1. FORMS OF BUSINESS
The main forms of business stipulated in Latvia’s Commercial Law are:
For more information on business forms click here.
2. SETTING UP A COMPANY, REORGANISATION, AND LIQUIDATION
All companies must be registered in the Commercial Register. For companies to achieve legal status, their founders shall prepare and submit to the Register of Enterprises a foundation agreement or decision of foundation (in case of a single founder), articles of association, and confirmation of legal address, together with receipts that confirm payment of registration duty and payment for the publication of an announcement in the official newspaper, Latvijas Vēstnesis. Registration duty depends on the chosen form of business. The Register of Enterprises undertakes to review applications and register companies within three days or within one working day (if a three times larger fee is paid).
A company can be registered in just one working day!
The liquidation of a company may occur voluntarily by decision of its shareholders or in other statutory cases. According to the law, the minimum length of the procedure is about six months. Both the company and any creditor may file a bankruptcy petition.
For more information on company, reorganisation, and liquidation click here.
3. ENTRY, WORK, AND RESIDENCE PERMITS
According to the Immigration Law, foreign nationals are entitled to enter and reside in Latvia if they have valid travel documents. If foreign nationals wish to reside in Latvia for more than 90 days within a 6-month period, they must obtain a visa or residence permit. Since Latvia’s accession in the EU, citizens of other EU member states do not require visas or residence permits, but must obtain a registration card from the Office of Citizenship and Migration Affairs if their stay in Latvia exceeds 90 days.
Latvia has been a member of the Schengen Agreement since December 21, 2007, therefore member state citizens traveling to Latvia do not require a visa, and foreigners who have valid a Schengen visa can travel to Latvia with an existing one. Other foreign nationals who are citizens of countries that are entitled to request visas for entering Latvia must submit an application.
An invitation is mandatory if a natural or legal person in Latvia is considered to be an employer in accordance with the Law on State Social Insurance, and they intend to employ a foreign national by entering into an employment contract or a work-performance contract. However, foreign nationals who wish to establish employment relationships or become self-employed must have a work permit.
Work permits are issued by the Office of Citizenship and Migration Affairs on the basis of visa or residence permits. If employers intend to employ a foreign national, they must register a job vacancy with the State Employment Agency (SEA) at least one month before applying to the SEA for approval of invitations for visas or sponsorship for residence permits. Foreign nationals must receive separate work permits if they will work for more than one employer or in several positions. If the employment of foreign nationals relates to short-term stays in Latvia that do not exceed 90 days in a six-month period, work permits can be issued in accordance with the validity of visas.
Residence permits allow foreign nationals to stay in Latvia temporarily or permanently for periods exceeding 90 days in a six-month period. Residence permits may be requested by self-employed persons, members of the boards of directors or supervisory councils of companies registered in the Commercial Register, persons authorized to represent foreign companies in branch activities, and in other situations prescribed in the Immigration Law.
Additionally, temporary residence permits may be requested by foreign nationals who have done one of the following:
4. REAL ESTATE ACQUISITION PROCEDURES AND RESTRICTIONS
Latvian legislation provides no restrictions on the acquisition or transfer of ownership rights to real estate in cities for citizens of Latvia, citizens of EU member states, and companies in which more than 50 % of equity is owned by citizens of Latvia, citizens or EU member states, or natural or legal persons from countries with which Latvia has entered into international agreements on the promotion and protection of investments. Foreign nationals from third countries are subject to restrictions on the acquisition of land in state border zones, specially protected areas, natural resource extraction areas, and agricultural or forest land.
TRANSFER OF RIGHTS TO REAL ESTATE
Each real estate transaction involving changes in ownership rights must be registered in the Land Register, which stores information regarding the legal status of real estate. Registration of the transfer of real-estate ownership rights is done by submitting registration applications signed by both seller and purchaser. Before registration with the Land Register, the owner must settle any real-estate tax debt on the property and pay stamp and state duties (see the section Real Estate Tax). Applications for transfer of real-estate rights are reviewed in ten days.
