It becomes necessary for a Latvian company to liquidate when it has failed to meet its financial obligations to creditors. The process signifies the termination of business activities and the permanent closure of the association. When a corporation decides to end the business, the owner(s) must remove the existence of the firm from the Companies Register. It takes 7 days to commence the process of liquidation with a state fee of around EUR 5. 

Types of liquidation of the association

Two kinds of liquidation exist in the republic: voluntary and compulsory. The board members of the company decide to do voluntary liquidation after careful thought when it seems to be the only option available. Whereas, compulsory liquidation is the request of a third party who has interests in the firm. The request is usually backed with the help of a court.

Stages of liquidation 

There are two stages involved in the liquidation of a Latvian business entity: Stage one and Stage two. 

Stage one

For a voluntary liquidation to work, it must be approved at a general meeting of all shareholders or partners of the company. At this meeting, a liquidator is usually appointed to carry out the activities of the process. The liquidator may be a former manager, a fiscal agent, or one of the owners of the entity. Aside from handling the sale of assets, such a person will oversee the procedure and pay creditors accordingly. After deciding to liquidate, the company must register its decision in the Latvian Register of Enterprises at most 15 days after the day the decision was made.  The name and details of the liquidator have to be registered too. 

Documents required for liquidation

The following are some of the documents required to start the liquidation of a company:

  • Application form B7
  • Minutes of the meeting on the day the decision was made
  • Details of the liquidator
  • Receipt or copy of the payment of state fee
  • Notarized copy of the liquidator’s signature

Note that the liquidator has to publish a statement about the termination of the company in the official publication Latvijas Vēstnesis (Latvijas Vēstnesis). 

Stage two

Upon applying with the Register of Enterprises, they will inform the official gazette about the new status of the company. After which, creditors shall be called to deposit their claims within a period not exceeding 3 months. The liquidator has to sort the company’s documents and prepare a balance sheet showing the assets the company has before submission to the State Archives. Throughout this period, the company can perform only activities leading to liquidation. When all claims by creditors have been satisfied, the leftover assets are returned to entitled shareholders. This signifies the end of the process, and the organization is removed from the Register of Enterprises after the liquidator submits the following documents:

  • Duly signed application form B9
  • Certificate of Registration
  • A closing financial statement showing payment of debts
  • Receipt or copy of the payment of state fee

Financial statement

The liquidator draws up the closing financial statement only after the payment of all claims of creditors. Then he can share the remaining assets with the entitled holders according to the articles of association. After this, he must apply to complete the process to the Register at least six months after the publication in the official publication ‘Latvijas Vēstnesis’. Before doing this, he has to ensure to settle all obligations with the State Revenue Service, as the Enterprise Register shall request confirmation from the service. 

Timeline of liquidation

The procedure usually takes at least a few months if there are lesser claims to satisfy, and up to a year or even more when there are tons of claims. Liquidation is completed when all claims have been met and leftover assets are distributed accordingly. Should new claims come up; the process can be reopened for proper settlement.

Payment of state fee

The state fee paid during the application is EUR 5.69. However, a discount of 10% applies when an applicant submits via the e-service portal and chooses to receive the reply documents electronically.