The Commercial law provides that a company board ensures that the Enterprise Register is notified of a change of shareholders. The law does not envisage unique requirements for foreign firms.
Nevertheless, since 2008, the Commercial Law is unevenly applied. More precisely, where the shareholders are foreign registered companies and there is a change in shareholders, the Enterprise Register requires the foreign company to provide additional documents about the foreign registered shareholders.
In the event of a change of shareholders, documentation has to be submitted substantiating such change. Suitable documentation includes a registration certificate of the foreign company and documents setting out the authority of signatories to transfer documents, and powers of attorney. The Enterprise Register has not set out exactly what documents it requires from foreign shareholders. Nonetheless, it is taken as given that proof of the existence of a foreign legal entity is established by a certified copy of the registration certificate, and that signing authority is confirmed by an excerpt of the applicable company register. Such documents must be notarized, legalized (unless otherwise provided by the Hague Convention) and translated into Latvian.
There are still areas of uncertainty with respect to document processing, such as what happens if the foreign entity is transferred to a third party between the date of submission and registration. It is clear, however, that document collection, notarization, legalization and translation should not be left for the last minute, as it is not uncommon for the Enterprise Register to take issue with the content of submissions and require further submissions or corrections.
Kristine Sakarne is a Senior Associate, Kronbergs & Cukste, a founding member in Baltic Legal Solutions, a pan Baltic legal network dedicated to providing a one-stop-shop for legal services in the Baltics. In Lithuania, Baltic Legal Solutions is represented by Jurevicius, Balciunas & Bartkus. In Estonia, Baltic Legal Solutions is represented by Glickman & Partnerid.