More than a year ago – on May 2, 2013 – the Latvian Parliament adopted changes to Latvian Commercial Law (Komerclikums – LV., KCL). These amendments took effect on July 1, 2013. Their aim is to prevent the unlawful takeover of companies. With a view to achieving this objective, the Latvian legislature has chosen to significantly increase the number of documents requiring notarized signature and to regulate more strictly the recording of the shareholders register and transfer of shares. It should be noted that the above mentioned amendments are not evaluated unequivocally by legal practitioners and scholars. There is an opinion that Latvian legislature has failed to achieve its own objective – to bring security to the business environment. Instead the new order has created a disproportionate burden for business activities.
The requirement for notarized signatures is often described as one of the most cumbersome, but in reality, this request is not as severe as it may seem at first glance.
Notarized signature
Following these amendments, the signature of a person shall be notarized on documents – such as applications regarding procuration, minutes of shareholders’ and council meetings, change of board members, register of shareholders, amendments to the articles of association, etc. At the same time KCL provides that the requirement to notarize the signature is deemed as complied with if the signature has been certified by a sworn notary or an official of the Commercial Register Office or – if the document is drawn up in electronic form – it has been signed by a secure electronic signature. Hence the person, whose signature in this case must be notarized, has two options: first, he or she can go directly to the sworn notary or the official of the Commercial Register Office; second, the person can sign documents electronically at a time and place convenient for him or her.
Secure electronic signature
Until relatively recently, in Latvia an electronic signature was used rarely and with scepticism. Now, however, it is being used more and more frequently. It should be emphasized that the use of an electronic signature is particularly suitable for foreign investors. Still, when using the opportunities offered by an electronic signature, one must take into account two important factors: (1) if at least one of the persons who has to sign the document uses a secure electronic signature, it must also be used by the others, and (2) all such persons shall have a secure electronic signature issued by the certified service provider in the same EU jurisdiction. In Latvia the only certified service provider is the Latvian State Radio and Television Centre (Latvijas Valsts Radio un Televīzijas centrs), whose secure electronic signature can be issued to foreigners if they obtain a Latvian residence permit. Inter alia, a Latvian temporary residence permit is also available to foreigners who have been registered in the Commercial Register as a members of the board of directors or a member of the council, proctor, administrator, liquidator or a member of a partnership having the right to represent the partnership.
In conclusion, although positive development is taking place slowly, Latvian legislation is moving toward a more secure and modern business environment. Merchants must be flexible and ready to use the opportunities provided by law and technical development.
Author
Katrina Salmgrieze
ECOVIS Convents, Riga, Latvia
The requirement for notarized signatures is often described as one of the most cumbersome, but in reality, this request is not as severe as it may seem at first glance.
Notarized signature
Following these amendments, the signature of a person shall be notarized on documents – such as applications regarding procuration, minutes of shareholders’ and council meetings, change of board members, register of shareholders, amendments to the articles of association, etc. At the same time KCL provides that the requirement to notarize the signature is deemed as complied with if the signature has been certified by a sworn notary or an official of the Commercial Register Office or – if the document is drawn up in electronic form – it has been signed by a secure electronic signature. Hence the person, whose signature in this case must be notarized, has two options: first, he or she can go directly to the sworn notary or the official of the Commercial Register Office; second, the person can sign documents electronically at a time and place convenient for him or her.
Secure electronic signature
Until relatively recently, in Latvia an electronic signature was used rarely and with scepticism. Now, however, it is being used more and more frequently. It should be emphasized that the use of an electronic signature is particularly suitable for foreign investors. Still, when using the opportunities offered by an electronic signature, one must take into account two important factors: (1) if at least one of the persons who has to sign the document uses a secure electronic signature, it must also be used by the others, and (2) all such persons shall have a secure electronic signature issued by the certified service provider in the same EU jurisdiction. In Latvia the only certified service provider is the Latvian State Radio and Television Centre (Latvijas Valsts Radio un Televīzijas centrs), whose secure electronic signature can be issued to foreigners if they obtain a Latvian residence permit. Inter alia, a Latvian temporary residence permit is also available to foreigners who have been registered in the Commercial Register as a members of the board of directors or a member of the council, proctor, administrator, liquidator or a member of a partnership having the right to represent the partnership.
In conclusion, although positive development is taking place slowly, Latvian legislation is moving toward a more secure and modern business environment. Merchants must be flexible and ready to use the opportunities provided by law and technical development.
Author
Katrina Salmgrieze
ECOVIS Convents, Riga, Latvia
