A joint-stock company (JSC) in Latvia is an open commercial company, the authorized capital of which consists of the nominal amount of shares (shareholders’ contributions).
A joint-stock company is a legal entity.
A share is a security that confirms the participation of a shareholder in the authorized capital of a JSC and also gives the right to make certain decisions about the JSC, receive dividends and a liquidation quota (in case of liquidation).
A JSC can issue shares of different categories, with different amounts of rights (for example, voting rights, rights to receive dividends, etc.). Shares of the same category give the same rights. A JSC may issue preferred shares, which give special rights to receive dividends and a liquidation quota. But preferred shares do not give voting rights.
Shares can be registered and bearer. Information about the owners of the named shares is recorded in the register of shareholders. The issue of bearer shares is registered with the Latvian Central Securities Depository and the rights arising from the share belong to the holder of the share.
Shares can be publicly traded (shares can be sold in a regulated market for financial instruments).
Shares can be paper-based or dematerialized. Bearer shares can only be dematerialized.
The minimum par value of one share is 10 euro cents. The par value of shares of different categories may be different. The par value of any share must be divisible without a remainder by the minimum par value, as well as by 10 euro cents.
Just as about LLC, the owners of shares of JSC can be legal entities and individuals. The minimum number is one. The maximum number of shareholders is not limited. Foreign individuals and legal entities can also be shareholders (but there may be nuances in connection with certain types of activities).
The rights (votes) of shareholders depend on the category of shares. Unless otherwise specified in the articles of association or law, the meeting of shareholders decides by a majority vote of those present shareholders who have the right to vote.
The shareholders (shareholders’ meeting) make decisions on the appointment of the board, distribution of profits, and the appointment of remuneration for the board and the board. A meeting of shareholders must be convened in the administrative territory where the legal address of the JSC is registered unless otherwise specified in the charter. For example, if the legal address of the JSC is in Riga and the charter does not indicate anything about the place of convening the meeting, then the meeting of shareholders must be convened in Riga.
The minimum amount of the authorized capital is 35,000 euros (until 31.12.2013, – 25,000 lats). Before registering a joint-stock company, the amount of the paid-up share capital must be at least the minimum share capital (that is, 35,000 euros). But for certain types of activity, the size of the minimum authorized capital is much larger (for example, a life insurance company).
The requirements for a legal address are the same for all types of merchants. The joint-stock company must have a legal address in Latvia.
- The Management Board is in charge of the operational management of the joint-stock company.
- The minimum number of board members is one individual. But, if the shares are in public circulation, then the minimum number of the board is three individuals.
- The board members represent the JSC jointly unless otherwise specified in the articles of association.
- The council elects a board of directors for five years unless a shorter period is specified in the charter.
- The Board has a quorum if more than half of the members of the Board participate in the meeting of the Board. If the charter does not require more votes, then the board makes its decisions by a simple majority of votes.
- The board is obliged to submit a written report to the council (once a quarter) and the meeting of shareholders (once a year).
- The Council is the controlling body of the joint-stock company and also represents the interests of shareholders in the interval between shareholders’ meetings.
- The council appoints the composition of the board and oversees the work of the board.
- The board must have at least three capable individuals (if the shares are in public circulation, then the minimum number is five individuals). The maximum number of council members is 20.
- The shareholders elect the council for a term not exceeding five years.
- The council has the right at any time to request from the board a report on the state of the joint-stock company and to get acquainted with all the actions of the board. The council also has the right to check registers, documents, cash office, and all property of the JSC.
- The council has a quorum if more than half of the council members participate in the meeting. As with the board, the council makes decisions with a simple majority, unless the charter provides for a larger majority.
The main (more common) requirements about the name: in the name only Latin and Latvian letters must be used, and also, – the name must differ from the already registered name.
- The name of the JSC.
- Commercial activities.
- The legal address of the JSC is in Latvia.
- The size of the authorized capital, the type and procedure for payment.
- Information about the categories of shares (if there are several categories).
- Information about shareholders (name, surname, place of residence, year of birth, passport data).
- Information about the board and council of the joint-stock company.
- Getting the information you need. Information can be sent by email.
- Preparation of documents for registration (term: 2 working days).
- Preparatory actions (payment of the authorized capital) and signing of documents.
- Payment of payments (state duty, publication fee, document preparation fee).
- Submission of documents to the Register of Enterprises of the Republic of Latvia.
- Obtaining reviewed documents.