Latvia Simplify AGM Compliance

Annual General Meetings (AGMs) play a vital role in corporate governance in Latvia, ensuring transparency, accountability, and compliance with the Latvian Commercial Code. This guide explains legal deadlines, quorum requirements, financial filings, and best practices to help companies manage AGMs efficiently.

Legal Requirements for AGMs

The Latvian Commercial Code mandates that companies hold an AGM within four months after the fiscal year ends. However, big companies have up to seven months if they meet at least two of these criteria:

• Assets exceeding EUR 1.5 million
• Sales exceeding EUR 3.6 million
• An average of 250 employees during the fiscal year

Failing to meet these deadlines can result in fines, suspension of commercial activity, or even company termination.

Calling and Convening the AGM

Board Responsibility: The board of directors must convene the AGM. If they fail to act:

• The council (if established) must convene the meeting.
• If the council also fails, the Commercial Register Office can step in. In this case, the requesting shareholder initially covers the fee.

Notice Requirements: Shareholders must receive AGM notices at least two weeks before the meeting, following the articles of association. If the meeting lacks a quorum, a reconvened meeting can proceed regardless of shareholder attendance.

Quorum and Voting

For a meeting to be valid, shareholders representing at least 50% of voting equity capital must be present, unless the articles of association require a higher threshold. Each fully paid-up share grants one vote, and resolutions pass by a majority vote, unless otherwise required by law or internal regulations.

Financial Filings and Audits

Companies must file financial statements with the Enterprise Register and tax authorities within one month after AGM approval. Companies exceeding these thresholds require a mandatory audit by a sworn Latvian auditor:

• EUR 150,000 in assets
• EUR 300,000 in sales

Penalties for Non-Compliance

Failing to hold the AGM or submit annual accounts on time may lead to:

• Fines for directors and auditors.
• Suspension or termination of company activities.

Participation and Proxies

Shareholders may attend AGMs in person or appoint a proxy. The proxy authorization must be in writing and attached to the meeting minutes. In stock companies, a proxy is unnecessary if a representative acts under the law.

Dividend Distribution

Dividends go to shareholders with fully paid-up shares, based on AGM decisions. If shareholders fail to claim dividends within 10 years, the amount reverts to the company.

Signing and Filing Documentation

Companies can sign AGM-related documents using:

• EU-compliant e-signatures
• Handwritten (wet-ink) signatures

Signed documents must be filed with the Commercial Register Office, either electronically or in printed form, and retained at the company’s registered seat.

Best Practices for AGM Compliance

1. Plan Ahead: Schedule AGMs early to meet deadlines.
2. Ensure Proper Notification: Follow legal notice rules to avoid procedural challenges.
3. Facilitate Participation: Allow remote access or proxy voting for better shareholder engagement.
4. Submit Filings on Time: Late filings can lead to unnecessary penalties.

Final Thoughts on Managing AGMs in Latvia

Staying compliant with Latvian AGM regulations ensures corporate stability and strong governance. Companies that meet deadlines, follow notification rules, and maintain transparency operate more efficiently and avoid legal risks.

Klea offers tailored solutions to streamline compliance and simplify corporate governance. For more insights into processes in other jurisdictions, explore our article, Essential Strategies for Triumph in AGMs: The Ireland Perspective.