Capital company in Latvia

Capital company in Latvia is commercial company, which equity capital consists of sum of nominal values of shares of equity capital.

Types (kinds) of capital company are limited liability company and joint stock company.

Limited liability company is closed company, shares of which are not object of a public circulation.

Joint stock company is open company which stocks may be object of a public circulation.

Capital company is legal entity from day, when company is recorded in commercial register.

Shareholder (stockholder) of company is person who own one or more shares.

Company is responsible for its obligations with all property of company. Company is not responsible for obligations of shareholder and shareholder is not responsible for obligations of company.

Company may be formed as company with addition responsibility where at least one shareholder is responsible for obligations of company with all shareholders property.

Legal address of company is address, where management is located (seat of company).

Founders of company can be individuals, legal entities and personal partnership. Company may be formed by one or several founders. No restrictions for foreign founders.

Foundation and registration of company may consist from following stages:

Collection of information necessary for registration;
Preparing of documents necessary for registration;
Creating management institutions of company and auditor (if auditor is planned for company);
Signing of documents (including of notarial certification of signature);
In most cases is necessary to open temporary account in bank and pay statute capital;
Evaluation of property (if equity capital (part of equity capital) if formed by property, other than money);
Doing payments necessary for registration;
Submission of documents to commercial register;
Receiving of examined documents.

What information is recorded to Register of Enterprises about capital company?

Name of company (firm);
Type of capital company;
Name, surname, personal code, address of members of board of directors and members of supervisory board (if created);
Rights for members of board of directors to represent company jointly or individually;
Amount of equity capital, amount of subscribed and paid equity capital;
Legal address;
If capital company is established temporary, then term of establishing;
If capital company has created branch office, then name of branch office (if differs from name of capital company) and legal address of branch office;
If authorization issued, then name, surname and personal code of authorized person (company secretary), reference on joint authorization or authorization of branch, rights to conclude special agreements regarding to immovable property, as well as rights of authorized person to represent merchant jointly with one or several members of board of directors or individually.

What must be included in memorandum of association?

Data about the founders (for individuals – name, surname, personal code and address; for legal entities – name of legal entity, registration number, legal address, name, surname, date of birth, and address of persons that has rights to sign the memorandum of association);
Firm of the company;
Amount of the equity capital of the company, number of shares and value of one share;
Amount of the equity capital signed by each founder and amount of the equity capital paid before the registration, order and terms of payment of equity capital;
Amount of the equity capital pertained to each founder (according to amount of signed equity capital);
Number and sum of nominal values of shares, that establishing company are paid by property;
Must be specified each subject of property contribution and information about person who undertakes obligations to make property contribution;
Admissible amount of the foundation expenses and payment order of the expenses;
All specific obligations, rights or privileges that during the foundation of the company are granted to the person who has participated at the foundation of the company;
Name, surname, personal code and address of the members of the board of directors of the company;
Name, surname, personal code and address of the members of the council of the company (if the company has a council);
Name, surname, personal code and address of the auditor, if the auditor is provided for the company;
Other provisions that the founders consider to be relevant and that do not contradict the legislation;
Place of drafting (signing) and date of signing.

What must be included in articles of association?

Firm (name) of the company;
Purpose or term of company activities (in case if the company is registered for a definite time or to achieve a certain purpose);
Equity capital amount, number of shares and value of each share;
Number of members of the board of directors of the company and the rights of the members of the board of directors to represent the company jointly or individually;
Number of the council of the company (if the council is provided for the company);
Specific rules regarding alienation of the shares (if the founders want to state such rules);
Other terms that the founders want to include in articles of association and that do not conflict with the law;
Date of signing of the articles of association;

for joint stock companies in articles of association also must be included:

If company has issued several categories of shares, then categories of shares, specifying rights that follows from each category of shares;
Number and nominal value of each category shares;
Are the shares registered (named) shares or bearer’s shares and, if conversion of shares is prescribed, then rules of conversion;
Are the shares in paper form or immaterial and, if conversion of shares is prescribed, then rules of conversion;
Main commercial activities of joint stock company.

Until submitting of application to commercial register must be paid at least 50% of limited liability company equity capital. Other part must be paid within one year after registration of company.

Until submitting of application to commercial register must be subscribed all share capital of joint stock company and amount of paid statute capital can not be less than LVL 25000 and not less than 25% of subscribed share capital. Until submitting of application to commercial register share capital of joint stock company can be paid only by money.

To record company in commercial register, application must be submitted. To application must be added such documents:

Foundation documents (memorandum and articles of association);
Bank notice (certification) about paid equity capital (in case if equity capital or part of it is paid by money);
Documents certifying value of property contribution (in case if property contribution is made);
Written acceptance of each member of the council to be a member of the council (if council is formed);
Written acceptance of each member of the board of directors to be a member of the board of directors;
Notice of the board of directors on the legal address of the company;

Equity capital of company.

Equity capital can be paid by money or other property contribution. Equity capital must be stated in complete (whole) lats. Items of other property contribution can be material or immaterial things that can be evaluated in money and that can be used for commercial activities of the company, excluding thing against which demand can not be addressed. Property contribution can not be obligations to render services or do work, as well can not be planned profit or planned activities in company, also can not be planned wage, fees, dividends and similar payments what shareholder may receive from company. Property contribution can not be made by parts. If property contribution is less than LVL 4000 and property contribution is less than half of equity capital, then founders of company can themselves evaluate property contribution. In other cases special expert is necessary to evaluate property contribution.