Registration of a limited liability company (PLC/LLC) in Latvia

LLC/PLC - Limited Liability Company is exact translation from Latvia. But actual status is more similar to PLC (private company limited by shares) That is, in the usual case, the owners of the shares (the only owner of the shares) for the obligations of company is responsible only with contribution to the share capital. What could be the exceptions? The first exception is if the owners of the shares amongst themselves agree otherwise. The second exception - it's illegal actions of the owner of shares and company suffers losses (and the company can not fulfil its obligations to creditors).

How do I register a company?

In short, the founding and registration process is as follows:

• Receiving (aggregation) or required information.
• Preparation of documents.
• Doing other required actions and signing of documents.
• Payments (state duty, publication, notary etc.).
• Submitting documents to the Commercial registry authority.
• Receiving of examined documents.

Before registration (before making decisions) it may be useful to review several business forms and tax regimes. This tool is available at here . I also provide free consultation regarding the choice of the business form and tax regime.

Summarizing (aggregating) the information, it is necessary to decide on the name of the company and where the company will have its registered office. Information about the founders (shareholders) of the company and the board of directors of the company is necessary. Also need information about the amount of the company's share capital and the number of shares.

All necessary information you can be send to the e-mail address: abways@abways.lv
Documents required for registration are usually prepared within one working day. In case of urgency, documents can be prepared faster (for example, within an hour). After preparing the documents, I usually will send them your email address.

During the registration process it may be necessary to open a temporary bank account where you will pay the share capital. To make the registration process easier and cheaper, the recommendation is to register a company with a registered capital of less than 2800 euro (so-called, small-capital SIA). In this case, there is no necessity to open the temporary bank account (after registration of a company you will go to a bank and open a permanent account). Need to note that for Latvian company you can open bank account in another country (just need to inform tax authority).

Before submitting the documents to the commercial registry, must sign the documents. You can sign the documents with a secure electronic signature. If the documents are not signed with a secure electronic signature, then the signature on certain documents must certify before a sworn notary or a state notary public of the Register of Enterprises (if the person has a personal code of the Republic of Latvia).

Also, before submitting the documents to the Register of Enterprises, must pay the state duty, payment for publication and payment for the services of the Register of Enterprises (if you will submit the documents in paper form).

When the company is registered, you can go to the bank to open a bank account. Also, need to create access to the Electronic Declaration System - EDS (to submit tax reports, declarations, reports and other documents).
If the company need the value added tax number, then must submit special application to the State revenue service (you can also submit the application to the Register of enterprises together with the other documents).

How long does it take to establish a company?

In accordance with the Commercial law part 3, article 10 the notary of the Register of enterprises makes decision within three working days from the date of receipt of all documents.
I can prepare the documents in shortest possible time, usually within one working day. In case of urgency, I can prepare the documents faster.

Information required for the preparation of documents for registration.

• Name of company.
• Legal address of a company. Need written permission (consent) of an owner of immovable property.
• Amount of the authorized capital (equity capital), type and terms of payment.
• Information about the company owners (name, surname, place of residence, date of birth, passport details).
• Information on board of directors of the company.

The authorized capital (equity capital) of company and the small capital company.

The minimum amount of share capital is 2800 euro, but it is possible to incorporate a company with a share capital in less than 2800 euro (so called small capital company). To register the small capital company, there is no requirement to submit additional document that certifies payment of the capital (no requirement to open temporary bank account). Founders certify payment of equity capital, making special mark in the registration application.
Legal status of the small capital company is almost the same as a status of a company with registered capital of 2800 euro or more. With two rather important exceptions.

• The first exception: if the company becomes insolvent, then the owners of the shares are jointly and severally liable for the obligations of company in the amount of 2800 euro, less the actually paid share capital.
• The second exception: 25% of the profit company must allocate to a mandatory reserve. Mandatory reserve can be used to increase the share capital.

When the amount of the paid share capital is 2800 euro or more, then the small capital company is the same as the so-called "standard" company.

The state duty and payment for publication for the small capital company are less then for company with share capital of 2800 euros or more.

To have rights to register the small capital company, must fulfil following requirements:

• Only natural persons can be founders (shareholders) of the company.
• Maximum number of founders (shareholders) is five.
• The person that is a member of the board of directors, must be a founder (shareholder) of a company.
• A person can be founder (shareholder) only in one small capital company.

The small capital company can choose to register as payer of the micro-enterprise tax or can pay standard taxes.

The owners of the shares (shareholders).

The owners of the shares of the standard company can be both legal or physical (natural) persons. Minimum number of shareholders is one. There are no restrictions for foreign individuals and legal entities to become shareholders of Latvian standard company. Owners (shareholders) makes the so-called "global" decisions regarding company. For example, the appointment of the board of directors, the distribution of profit.

Board of member of directors (valde).

The board of members of directors is a management institution of company. Only individuals can be members of the board of directors (no legal entities allowed). So, another company can not be a director. The minimum number of members of board of directors - one natural person. There are no restrictions for foreigners to be a member of board of directors. The board of directors fulfil the operational (daily) management of the company.

On 1st January, 2015 the amendments to the law "About taxes and duties" came into force. According to the amendments in certain cases directors have personal financial responsibility for tax debts of a company. According to the article 60 of the law The State Revenue Service has rights to begin the process of company's tax debt recovery from person, which was a director at the moment when tax debts arose if all following conditions are met:

• the total amount of tax arrears exceeds 50 minimum monthly wages;
• decision to recover tax debts reported to a legal entity (that is, the State Revenue Service informed the company about the recovery of tax debts);
• it is stated that, after arising of tax debts, a company disposed assets to certain categories of persons (spouses, family members, caregivers, and certain legal entities);
• made an official act of the impossibility of recovery;
• entity has not complied with the obligation to apply for insolvency.

If at the time when the tax debts arose, the company had more than one board member (director), then all members of the board are jointly and severally liable.

Legal address.

Company need a legal address in Latvia. According to commercial law, legal address is the address where the company management is located. In Latvia, a rather common situation is the granting of rights to use the legal address (owner of real estate gives permission to register the legal address of the company in his real estate).
The legal address must be registered in the National address register.

Name (firm) of a company.

Major (more common) requirements with respect to the name:

• A name must contain only Latin and Latvian letters.
• A name must be different from already registered names.

You can check a name (if not used) on the website of the Register of enterprises or on lursoft.lv.

Documents received after the registration.

The decision of state notary about registration. On special request, for additional payment can receive registration certificate and certified copy of articles of association. All documents are in the Latvian language.

What are the registration expenses?

Expenses for the small capital company and the standard company are different.
Expenses for the small capital company are following:

• State duty - 20 euro.
• Payment for publication - 14.23 euro.

Expenses for the standard company are following:

• State duty - 150 euro.
• Payment for publication - 27.03 euro.

Possible additional expenses.

• Certification of signatures. If to certify before sworn notary then price for certification of one signature is 20 euro. If you sign documents with secure electronic signature, then do not need to pay for notary services.
• If you submit documents in paper form, then must pay 4 euro for services of the Register of enterprises./
• Depending on circumstances may need to pay for bank services.
• Payment for preparation of documents.
• Payment for legal address.

Accounting requirements.

Company must do accounting. Accounting registers must be in Latvian and source documents must be located in Latvia. Need to submit annual return. Audit is necessary only if two of following criteria are exceeded: balance 400 000 euro (until 01 January 2014, - 250 000 lats), net turnover 800 000 euro (until 01 January 2014, - 500 000 lats), average number of employees during year - 25.

Publicly available information about company.

Any person, paying small fee can get information about company (for example, information about shareholders, directors, annual return).