Examining the exploration of decision-making of cross-border mergers and acquisitions, allowed us to identify country-specific characteristics that have influence, particularly on the choice of the host country of the targeted company. The current attractiveness of Latvia to foreign direct investment was clarified and it appears that the perception of Latvia in transnational reports is below normal. Stakeholders of listed companies perceive accession of equity to be unsafe compared to buying from separate means. Also, when Latvia is chosen as a host country for implicit business accession, each deal structure has its advantages and disadvantages, but none has a significant influence on the cost of the sale from the perspective of value-added duty if all the preventives are taken into consideration.
The process of acquisition
The addition is a process in which the company (the incorporating company) transfers all of its property to another company (the acquiring company). In the event of dependence, the incorporating company ceases to live without liquidation proceedings. As a result, all rights and scores of the incorporating company are transferred to the acquiring company. The reorganization shall be carried out in two stages.
The amended company must initiate the reorganization process by submitting the amended draft reorganization contract to the Enterprise Register. If the draft reorganization agreement has been submitted to the Enterprise Register and is attached to the company enrollment case, a meeting of actors shall, not earlier than one month after the publication of the draft amended reorganization agreement, examine the draft contract and decide on reorganization. However, the announcement to creditors shall be repeated after the decision of the meeting of the members, If the company had formerly issued a notice to creditors regarding the reorganization in the formal publication Latvijas Vēstnesis.
At the same time, it should be noted that if one of the companies involved in the reorganization changed the name or was converted into another type of company during the reorganization, it shouldn’t be considered as the base for amending the draft reorganization agreement.
According to Commercial Law, members/ shareholders have the right to share and bounce at the meeting ever or to bounce before the meeting.
Documents to be submitted
- Draft reorganization agreement (each company shall submit its duplicate).
- Announcement of reorganization by each company.
- A damaged or a duplicate thereof, a printout of online bank payment, or information regarding the payment of the State fee. The public fee is outstanding independently for a duplicate of the draft contract of each company.
- The time limit for the submission of documents in the Enterprise Register is 14 days from the drafting of the draft reorganization contract.
- Paying the freights.
The State fee must be paid before the submission of the documents for enrollment. Registration shall be made only after the Enterprise Register can make sure that the State figure is credited to the Treasury account.
The State fee may be affected using a transfer to any bank 2 days before the submission of documents electronically or by post. Not paying dividends several times is a tactic used by regional major shareholders when they wish to drop the price of the shares possessed by the minority. When the major shareholder has acquired 90 percent or further of the shares in the company, the minority shareholders may demand a buyout under the category of Group Law 2000. Alternately, if a private company becomes public, the mature shareholder may buy out the remaining shareholders after it has acquired direct or circular control of at least 95 percent of the shares in the company.
Submitting the documents
The operation and the documents to be attached thereto shall be submitted by the Management Board or by a person authorized. It isn’t unusual for Latvian companies to have the right of first ‘turndown’ available to all shareholders. Under normal circumstances, the buyer negotiates the purchase agreement with as numerous shareholders as possible or immaculately with the major shareholder. In practice, minority shareholders are forced to sell the shares when there’s a threat of dilution or several times overdue dividends. Dilution is effectuated either by way of combinations or share capital increases. The statutory minimum to decide in favor of a share capital increase for shareholdings is 67 percent for SIA companies and 75 percent for AS companies. There are no minimal tips set by law, but there may be minimal tips set in the papers of association.
Advertisement to the creditors
Within 15 days of the date of deciding the reorganization, each company involved in the reorganization shall order a written notice of reorganization to all known creditors of the company.
The notice to creditors regarding the reorganization shall also be published by each company in the sanctioned publication Latvijas Vēstnesis’.
The announcement shall specify:
- Company establishment, enrollment number, and legal address.
- Enterprises, enrollment figures, and legal addresses of other companies involved in the reorganization.
- Type of reorganization.
- The fact that a decision on reorganization has been taken.
- Place of operation for claims by creditors and a time limit that may not be lower than one month from the date of publication of the notice.