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Pursuant to the recommendations of the European Commission and following the example of stock exchanges in most European countries, the Riga Stock Exchange has issued Principles of Corporate Governance and Recommendations on Their Implementation. The recommendations aim to create a uniform and easy-to-implement system establishing effective corporate governance and resolution of conflicts principles.
Including: Corporate Entities; Legal Framework; Management Structure; Removal of Directors; Management Rules and Authority; Duties and Liabilities of Directors; Transactions with Directors and Conflicts; Disclosure; Company Meetings; Minority Shareholder Action; Internal Controls, Accounts and Audit; Corporate Social Responsibility; Role of General Counsel; Reform.
The government has given its support to amendments to the Commercial Law which aim to facilitate the registration of new limited liability companies, prevent unsubstantiated freezing of capital in cases of liquidation and alleviate the administrative burden for capital undergoing reorganization and internal audit by removing the requirement for formal approval of the appointed auditor by the Register of Enterprises.
The Saeima (Parliament) has amended the Commercial Law, adding a new chapter on commercial transactions. The new chapter will introduce to the legal system provisions regulating commercial transactions, with the aim of increasing the speed and simplicity of commercial relationships, providing them with greater stability and allowing for higher levels of trust and responsibility between parties.
The absence of regulation on commercial transactions had long been considered one of the most significant drawbacks of the Commercial Law. The Saeima recently supplemented the law with a chapter entitled "Commercial Transactions", containing general provisions on commercial transactions, as well as special provisions on specific types of commercial transaction.
Parliament has approved the draft Law on Amendments to the Law on the Register of Enterprises. Among other things, the draft law will provide that documents may be submitted to the Register of Enterprises electronically and will allow data and documents to be disclosed to the public in electronic format. The draft law must be approved at three readings before it comes into effect.
The Cabinet of Ministers has approved amendments to the Consumer Protection Law. The amendments will incorporate the requirements of the relevant EU directives on equal treatment of consumers and the protection of their rights and interests without distinction of gender, race or ethnic origin.
The Cabinet of Ministers reviewed two draft laws in the field of consumer rights. One of the draft laws is designed to secure the protection of consumers' economic interests by prohibiting sellers and service providers from using unfair and aggressive commercial practices.
Including: Types of Merger; Consequences of Merger; Preconditions of Merger; Compensation of Dissenting Shareholders.
The Saeima (Parliament) has adopted amendments to several laws, including the Law on Reinsurance, the Law on the Market for Financial Instruments, the Law on Credit Institutions and the Law on Insurance Companies and Supervision Thereof, giving effect to the provisions of the EU Acquisitions Directive. The amendments apply to the operations of financial market participants.
In comparison to the period of economic boom, during the last year the number of M&A transactions in Latvia has dropped considerably. Foreign and local investors are still interested in certain sectors of the Latvian economy; however, the present economic downturn has had a considerable impact on M&A activities, which have now almost come to a halt.
The amendments to the Law on Completion of Privatization of the State and Municipal Property and Use of Privatization Certificates recently came into force. The new amendments lift the restrictions on the privatization of land in Jurmala and Riga, and prescribe that it will be possible to use privatization certificates instead of compensation certificates in these areas.
The Cabinet of Ministers has adopted several regulations amending the laws and regulations dealing with privatization. The amendments were adopted to deal with the high number of privatization applications received between July 1 2006 and August 31 2006. Municipalities have one year from the submission date to review applications for privatization.
The Latvian Parliament has amended the Financial Instruments Market Law in order to ensure compliance with the EU Directive on Takeover Bids. The amendments affect share redemption offers by providing new or updated definitions, more detailed procedures and additional powers, and clarifying the share redemption procedures.
In Latvia, due diligence is increasingly utilized as a tool for examining the target company's operations before the acquisition of shares. Prior to or after signing an agreement on the purchase of shares, the purchaser may itself or through its representatives perform a due diligence investigation into the company, usually comprising financial, legal and organizational enquiries.
New draft amendments to the Law on Insurance of Maternity and Sickness shorten the disbursement period during which employee sick pay is covered by the employer. As from January 1 2009, the employer must pay sick pay for the first 10 calendar days of illness. On the eleventh calendar day, this responsibility shifts to the State Social Security Agency.
The Saeima has adopted a new draft Insolvency Law in the first reading. If its adoption goes smoothly it will be the third law to have been introduced regulating the insolvency of companies and individuals within two years. The draft law aims to speed up insolvency proceedings in many ways and establishes rights and obligations of involved parties in more detail and more accurately.
Amendments are planned to a number of laws relating to insolvency proceedings in order to improve the efficiency of insolvency procedures and support the rehabilitation of companies that are experiencing financial difficulties. To this end, amendments are planned to the Insolvency Law, the Civil Procedure Law and the Credit Institutions Law.
The Cabinet of Ministers has approved the draft amendments to the Insolvency Law, which aim to improve the regulation of restructuring procedures for companies which have temporary financial difficulties and are expected to develop a programme to restore their solvency in full. The amendments also reduce the administrator's monthly fee from three monthly minimum salaries to one.
Parliament has passed the draft Law on Turnover of Goods of Strategic Significance at the first reading. Its aim is to ensure the controlled turnover of goods with strategic significance in accordance with Latvia's national and international interests, and to prevent terrorism and the proliferation of weapons of mass destruction.