Corporate: Guide on company formation in Latvia.

In recent years company formation in Latvia is becoming more complicated and more transparent due to on-going efforts of the Government to implement AML measures and desire of the Tax Authorities to close tax avoidance loopholes in Latvian company laws.

In general, there are two types of companies: SIA (a private limited liability company) and AS (a public limited liability company). Although AS has as minimum two-layer corporate governance and ability to issue securities to be listed on stock exchange, by far most of businesses in Latvia are registered as SIA (sabiedrība ar ierobežotu atbildību). This guide is about formation of a company as SIA, hereinafter – “NewCo”.

In order to register NewCo in Latvia the following documents shall be submitted to the Latvian Company Register:

(1)      Name of NewCo – there is no option to “reserve” the name with the Latvian Company Register, but rules are fairly relaxed about the company names. Lawyers cannot proceed with the preparation of the documents, unless NewCo has a name;
(2)      Extract from the foreign register about the founder– if the founder is a non-Latvian entity, then there is need to have properly issued extract from the public register (preferably not older than one month) and passport copy is sufficient;
(3)      Memorandum of Association of NewCo – shall be signed by all the founders in front of a notary public (not applicable if one founder);
(4)      Articles of Association of NewCo– shall be signed by all the founders;
(5)      Bank statement regarding share capital of NewCo – a notice from a bank or another document regarding the payment of the share capital (minimum EUR 2,800);
(6)      NewCo board member consent - written consent of each member of the management board to be a member of the management board – shall be signed by a member of the board of directors in front of a notary public;
(7)      Legal address statement – a notice from the management board regarding the legal address of the company – shall be signed by the chairperson of the board of directors or an authorised member of the board;
(8)      Landlord statement - consent issued by the owner of the immovable property (building or apartment property) for registration of the legal address of a company in the relevant building or apartment property – shall be signed by a person owning the immovable property;
(9)      The register of shareholders in NewCo – shall be signed by the chairman of the management board or an authorised member of the board in front of a notary public;
(10)  Application Form to the Company Register – a formal notice to the Latvian Company Register that needs to be executed in front of notary public;(11)  Power of Attorney – a separate document issued by the founder of NewCo authorizing the lawyers to represent founder before the Company Register and bank.

When all documents are ready, the registration of a company takes 1-3 working days.

State fee for establishment of a company consists of EUR 150 and EUR 27.03 (fee for the publication in the official newspaper “Latvijas Vēstnesis”). Additionally, in case founder or a board member is a foreigner, there might be translation costs as well to translate the extract from the foreign register into Latvian.

When establishing a company, it is necessary to consider the tax matters as well. Meaning that company shall choose the most appropriate tax regime upfront for its economic activities, consider tax issues, for example, whether it should be registered in the VAT register, who would be a beneficial owner of the company and whether it is mandatory to elaborate transfer pricing documentation.

All documents in foreign language shall have certified translations in to Latvian language attached.

As per the new amendments to the Law on the Prevention of Money Laundering and Terrorism Financing, as of 1 December 2017 when establishing a company, it is mandatory to file information regarding the Ultimate Beneficial Owner (UBO) (natural person who holds, directly or indirectly, more than 25% of the shares or voting rights) of the company to the Latvian Company Register.

NewCo formation could take place slower (more than 10 business days) if the following criteria are met:

(1)   if any of the board members are board members or shareholders in other companies in Latvia (e.g. more than 5 boards);
(2)   if any of the founders are shareholders in more than 10 companies;
(3)   if NewCo legal address is also location for more than 10 other companies.

If there are more than one shareholder please consider signing of the shareholders agreement to cover such topics as non-compete, non-solicitation, share transfer rules, confidentiality, profit sharing, etc.

In practice, to speed up the process, some clients opt for company formation by our lawyers and then the client acquires the shares in NewCo. Registration as VAT payer is not an easy process, but it can be accomplished within 2-3 weeks. The most unpredictable part in time and costs is opening of the bank account.

Our law firm also recommends registration of trademark as part of the company formation process.

by Elīza Grīnvalde, Junior Associate / AML specialist (CAMS), Latvia

Related Lawyers

Vairis Dmitrijevs

Head of M&A

+371 29 258 370


Gints Vilgerts

Partner, M&A

+371 29 107 768


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