Appraisal of property is used to give the company the knowledge of its worth. It will interest you to know that asset contribution adds value to a company, these properties may be tangible or intangible assets estimated in monetary value, and it is used in the company for business activities. It would not be used if the asset is exempted by law.
Also, property contributions in Latvia are not likely made in installments and that is why some assets are not allowed to be termed as such, these include:
- The obligation of a property to execute a service or a certain task;
- Profit of a business or anticipated ownership;
- Salary, royalties, dividends, or other forms of income comparable that the founder or its member expect to get
Appraisal procedure
To carry out an appraisal, the responsibility or right to perform such function is given to a few and they include;
- A registered appraiser of property contribution in the list of the Enterprise Register (ER), the appraiser is expected not to be a first to a third-degree relative, a spouse, or in-law of first to second-degree affinity to the owner of the property to be apprised and anyone with interest in the asset appraised.
- The founders are entitled to carry out the appraisals themselves with a condition of the equity of the limited liability company to be below EUR 5700 and the total amount of the asset contribution is less than half of the equity.
- The holder of capital shares is entitled to draw an appraisal report if the contribution of the person does not exceed EUR 14000
- An auditor can assess the adequacy of assets, this takes place when an acquiring company wants to get a report of the relevant asset acquired.
Appraisal report
The appraisal report must carry some information which includes:
- The description of the item in the Asset contribution;
- The money added value of each contribution to the property;
- The Owners of the property;
- The method of valuing each contribution (it can be omitted if the founders conducted the appraisal);
- The opinion on the compatibility of the item of the property contribution’s with the company’s commercial activities;
- Information on transferable securities and money market instruments traded on a regulated market used for equity.
All founders are to sign the evaluation report if the appraisal was carried out by a founder.
A Property Contribution Appraisal Report is valid for six months from the date it was drawn or prepared. A Property Appraisal Report is also valid on the day of the memorandum of association or taking the decision is signed on the increase of the equity.
