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Company registration
In Latvia, several forms of legal entities exist to meet commercial needs. These are: a limited liability company, joint stock company, general partnership, limited partnership and individual merchant.
Individual merchant (IK)
Definition: an individual merchant is a natural person registered in the Commercial Register as a merchant.
Foundation: it is registered in the Commercial Register. The grounds for registration is an application including the name, surname, personal ID number, address of the place of residence of the respective person, details of the individual merchant, its registered address and information on types of business activities pursued.
Equity capital: none
Management: decisions are made by one person (he or she may recruit employees).
Division of profit: all revenue is gained by the individual merchant (however, it pays taxes to the state).
Liability: an individual merchant is liable for its obligations with its whole property.
Raising of funds: an individual merchant may conclude transactions related to its business, as well as take out loans.
General partnership
Definition: a general partnership is a partnership the aim of which is doing business by using a joint company and which is formed by two or more persons joining together based on the partnership agreement not limiting their liability towards creditors.
Foundation: it is registered in the Commercial Register. The application for registration must include the name, surname, personal ID number, address of the place of residence of every member of the company or in case of a legal person – a name, registration number, registered address, name and registered address of the company, information on type of company and types of business activities pursued.
Equity capital: none
Management: it is implemented in compliance with provisions of the agreement. In order to make a decision it has to be agreed on by all those members of company who has the right to make the respective decision. If the agreement stipulates that the decision is to be made by majority, the majority is determined based on the number of members. In compliance with the agreement record-keeping can be carried out by one or several members of the company (secretaries).
Division of profit: after taxes the profit and losses are divided amongst members in proportion to their investments (shares) in the company.
Liability: members of the company are personally liable for the company’s obligations as co-debtors with their whole property.
Raising of funds: part of the profit is invested in the company. It is also possible to take out loans.
Limited partnership
Definition: a limited partnership is a partnership the aim of which is doing business by using a joint company and which is formed by two or more persons joining together based on the partnership agreement provided that the liability of at least one member of the company (a limited partner) towards creditors is limited according to the amount of his or her investment, but the liability of other personally liable members of the company (complementary partners) is not limited.
Foundation: it is registered in the Commercial Register. The application for registration must include the name, surname, personal ID number, address of the place of residence of every member of the company or in case of a legal person – a name, registration number, registered address, name and registered address of the company, information on type of company and types of business activities pursued, amount of total investments and the amount of the limited partner’s investment.
Equity capital: none
Management: limited partners do not have the right to participate in record-keeping of the company, as well as to object to a complementary action except for the cases when such action exceeds the limits of the usual conduct of the company’s business activities.
Division of profit: after taxes the profit and losses are divided amongst members in proportion to their investments in the company.
Liability: a limited partner is liable only with its capital share; however, complementary partners are liable for all other loses in proportion to invested capital shares with their whole property.
Raising of funds: the company can attract new limited partners. It invests the profit and can take out loans.
Limited liability company (SIA)
Definition: a limited liability company is a capital company – a private company the shares of which are not publicly traded.
Foundation: a company is considered to be established and has a status of a legal person starting from the day when it is registered in the Commercial Register. The procedure of foundation is the following:
- documents of incorporation – an incorporation agreement and articles of association – are drafted and signed;
- management bodies are established and an auditor is appointed;
- a certain amount of the equity capital is paid-up, founders’ money contributions are deposited in the bank and a statement regarding this deposit is received;
- appraisal of the property is organised;
- the state fee for registration in the Commercial Register and the fee for announcement of registration is paid;
- an application is submitted to the Commercial Register office.
Equity capital: at least LVL 2,000
Management: the company’s management bodies are the following:
- shareholder meeting;
- board;
- council (if established).
The shareholder meeting deals with the following tasks:
- making amendments to the articles of association;
- increasing or decreasing the equity capital;
- appointing or dismissing members of the council;
- appointing or dismissing members of the board;
- approval of the annual report and profit;
- appointing or dismissing auditors, controllers or liquidators;
- making a decision on termination, continuation or reorganisation of business activities;
- and other tasks in compliance with the articles of association.
The board is appointed for a period of 3 years, and it manages and represents the company.
Division of profit: the shareholder meeting makes a decision on division of profit after approving the company’s annual report.
Liability: the company is liable with the invested capital.
Raising of funds: the equity capital can be increased by investing in it (both existing and new shareholders invest in it). The company invests the profit and can take out loans.
Joint stock company (AS)
Definition: a joint stock company is a capital company – a public company the stocks of which are publicly traded.
Foundation: a company is considered to be established and has a status of a legal person starting from the day when it is registered in the Commercial Register. The procedure of foundation is the following:
- documents of incorporation – an incorporation agreement and articles of association – are drafted and signed;
- management bodies are established and an auditor is appointed;
- a certain amount of the equity capital is paid-up, founders’ money contributions are deposited in the bank and a statement regarding this deposit is received;
- appraisal of the contribution in kind is organised;
- the state fee for registration in the Commercial Register and the fee for announcement of registration is paid;
- an application is submitted to the Commercial Register office.
Equity capital: the equity capital must be at least LVL 25,000.
Management: the company’s management bodies are the following:
- stockholder meeting;
- council;
- Board.
The stockholder meeting deals with the following tasks:
- making decisions regarding the annual report and utilisation of the last year’s profit;
- appointing or dismissing members of the board, controllers or liquidators;
- making amendments to the articles of association;
- bringing actions against members of the board, council and the auditor;
- increasing or decreasing the equity capital;
- ensuring emission and conversion of the company’s securities;
- determination of the remuneration for members of the board and the auditor;
- termination, continuation or reorganisation of the company’s business activities.
The voting rights are ensured by the paid stocks.
The Council – a management body of a company representing interests of stockholders between meetings and monitoring activities of the board – has the following responsibilities:
- to appoint or dismiss members of the board and to monitor activities of the board;
- to monitor transactions of the joint stock company;
- to review the annual report and the board’s proposal on utilisation of the profit and submit these
- documents to the stockholder meeting;
- to represent the join stock company in court;
- to prepare questions for the stockholder meeting.
The board is an executive body of the company which manages and represents the company, is responsible for conducting business, accounting, manages the property and makes use of the company’s resources in compliance with the laws and regulations, articles of association and decisions of the stockholder meeting.
Division of profit: the stockholder meeting makes a decision on division of profit. The amount payable in dividends is divided in proportion to the nominal value and category of stocks.
Liability: the company is liable with its property.
Raising of funds: the company can issue stocks and bonds, as well as take out loans.
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Company registration in Latvia
We will prepare all necessary documents for company formation, give you all necessary information and consultation, as well as register it in the Register of Enterprises. We can also register a new or already existing company as a Value Added Tax (VAT) payer or prepare and submit documents necessary to make amendments to the corporate documents. If your activities require a special license or certificate, we will help you to find the appropriate authority, to contact it and prepare the application.
