Commercial law reforms bogged down in Parliament

  • 2001-07-26
  • Nick Coleman
RIGA - As the pressure intensifies for Latvia to ready itself for European Union membership, the European Commission's Latvia delegation has urged speedy reform of the country's commercial law, which is currently stalled in Parliament.

In a written statement, delegation head Gunter Weiss expressed concern about delays in implementation.

"The delegation hopes everything possible will be done to put Latvia's business environment in order and increase the speed of implementation," he said.

Latvia's reformed commercial law was passed by Parliament following the resignation of Prime Minister Andris Skele last year, thus enabling the closure of the relevant chapter in negotiations with the EU. But after the current Prime Minister Andris Berzins took office, disagreement broke out over an accompanying law, which prescribes how the main law is to be implemented. Now the commercial law itself is up for amendment.

Zaneta Ozolina, press officer of the European Commission's Latvia delegation, pointed out that the closure of negotiating chapters, including the chapter on commercial law, is provisional.

"Member states can ask for chapters to be re-opened," she said. "The commercial law is in conformity with EU legislation, but the question is how it will be implemented."

Peteris Elferts, adviser to Prime Minister Berzins, described the situation as a "mess" and said the date now set for the laws to take effect is Jan. 1, 2002. He said the delay is due to MPs from Skele's People's Party, who broke with the governing coalition and voted with the opposition, claiming the regulations contained misleading definitions. "If anyone feels there should be further amendments they should wait until the law is up and running," said Elferts.

Vineta Muizniece, spokeswoman for the People's Party, rejected his criticisms. "Implementation is not being delayed. But so far the People's Party has not succeeded in convincing the majority that there are big mistakes in the commercial law. We are working to change it, to make the implementing regulations clear, so that damage to society is minimized."

Baiba Kuple, lawyer for Hansa-bank Markets, questioned such criticisms. "There are many people who believe the definitions are correct and less misleading than the alternatives now being proposed."

She highlighted three areas of the law which will bother the unscrupulous: The liability of company board members will increase, minority shareholders will have more rights and companies' creditors will have greater protection.

In particular the new law will stop the practice of breaking up a company which is in trouble, so that one entity holds its assets and the other its liabilities, thus preventing creditors from claiming the assets.

Kuple sought to calm public anxiety about a requirement of the new implementation law that all enterprises re-register with the authorities. "The draft of the implementation law says that existing companies will have two years to re-register. Only when they have done so will they be bound by the new rules. With this grace period people should not feel threatened."