Division without establishing a new company of Stock Company in Latvia

Shorten as AS or SC, Stock Companies are organizations with shares and stocks open to the public to buy. A stock company with publicly bought shares is called a joint-stock company. All corporations doing business in the country have to register with the Commercial Register and comply with all regulations of the Enterprise Register. The minimum equity required for this legal entity is EUR 35,000. 

Divisions without establishing a new company

When you want to split this type of entity, several factors come into play. This is why the process is divided into two stages. 

Stage one

When a reorganization occurs, the company to be divided must transfer all of its properties to the acquiring companies and stop existing without liquidation. The shareholders of the entity being divided become shareholders in the acquiring companies provided it is stated in the reorganization contract.  

Payment of fees

The process of reorganization attracts a state fee of EUR 65,00 for the submission of the documents required. It takes 3 business days to complete the payment and the Enterprise Register has to confirm the payment to the Treasury account. Aside from this fee, national fees also apply. 

The Treasury (Valsts Kase)

Reg. No 90000050138 

Account: LV84TREL1060190913200

Submission of documents

An SC has to present the listed documents for reorganization:

  • A copy of the reorganization decision from all the companies
  • Published Notices of reorganization
  • Receipts of State fee payment
  • Names, registered offices, and registration numbers of the companies
  • Evidence of division of shares among members of the acquiring company
  • Transfer rules for acquiring corporations’ capital shares, etc

Announcement to the creditors

It must inform creditors of the decision to reorganize within 15 days after the decision is taken. This could be in the form of a written notice. A notice in the official publication (Latvijas Vēstnesis) has to be published to also inform creditors. The notices shall contain not limited to the details listed below:

  • Names, business addresses, etc. of companies involved
  • Kind of reorganization
  • Proof of the decision to reorganize
  • Claims by creditors applications

Stage Two

Secure creditors’ claims three months after the date of publication of notices, then file for an application to the Register to enter the reorganization in the Commercial Register. Once it has been submitted and informed creditors of the reorganization, the next stage comes with three steps. 

Draft a reorganization agreement

The firm is divided and should draft a reorganization agreement contract to be submitted to the Enterprise Register, in addition to the company registration form. In an instance where there is an amendment after submission, one can send a copy of the amended draft to the Enterprise Register and a meeting shall be held a month after it is published, to examine the contents of the contract. Note that if there is a modification to any of the companies in the reorganization is it a change in the business name, address, or structure, it does not warrant the amendment of the draft reorganization agreement. 

Payment of fees

The state fees have to be paid for the application to be processed. It takes three working days to complete this stage and attracts a fee ranging from 150,00 EUR. 

Submission of required documents 

Documents to be submitted for processing include but are not limited to the following:

  • An application form KR12 of the firm is divided
  • The reorganization agreement or a certified copy
  • Minute of the meeting of shareholders 
  • List of members who voted against the reorganization
  • A permit for reorganization (if required), etc. 

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