New Registration Procedure for Representative Offices

Activities of Foreign Merchants
Legal Status
Registration Procedure
Amendments to the Register
Termination of Activities
Other Changes

New regulations adopted by the Latvian Cabinet of Ministers, entitled Procedure for Registration of Representative Offices and Representatives of Foreign Merchants and Organizations, took effect on October 1 2002. The regulations replace Cabinet of Ministers Decision 107 on the Procedure for Establishment and Operation of Representative Offices of Foreign Companies in the Republic of Latvia, dated April 19 1991.

The regulations apply not only to newly registered representative offices of foreign companies, but also to existing representative offices.

Activities of Foreign Merchants

A representative office is one of several ways in which a foreign company can establish a presence in Latvia. Foreign companies have the choice of:

• establishing a new limited liability company or joint stock company, or investing in the share capital of existing companies;
  
  
• opening a branch; or
  
  
• opening a representative office.

Unlike the other forms of activity, however, a representative office does not have the right to conduct business activities in Latvia.

Legal Status

Representative offices must be registered in order to obtain legal status. The representative office is deemed open and may commence activities once it has been registered with the Register of Representative Offices. Similarly, its operations are deemed to have terminated as of the date on which an entry to this effect is made in the register. The registration of representative offices is undertaken by the Latvian Register of Enterprises.

Registration Procedure

In order to have a representative office registered, the foreign company must submit an application, signed by its authorized representative, to the Register of Enterprises. The following documents must be filed alongside the application:

• proof of the foreign company's registration or legal status in its home country;
  
  
• documents evidencing its decision to open the representative office and its authorization of the appointed representative;
  
  
• its articles of association or similar documents; and
  
  
• proof of payment of the state fee for registration.

If all the necessary information has been submitted, the Register of Enterprises must register the representative office and enter the following information in the Register of Representative Offices:

• the representative office's registration number and the date on which it was registered;
  
  
• the name, registered address and registration number of the foreign company;
  
  
• the foreign company's country of residence;
  
  
• the main types of activity in which the foreign company engages;
  
  
• information regarding the foreign company's representative;

• the foreign company's registered address;
  
  
• the anticipated duration of activities in Latvia, if this is desired;
  
  
• information regarding registered amendments, terminations of activity and prohibition notes; and
  
  
• information on the person submitting the application.

Following receipt of the application the Register of Enterprises has 15 days in which to decide whether to register the representative office as requested. The state notary of the Register of Enterprises will refuse to register the representative office if the necessary documentation has not been submitted or does not comply with the legal requirements, or if there are other legal barriers to registration.

The registration takes effect once the state notary of the Register of Enterprises has electronically authorized the relevant entry. The effects of the decision can be postponed in certain circumstances, but in any case for no later than one month from the date on which this entry is made.

Once registered, each representative office receives a registration certificate stating:

• the office's registration number and date of registration;
  
  
• the name of the foreign company;
  
  
• the representative office's registered address;
  
  
• information on the foreign company's representative; and
  
  
• other information.

Amendments to the Register

In the case of changes to the information set out in the Register of Representative Offices, the manager of the representative office has one month in which to submit an application to the Register of Enterprises indicating the specific details which must be amended. Additional documents confirming the changes must also be submitted, and a state fee paid. If the amendments include changes to the information on the registration certificate, the registration certificate must also be submitted to the Register of Enterprises, which will issue a new certificate reflecting the amendments.

Termination of Activities

The activities of the representative office will terminate if:

• the foreign company decides to close the representative office;
  
  
• the foreign company goes into liquidation;
  
  
• the representative office is re-registered as a branch; or
  
  
• the representative office violates normative acts.

If the representative office has violated normative acts which govern its establishment and operation, the state notary of the Register of Enterprises will decide whether its activities must terminate on the basis of a court ruling. Notice of the termination of the representative office's activities and the annulment of its registration certificate must be published in the official state newspaper Latvijas Vestnesis.

Where the activities of the representative office are terminated for other reasons, the following information must be submitted to the Register of Enterprises:

• an application to terminate activities;
  
  
• the original registration certificate;
  
  
• proof of payment of the state fee for termination; and
  
  
• documents evidencing (i) the decision to terminate the representative office's activities or to reorganize the representative office into a branch, or (ii) the liquidation of the foreign company, as the case may be.

Other Changes

Under the new regulations, representative offices are no longer issued permits to conduct activities for a specified term. Representative offices may now continue to operate indefinitely, unless they themselves choose to specify a term of operation.

For existing representative offices and representatives, if the term stated in the original permit expired before October 1 2002, the Register of Enterprises will now decide whether to terminate their activities. If the specified term of activity expires after October 1 2002, the representative office will be entitled to continue operations after the expiry date by submitting an application for a registration certificate to the Register of Enterprises. The following documents must be attached to the application:

• the original permit to open the representative office;
  
  
• the representative's certificate (if issued);
  
  
• proof of the foreign company's registration or legal status in its home country;
  
  
• documents evidencing its decision to open the representative office and its authorization of the appointed representative; and
  
  
• its articles of association or similar documents.

Information regarding existing representative offices is to be re-registered with the new Register of Representative Offices by December 31 2002.

For further information on this topic please contact Filip Klavins at Klavins & Slaidins by telephone (+371 703 5222) or by fax (+371 703 5252) or by email ([email protected]).