Deadline approaching for filing annual reports with the State Revenue Service (SRS).
Under the Law on Annual Reports, all companies must file with the SRS an annual report approved by the shareholders’ meeting no later than one month after approval and no later than four months after the end of the reporting year. This means that if a company’s reporting year is the same as the calendar year, the deadline is 30 April. An exception is made for:
- larger companies that comply with the criteria set by the Law on Annual Reports and
- the parent companies of a group of companies which prepares a consolidated annual report.
These companies may file their annual report no later than seven months after the end of the reporting year.
In addition to the annual report and an auditor’s statement on the annual report (for those companies that meet the criteria listed in the Law on Annual Reports, as well as companies whose articles of association or shareholders’ meeting requires the annual report to be reviewed by an auditor), the Commercial Law requires a board proposal to be prepared before approval of the annual report on distribution of profit (or in the case of losses on improving company financial status) and, if the company has a council, a report from the council on the annual report. Moreover, under the Law on Groups, dependent companies must prepare a statement of dependence unless a group agreement has been concluded, in which case this must be filed with the Commercial Register.
The annual meeting of shareholders to approve the annual report must be held no later than the deadline mentioned above. A notice convening the meeting must be sent to shareholders of private limited liability companies at least two weeks before the meeting, while for joint-stock companies the deadline is at least 30 days before the meeting. Along with the notice convening the meeting, the following must be sent to shareholders: the annual report, statement of dependence, auditor’s statement, a report from the council and board proposal. Joint-stock companies need not append these last mentioned documents to the notice convening the meeting as long as the notice contains information about the place and time where the shareholder may access them at the registered address of the company.
The annual report must be filed only with the SRS, along with explanations on approval of the annual report by the shareholders’ meeting or shareholders’ meeting minutes (or an extract) approving the annual report.
Amendments to corporate documents in relation to the euro and terms for document submission
As a result of introduction of the euro, a company’s share capital and the old nominal value of a share in lats must be expressed in euro. To do so, the board should convene a shareholders’ meeting as required by law and the articles of association. The agenda of the shareholders’ meeting must contain an item on changing the denomination of share capital from lats to the euro and another item on amendments to the articles of association.
The re-denominated nominal value of the share capital and a single share in euro must be filed for registration with the Commercial Register. If companies denominate nominal value and file supporting documents with the Commercial Register by 30.06.2016, and no other amendments are introduced to the company's articles of association, several preferences apply to the denomination procedure:
- the decision amending the articles of association due to transfer to the euro can be adopted at a shareholders’ meeting by a simple majority of votes;
- if the decision of the shareholders’ meeting on amendments to the articles of association relates only to denominating the nominal value of the share capital and share from lats to euro, there is no need to observe the requirement to certify signatures on certain documents before a notary public and the company is released from payment of state duty for registration of changes in the Commercial Register and publishing an announcement in the official gazette Latvijas Vēstnesis.
However, if transfer to the euro is not completed by the above deadline, the Commercial Register will automatically convert the share capital from lats to euro in compliance with the official exchange rate (EUR 1 = LVL 0.702804). In this case, the company's management board still needs to organise denomination of the share capital and nominal value of shares from lats to euro and file the supporting documents with the Commercial Register when any other changes are notified to the Commercial Register for registration.
After 30.06.2016, preferences will not apply to denomination. The decision to amend the articles of association needs to follow the requirements of the Commercial Law or the articles of association, minutes of shareholders' meetings and articles of association have to be approved before a notary public, and state duty must be paid to register the changes with the Commercial Register and publish the information in the official gazette Latvijas Vēstnesis.
We recommend including the issue of re-denominating the share capital in the agenda for the annual general meeting of shareholders approving the annual report (or in the agenda of any other upcoming shareholders’ meeting).
For more information on changing the denomination of the nominal value of shares from lats to the euro please follow the link.
Reminder to file the first section of the shareholders' register with the Commercial Register
We remind clients that the Commercial Law sets specific requirements for organising shareholders' registers, and all SIAs need to file the first section of their shareholders' register, signed before a notary public, with the Commercial Register (alternatively to notarisation – the documents may be signed by a safe electronic signature or in the presence of an official of the Commercial Register).
The obligation to file the first section of the shareholders' register by 30.06.2015 applies to all SIAs with two or more shareholders. Failure to file the first section of the shareholders’ register with the Commercial Register within the deadline can result in a warning or monetary fine from EUR 70 to EUR 430 on SIA management board members imposed by the Commercial Register. Likewise, SIAs with one shareholder need to file the first section of the shareholders' register with the Commercial Register, but this becomes mandatory only at the moment when changes are introduced in the composition of an SIA's shareholders or share capital. Upon preparing documents to express the share capital in euro, it is important to check whether the SIA's management board has already filed the first section of the shareholders' register with the Commercial Register.
If the SIA management board files the first section of the shareholders' register together with documents on expressing the share capital in euro, that section of the shareholders' register must be signed before a notary.
In turn, if the SIA
- has already filed the first section of the shareholders' register with the Commercial Register and
- prepares a new section of the shareholders' register to express the share capital in euro, and
- files the application to express the share capital in euro with the Commercial Register by 30.06.2016,
then the preferential procedure can apply to signing the section of the shareholders' register, that is, there is no need to sign this section before a notary public.
SIAs with two or more shareholders that have not filed the first section of the shareholders' register with the Company Register should definitely file it as soon as possible to mitigate the risk of administrative fines for not filing documents with the Commercial Register within deadline.