Easier Provisions for Establishing a Limited Liability Company

Starting 1 May this year, it will be possible to establish a Limited Liability Company (SIA) with a fixed capital as small as LVL 1 lat instead of LVL 2 000, provided that:

-          The founders of the SIA are natural persons and there are no more than five of them;

-          All founders of the SIA are also its shareholders;

-          Each shareholder is only a shareholder of one such SIA, the fixed capital of which is less than LVL 2 000.

The fixed capital shall be increased to LVL 2 000 over time by deducting 25 % from the company's profits each year. It will not be allowed to reorganise this kind of SIA. Should the SIA become insolvent before the fixed capital has reached LVL 2 000, the owners will be jointly responsible for the remainder.

Changed Terms of Office for Board and Council Members

Amendments to the Commercial Law stipulate that Board and Council members of SIAs shall hereafter be elected for an undefined term. Board and Council members of Joint Stock Companies, however, shall have their term prolonged from three to five years. Owners of Capital Companies may set different terms of office in their Articles of Association. These amendments are effective since 1 May 2010.

Easier Liquidation Process for Companies

The term for liquidating a company has been reduced:

-          If the company to be liquidated has no known creditors, the term for submitting their claims may be reduced to one month (normally it would be three months);

-          If all liabilities of the company have been settled, there is no need to wait for six months to divide the remaining assets.