Transformation is a process in which one type of company (the company being converted) is converted into another type of company (the acquiring company). In the event of transformation, all rights and scores of the company to be converted shall be transferred to the acquiring company Members of the company to be converted shall come members of 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 members shall, not earlier than one month after the publication of the draft amended reorganization agreement, examine the draft contract and take a decision regarding 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. 

The restructuring Process

In compliance with Composition 357 of the Commercial Law, a draft decision on restructuring is prepared to contain the information pertained to in Paragraph 2 of Composition 338 of the Commercial Law,  The decision is also supplemented with a draft of the papers of association of the acquiring company or cooperation agreement of this company (if the acquiring company is cooperation). 

A notice of reorganization is submitted to the Register of Enterprises. The notice is supplemented with the draft decision and draft papers of association or cooperation agreement of the acquiring company as well as with official receipts for payment of the state amount and receipts attesting to the payment for enrollment advertisement in the formal review.  The company may choose any of the auditors included in the approved list of the Commercial Register, except for cases when the examination by auditors isn’t necessary. The operation is supplemented with the minutes of the company’s shareholder meeting together with the decision on the appointment of auditors.

Functions of the Auditors

 The main liabilities of the auditors are the following; 

  1. To examine the draft reorganization agreement ( decision).
  2. To estimate whether the property is sufficient for the confirmation of the equity capital if the acquiring company is a capital company.

An auditor may not examine the draft decision if it’s agreed on by all shareholders of a limited liability company to be restructured or by all members of cooperation to be restructured. If a limited liability company is restructured to come to a common-stock company or vice versa not changing the equity capital the evaluation of whether the property is sufficient for the conformation of the equity capital. 

After the auditor has carried out the examination (if it was obligatory) and shareholders (members) of the company have got acquainted with the reorganization documents a decision on reorganization is made according to the vittles of Composition 343 of the Commercial Law and the general procedure determining the decision- making process of similar companies. At the same time, the papers of association or cooperation agreement of the acquiring company are approved. However, a council, or board, If the acquiring company is a limited liability company or a common-stock company. 

At least 3 months after the day of publishing the advertisement a company in compliance with Composition 347 of the Commercial Law submits to the Register of Enterprises an operation in order to make an entry concerning the reorganization as well as enrollment of the acquiring (reorganized) company in the Commercial Register. 

Documents to be submitted 

  • Draft reorganization decision (each company shall give its duplicate). 
  • Public Reorganisation Notice. 
  • Draft terms of reference of the acquiring company (if a capital company is created) or contract design (if cooperation is established). 
  • A receipt or a duplicate thereof, or a printout of online bank payment, or information regarding the payment of the State fee. National fee outstanding independently for a duplicate of the draft contract of each company 

Advertisement to the creditors 

Within 15 days of the date of taking the decision on the reorganization, the company to be divided shall direct 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 formal publication Latvijas Vēstnesis’. 

The announcement shall specify:

  • Company establishment, enrollment number, and legal address. 
  • Enterprises, enrollment fees, 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.