Founding an organization such as a foundation needs at least two individuals, enterprises, or associates with related goals. The purpose of foundations is stipulated in their articles of association drafted by the board. The registration of organizations takes a maximum of seven days to process. Founders of organizations can choose to reorganize because of specific risk factors impeding their operations, the procedure can ensue in three ways; acquisition, merger, and division. A division happens when a distributable foundation transfers its equity to other associations by a split or partition. If it is a split, there is a complete transfer of all the property to the acquiring foundations and the foundation terminates its existence without a liquidation. For a divestiture, the organization may continue to exist after the transfer. Usually, the acquirer may be recently established or already in existence. All organizations involved in the reorganization must submit some documents to the Enterprise Register within three months before a publication of the division is made in the official publication ‘Latvijas Vēstnesis’.
For a foundation considering a full or partial transfer of its property (division) or a business proprietor interested in the division of foundations, this guide provides knowledge on the practice of division of foundations and how to do it.
Steps to the division of foundations
There are three steps involved in the division of a foundation. They are simple and take up to seven days to finalize and receive a certificate of registration. The steps include the following:
- Filling out the application form
- Paying the state fee
- Submission of necessary documents
Filling out the application form
In the event of a division, split, or separation of a full or part of the property of foundations, a meeting of the management board must be conveyed to make the decision. After which, the next step is to prepare the necessary documents. The application form obtainable at the Enterprise Register must be filled and duly signed by the members based on the representation rights as stated in the Statute. In the case of members unable to sign, an entrusted person may be authorized by power of attorney. The following information must be included in the form:
- Names of the involved parties (foundations)
- Details of the management board
- Registered addresses
- Date of the decision to divide, etc.
Paying the state fee
This fee should be paid by the foundation two days before the submission of the application and necessary documents. It must be deposited to the Treasury account at any bank in the country, in person, via a credit card, or wire transfer. After this payment is made and confirmed, the application for division is processed and the certificate is issued by the Enterprise Register. The payable fee for all foundations involved in a division is EUR 8, 54 each. Applicants should pay to the account with the following details:
Reģ. Nr. 90000050138
Valsts Kase, Konts: LV84TREL1060190913200
The state fee for registering a new foundation is EUR 11, 38, to be paid to the same account.
Submission of necessary documents
To process the application for division, participating foundations must tender some necessary documents to the Enterprise Register. The documents have to be presented no earlier than three months before a publication of the decision to divide is made in Latvijas Vēstnesis. The following are some necessary documents to be submitted:
- Application form B6
- Contract to reorganize or a copy (when two or more organizations are involved)
- Extract of the board’s meeting
- Statutes of the acquiring foundation
- A receipt or a copy of the payment of the state fee
- List of board members in the acquiring organization, et cetera