

	21 July 2011 Riga
Dear readers, In this Corporate and Employment law newsletter prepared by Corporate and Employment practice group of law office RAIDLA LEJINS & NORCOUS you will find information on recent significant amendments to the Commercial Law and Labour Law, both coming into force in July 2011. With kind regards, Toms Sulmanis Senior Associate
CORPORATE AND EMPLOYMENT LAW NEWS
In this issue:
Amendments to the Commercial Law Amendments to the Labour Law

Recently new amendments to the Commercial Law were introduced dealing amongst other things with the issues related to legal address of the companies, shareholders access to certain documents electronically, place of the General Meeting of shareholders, specific merger rules etc. – entering into force on 1 July 2011; and requiring the true beneficiary owners of the shares to be disclosed – entering into force on 13 July 2011.

Legal address of the companies

As of 1 July 2011 companies will have to prove their right to register their legal address at the premises, i.e., the company will either have to be the owner of the said premises or written consent of the owner of the premises will have to be obtained and submitted to the Commercial Register.

Addresses of Management Board members

Requirement to provide the Commercial Register with the information about the residence address of the Management Board members has been cancelled.

Place of General Meeting of shareholders

Amendments provide that as the general rule General Meeting of shareholders shall be convened within the administrative territory in which the company’s legal address has been registered, unless the company’s Charter provides otherwise.

Access documents electronically

In certain cases when the company’s Management Board can ensure the availability of specific documents to its shareholders electronically, Management Board is no longer required to ensure the availability of the said documents at its legal address. Amendments set forth conditions for electronic availability of the documents.

Specific merger rules

Specific provisions are introduced in case of the merger if the acquiring company owns at least 90% in company to be acquired.

Notification regarding true beneficiaries

Shareholders who own at least 25% of the shares in the company in their name, but for the benefit of a third person are required within 14 days of reaching the 25% shareholding threshold to inform the company and provide the information about the true beneficiary of the shares.

Persons who until 12 July 2011 were not the true beneficiaries of at least 25% of the shares in the company and continue to hold shares for the benefit of the third persons are required to provide the information on the true beneficiaries to the company no later than until 31 December 2011.

The same requirement applies also to the shareholders – legal persons who are not incorporated under EU rules, i.e., in case such companies own more than 25% in a Latvian company they are required to inform the said Latvian company about their founders, shareholders or other persons who are benefiting from the shares.

Person is relieved from the above obligation in case due to objective reasons it is impossible to establish the true beneficiary or obtain certain information about the person. In such a case the company has to be informed about the said reasons.

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On 20 July 2011 amendments to the Labour Law came into force. The amendments deal with two main issues – regulatory framework for temporary work agencies and illegal employment of foreigners. The amendments also provide that the formal notification to the State Employment Agency will no longer be required in cases of reduction of number of staff.

Temporary work agencies

Latvia has implemented the EU Directive 2008/104/EC on temporary agency work. Previously the area was unregulated apart from the fact that temporary work agencies had to obtain licenses from the State Employment Agency. The following main issues are addressed in the new amendments:

It has been re-affirmed that employees are considered as employed by the temporary work agency and not the client.
Agreements prohibiting the temporary agency workers to enter into direct employment relationship with the client shall not be valid.
The client shall ensure that the agency workers have similar working conditions as the client’s permanent employees.
The temporary agency workers shall be obliged to comply with the working procedures and orders of the client.
Agency worker shall be responsible for damages caused to the client as if he/she was directly employed by the client, and vice versa.
At least minimum wage shall be paid to the agency workers in between assignments.

Illegal employment of foreigners

The following new requirements have been introduced in relation to employment of foreigners:

Upon preparation of the employment contract, employer shall demand that the employee presents a visa or residence permit, as well as a work permit (if such permit is necessary).
A general prohibition has been introduced to employ persons that are not entitled to reside in the Republic of Latvia. Employers will not be responsible if they have verified the visa or employment permit but it turns out to be invalid/forged.
Persons which have knowingly subcontracted entity employing persons that are not entitled to reside in Latvia shall be held responsible along with the subcontractor. Such responsibility shall also include joint and several liability for payment of wages.

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The Competition law newsletter is a periodic publication of RAIDLA LEJINS & NORCOUS and should not be construed as legal advice or legal opinion on any specific facts or circumstances. We have used reasonable efforts in collecting, preparing and providing the information in the Competition law newsletter, but we do not warrant or guarantee the accuracy, completeness, adequacy or currency of the information contained herein. The contents are for general informational purposes only, and you are urged to consult a lawyer concerning your situation and any specific legal questions you might have.