Saeima Supports Joint-Stock Company Reform in Final Reading
Published: 17.06.2022
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On Thursday, 16 June, the Saeima supported in the final reading the amendments drafted by the Ministry of Justice
to the Commercial Law in order to reform the existing regulatory framework for joint-stock
companies and ensure transparency in their operations.
Deputy Prime Minister and Minister of Justice Jānis Bordāns: “The new changes
to the legal framework will ensure that everyone has access to information about the owners of joint-stock companies,
thereby promoting transparency in the operations of joint-stock companies. The aim of the reform is
to encourage greater activity in the establishment of joint-stock companies, a favourable business environment and
the attraction of investment. Consequently, the inflow of investment and economic activity will also promote
the prosperity of the people of Latvia.”
The previous regulatory framework allowed joint-stock companies not to provide information
about their shareholders to state institutions, making dishonest and unlawful
conduct possible, including the laundering of proceeds of crime, tax schemes, fraud and
corruption. Latvia’s National Risk Assessment also indicates that joint-stock companies are
high-risk entities due to their lack of transparency.
The amendments require all joint-stock companies, regardless of the type of shares selected,
to submit information about their shareholders to the Enterprise Register. Information about holders of registered shares
must be submitted to the Enterprise Register as soon as changes are made to the shareholders’ register.
Meanwhile, a joint-stock company whose shares are registered in financial instrument accounts
must provide the Enterprise Register with information about its largest shareholders, and this must be provided
as soon as the shareholders have informed the joint-stock company of the acquisition of the shares.
At the same time, the amendments introduce a number of innovations aimed at modernising and facilitating
procedures for both joint-stock companies and limited liability companies. The amendments modernise
the procedure for convening shareholders’ meetings, as well as access to documents of shareholders’ and members’ meetings
and the procedure for holding shareholders’ meetings, for example, by providing documents for shareholders’ and members’ meetings
primarily in electronic form rather than in paper form at the company’s registered
address.
The amendments are scheduled to enter into force on 1 July 2023, allowing joint-stock
companies one year to submit all the necessary information to the Enterprise Register. Joint-stock
companies that fail to fulfil this obligation and do not disclose their shareholders
may be subject to termination of their operations and removal from the Commercial Register.
The amendments to the Commercial Law can be viewed here .
Additional information:
At the same time, the joint-stock company reform also includes amendments to the Financial Instrument Market
Law and the Law “On the Enterprise Register of the Republic of Latvia” (adopted by the Saeima on
2 June and 16 June, respectively).
Evija Rimšāne
Ministry of Justice
Public Relations Specialist, Communications Department
Telephone: 67036861
Email: Evija.Rimsane@tm.gov.lv
Categories:
Government;
