LATVIA

COMPANY FORMATION

INCORPORATION OF A
STOCK CORPORATION
IN THE COMMERCIAL REGISTER

Stock Company – is a commercial company, the equity capital of which consists of the total sum of the par value of equity capital stocks. A stock company is a public company, the stocks of which may be publicly tradable objects. The Company is a legal person.

Applying to register a Stock Company in the Commercial register, it is necessary to submit an application to the Register of Enterprises. The application shall be signed by all founders of the Company. Signatures affixed to the application shall be notarized. An application may be also signed by any other person instead of the founder on a special Power of Attorney certified in due notarization order. An application may be submitted by founders or any other person authorized by the founders thereto.

DOCUMENTS ATTACHED TO THE APPLICATION

MEMORANDUM OF ASSOCIATION ARE REQUIRED TO SPECIFY:
1) information of the founders (for a natural person – given name, surname, personal identity number and the residential address, and for a legal person – firm name, Certificate of Incorporation, registered office, given name, surname, personal identity number, occupation and the residential address of the person signing the Memorandum of Association for and on behalf of a legal person);

2) name of the company;

3) amount of the Equity Capital of the company, the number and par value of stocks;

4) amount of the Equity Capital subscribed by each founder and the amount payable prior to applying for registering the Equity Capital, procedure and term of payment;

5) number of stocks due to each founder in accordance with the subscribed share in the capital;

6) number of stocks and the amount of stocks par value covered with the property contribution establishing a company, specifying each item of property contribution and given name, surname, personal identity number and the residential address of each person assuming the obligations to make property contribution the number of and the par value total of those stocks which, when founding the company, are to be paid-up with material contributions, indicating each item of the material contribution and the given name, surname, personal identity number and residential address of those persons who have assumed obligations to make property contributions(the Equity Capital of the Stock Company prior to applying for registration may be paid in monetary funds only);

7) amount of founding costs and the procedures for covering these costs;

8) any special duties, rights or advantages which are granted during the period of the founding of the company to a person who has taken part in the founding of the company;

9) given names, surnames, personal identity numbers and the residential addresses of the members of the Board of Directors the company;

10) given names, surnames, personal identity numbers and the residential addresses of the members of the Supervisory Board;

11) given name, surname, personal identity number and the residential address of auditor;

12) other provisions deemed by the founders significant and not contravening the law;

13) place and date of making (signing) the Memorandum of Association and the date of signing.

The Memorandum of Association shall be signed by all founders. Signatures of the founders to the Memorandum of Association shall be publicly certified by sworn notary or in the rural district court.

If a company is established by one founder, he makes and signs a resolution of the company foundation instead of the Memorandum of Association comprising all information specified therein above. A founder' signature to the resolution of the company foundation shall be publicly certified by sworn notary or in the rural district court.

THE ARTICLES OF ASSOCIATION MADE IN 2-3 ORIGINAL COPIES ARE REQUIRED TO SPECIFY:
1) name of the company;

2) spheres of commercial activities;

3) term or purpose of activities of the company (if a company is established for a definite period of time and for attaining a certain goal);

4) amount of the Equity Capital, the number and par value of stocks, as well as:

- if a company has the stocks of different categories – stock categories (specifying the rights resulted from the stock of each category) and the number and par value of the stocks of each category;

- if the stocks are the registered stocks or bearer stocks and, if the Articles of Association provide for conversion of the registered stocks into the bearer stocks and vice verse – the terms of conversion;

- stocks in the paper form or dematerialized stocks and, if the Articles of Association provide for conversion of stocks in the paper form to the dematerialized stocks and vice verse – the terms of conversion;

5) number of members in the Board of Directors of the company defining the rights of the members of the Board of Directors to represent the company jointly or separately ; minimum number of the members of the Board of Directors is 3, and not less than a half of the members of the Board of Directors should be represented by the persons with permanent residence in Latvia;

6) number of the members in the Supervisory Board, minimum number of the members in the Supervisory Board is 3, and in the company stocks are publicly tradable objects – 5;

7) special provisions of stocks alienation (if any envisaged);

8) other provisions deemed by the founders significant, that do not contravene the law;

9) date of signing the Articles of Association.

Notes: it is not allowed to specify information of the founders or the registered office of the company in the Articles of Association.

The Articles of Association shall be signed by all founders. The signatures of the founders to the Articles of Association shall be publicly certified by sworn notary or rural district court.

1. Notice from the bank regarding the payment of the stock capital.
2. Documents authenticating the value of each property contribution (if making property contribution). A report shall be made and submitted of each property contribution.
3. Written consent given by each member of the Supervisory Board to join the membership of the Supervisory Board.
4. Written consent given by each member of the Board of Directors to join the membership of the Board of Directors.
5. Notarized specimen of signatures of the members of the Board of Directors.
6. Notice of the Board of Directors regarding the registered office of the company.
7. Receipt conforming the state fee payment. The state fee payable for registering a stock company in the Commercial register is LVL 250. The state fee is payable prior to an application submission and it can be done in any banking institution in Latvia.
8. Receipt conforming the payment for the announcement regarding registration in the official newspaper «Latvijas Vēstnesis». Payment to the amount of LVL 24 is set for publication about registration of a stock company in the Commercial register. All entries made in the Commercial register are promulgated by publishing an announcement in the newspaper «Latvijas Vēstnesis» at the expense of the relevant merchant.

SHARE CAPITAL
Stock capital of the Stock Company may not be less than LVL 25 000.

The entire stock capital of the Stock Company defined by the Memorandum of Association shall be subscribed prior to applying for registration, and paid-up capital should not be less than the minimum amount of the stock capital set by law (LVL 25 000) and less than 25 per cent of the stock capital subscribed (the remaining share is payable not later, than within a year from the date of signing the Memorandum of Association).

Stock capital may be paid making monetary, as well as property contribution, however one should take into account that prior to applying for registration the paid-up stock capital of the stock company is payable only in money.

For instance, if the Memorandum of Association defines, that the stock capital will be LVL 25 000, at the moment of applying for registration it should be subscribed and paid-up in full. In its turn, if the stock capital is set to the amount of LVL 100 000, than at the moment of applying for registration it should be subscribed, and be paid at least to the amount of LVL 25 000 – moreover, in money.

Exclusion. There are requirements to the minimum amount of the stock capital for separate stock companies depending on the sphere of activities.
Minimum amount of the stock capital paid prior to foundation:
1) for life insurance stock companies – LVL 1 000 000, for other insurance stock companies – LVL 500 000;
2) for exchange stock companies – LVL 100 000;
3) for pawn broker’s stock companies – LVL 25 000.
Minimum amount of the stock capital payable within five years from the date of establishing a stock company:
1) for life insurance stock companies – LVL 2 000 000, for other insurance stock companies– LVL 1 000 000;
2) exchange stock companies– LVL 250 000;
3) for pawn broker’s stock companies – LVL 50 000.

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