5. PROTECTION OF INTELLECTUAL PROPERTY
Latvian legislation provides four main instruments for protecting intellectual property: patents, trademarks, designs, and copyrights. All laws regarding the protection of intellectual property are harmonized with EU legislation and international conventions.
The Patent Office is the institution that implements state policy on the ensuring of industrial property rights and makes decisions on the granting of patents or the registration of trademarks, designs, or additional protection certificates. It maintains official state registers of patents, trademarks, and registered designs and certifies individuals to act as intermediaries in the registration of intellectual property.
The rights to use intellectual property can be acquired in the form of licenses or license agreements. The owner of intellectual property is entitled to transfer ownership rights to another person together with a company or separately from it.
6. REGULATION OF COMPETITION, MERGERS, AND ACQUISITIONS
Foreign and local companies commencing business or involved in reorganization (merger or acquisition) must comply with the corresponding provisions of the Competition Law, the Commercial Law, and the Law on Corporate Income Tax. Since Latvia acceded to the EU in 2004, the Competition Law and the national competition authority – the Competition Council – have operated in accordance with EU regulations on mergers and acquisitions.
The protection and development of competition in Latvia is performed by the Competition Council, whose main tasks are to:
The Competition Council has the right to:
7. PROTECTION OF THE RIGHTS AND INTERESTS OF INVESTORS
RIGHTS OF SHAREHOLDERS
The rights of investors in Latvia are protected by the Commercial Law, the Civil Law, and the Law on Judicial Power. Shareholders exercise their rights in annual shareholders’ meetings. Shareholders who jointly represent not less than one-twentieth of the equity capital of a company can request extraordinary shareholders’ meetings. Any shareholders can bring an action in court to revoke decisions taken by shareholders’ meetings if they were unlawfully prevented from participating in the meeting or from familiarizing themselves with relevant information, or significant violations have occurred in making such decisions.
LATVIAN COURT SYSTEM
The Law on Judicial Power prescribes that all court judgments have the force of law after the expiration of their appeal or protest deadline. The Latvian court system is structured in three levels: (1) district (city) courts operate as first-level courts for civil, criminal, and administrative matters; (2) six regional courts operate as first-instance courts for more complicated cases and appeal courts for cases adjudicated by district courts; and (3) the Supreme Court, composed of the Senate, the Civil Matters Panel, and the Criminal Matters Panel, is the cassation instance for all matters previously adjudicated by district (city) courts and regional courts, and the appeal court for cases adjudicated by regional courts.
PROTECTION OF INVESTORS
Rights regarding investment made by foreign investors in Latvia are covered by bilateral agreements on the promotion and protection of investments. The agreements state that all disputes between investors and the contracting state must be resolved through negotiation. Where disputes are not resolved by negotiation, investors can hand over the dispute to a competent court in the country where the investment was made or to any ad hoc arbitration tribunal established under UNCITRAL or ICSID.
FOREIGN INVESTORS' COUNCIL IN LATVIA
The Foreign Investors' Council in Latvia (FICIL) is a non-government organization that unites the largest companies from various countries and sectors which have made significant investments in Latvia, as well as ten national chambers of commerce operating in Latvia. The companies represented in FICIL account for about 31% of total FDI stock.
FICIL's activities are based on a dialogue with the Latvian government, with the aim to improve the business environment and investment climate in the country. FICIL members identify issues that affect business operations and cooperate with various government agencies on a day-to-day basis to solve problems through changes in legislation or administrative procedures. The main activities of FICIL address four key issues for improving Latvia’s investment climate:
FICIL meets with the government in annual High Council meetings, jointly chaired by the sitting Prime Minister and FICIL’s Honorary Chairman, to discuss Latvia’s economic development, exchange views and ideas in order to improve the business environment, and facilitate further investment in the country.
Additional information at: