It is crucial to evaluate and select the best form of activity in terms of law and economics before starting a business. This decision will have an impact on the enterprise’s legal standing as well as other business-related difficulties, in addition to the amount of equity capital required.

In Latvia, there are various legal formats for conducting business. The following categories of ventures are typically registered by entrepreneurs:

• limited liability company (SIA)
• joint stock company (AS)
• branch
• representative office of foreign merchant

Limited liability company (SIA)

A limited liability company may have one or more founders, who may be either natural persons or legal entities. The originator may or may not be a Republic of Latvian citizen.

A limited liability company is regarded as a legal entity because of its status.

The business is held accountable for its debts to the full extent of its assets. A founder or shareholder is not responsible for the liabilities of the limited liability business, and the limited liability company is not responsible for the responsibilities of the founder or shareholder.

The board and, if necessary, the council serve as the limited liability company’s management and decision-making bodies. One or more natural persons, either inhabitants or non-residents of the Republic of Latvia, make up the board.

The procedure for forming and registering a company is not regarded as complicated. From the time all incorporation documents are prepared and submitted to the Commercial Registry of the Republic of Latvia, registration takes just four business days. Upon such a request, the registration period may be shortened by up to two working days.

Equity capital

The required minimum equity capital to form a limited liability corporation is EUR 2820. Both monetary and in-kind contributions of equity capital are acceptable.

Joint stock company (AS)

A joint stock company is regarded as a legal entity, much like a limited liability company (SIA). The entire company’s property is subject to liability for the company’s debts.

One or more founders may exist, and they may be either natural or legal individuals. The originator may or may not be a Republic of Latvian citizen.

Equity capital

Compared to SIA, the joint stock company’s minimum equity capital is substantially greater at EUR 35 210. Only cash investments may be made as part of the equity capital contribution.

Management structure

SIA’s corporate governance is simpler than that of a joint stock company, which is run by a shareholders’ meeting, council, and board. The board may be comprised of one or more natural people, residents, or non-residents of the Republic of Latvia.

Branch of a foreign undertaking with the right to conduct business

The branch of the foreign merchant refers to an organizationally separate unit or portion of a foreign undertaking that is geographically detached from the main enterprise and where routine commercial activities are carried out in the country or the relevant merchant. The branch isn’t regarded as a separate legal entity.

The parent overseas firm is entirely responsible for the actions and debts of its affiliate.

From the time all incorporation documents are prepared and submitted to the Commercial Registry, the registration at the State Registry only requires four business days. Upon such a request, the registration period may be shortened by up to two working days.

Representative office of a foreign undertaking

The Republic of Latvia allows foreign businesses and organizations to set up representative offices there or register official representatives.

Representatives do not have the authority to conduct business through their representative offices. Such representative offices’ primary goal is to promote foreign businesses and organizations in the Republic of Latvia and the Baltic states as a whole.

The representative office is not regarded as a separate legal entity from the foreign undertaking or organization that it is a part of and that is located on Latvian soil.

The state charge is EUR 29, and the State Registry will review the application in 15 days. The period may be shortened by up to two business days depending on the state charge that has been paid.