LATVIA Law and Practice Contributed by: Jānis Kārkliņš, Annija Kārkliņa, Ēriks Krēsliņš and Rihards Strads, BERG
5.6 Annual Entity Maintenance and Accounting Compliance
usually structured through ordinary companies or, where collective investment is intended, through an alternative investment fund (AIF) under the Law on Alternative Investment Funds and Managers Thereof. An AIF may be established as an aggregate of assets, a limited partnership or a joint-stock company. The main advantage of an AIF is that it provides a regulated structure for pooling capital from multiple investors and investing it in accordance with a defined investment policy. This may be attractive where pro - fessional management, a clearer governance frame - work and greater credibility in the eyes of investors are important. By contrast, where there is no need for a regulated multi-investor structure, an AIF will often mainly involve more supervision, higher costs and more formal requirements than an ordinary company. In such cases, a standard company structure may be more practical. 5.4 Minimum Capital Requirement For limited liability companies, the minimum capital is EUR2,800. However, for a joint-stock company, equity capital may not be less than EUR25,000. 5.5 Applicable Governance Requirements For a limited liability company, the mandatory govern - ance bodies are the shareholders’ meeting and the management board. A supervisory board is optional. The shareholders’ meeting has exclusive authority over the most important matters. The management board, as the executive body, acts in accordance with the Commercial Law and the company’s articles of association, and represents the company. For a joint-stock company, the governance bodies are the shareholders’ meeting, the supervisory board and the management board. Across both forms, there is a beneficial ownership disclosure requirement. Changes relating to the ben - eficial owner must be filed with the Latvian Register of Enterprises within 14 days, and such information is publicly accessible.
Annual maintenance and accounting compliance costs in Latvia depend on the volume and complexity of the vehicle’s activity. For a simple limited liability com - pany used to hold real estate, outsourced account - ing and annual reporting typically cost approximately EUR1,500 to EUR5,000 per year. For a joint-stock company, the annual cost is usually higher, common - ly around EUR3,000 to EUR8,000 per year, reflecting more formal governance and reporting requirements. These figures exclude statutory audit or review costs, payroll costs for management, tax advice and other transaction-specific legal or compliance expenses. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time Under Latvian law, a person, company or other organi - sation may be entitled to occupy or use immovable property for a limited period under a lease agreement, an agreement granting usufruct rights, or a loan for use (ie, use without compensation), and may also acquire specific rights in another person’s immovable property, such as superficies rights or servitudes. 6.2 Types of Commercial Leases There are no different types of commercial leases in Latvia. 6.3 Regulation of Rents or Lease Terms Rent and lease terms are regulated by the Civil Law, though the default rules may be varied by agreement, provided that they do not contradict mandatory pro - visions. However, the regulation of residential lease agreements is enshrined in a separate legislative act, namely the Residential Tenancy Law. 6.4 Typical Terms of a Lease The typical terms of a lease of business premises are outlined below: • the lease is usually a fixed term but can be an indefinite one as well; • the tenant is generally responsible for routine main - tenance and minor repairs of the leased property,
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