LATVIA Law and Practice Contributed by: Jānis Kārkliņš, Edijs Brants, Pauls Zeņķis and Kristens Vorslavs, BERG
3.7 Debt Buyback A borrower or sponsor may generally buy back debt, provided that there is mutual agreement among all parties and that the terms of the original debt agree- ment are adhered to. This is usually done through assignment or novation. However, debt buybacks are not very common in Latvia. 3.8 Public Acquisition Finance There are no specific provisions under national law that directly regulate the concept of “certain funds” with respect to public acquisition finance transac- tions. Under national law, in the case of a request to buy back shares in a company whose shares have been admitted to trading on a regulated market, the offeror shall submit to the competent authority a doc- ument certifying that sufficient resources are available to fulfil the obligations provided for in the offer. 3.9 Recent Legal and Commercial Developments Refinancing Mortgage Loans Since 2024, amendments to several laws and regu- lations have come into force to simplify mortgage refinancing for residents between lenders, including reducing the costs of refinancing. Collateral Agents Since the summer of 2024, the appointment, replace- ment, and dismissal of syndication credit collateral agents and collateral agents for debt securities, as well as their rights and obligations and the ownership of financial resources and other property under the jurisdiction of the collateral agent, have been estab- lished in the Credit Institutions Law and the Financial Instruments Market Law. Sanctions Given the geopolitical situation, there is an increasing focus on sanctions, and financing transactions must be conducted in clear compliance with the resulting rules. 3.10 Usury Laws Latvia does not have a specific usury law setting an absolute maximum interest rate, but consumer credit regulations and statutory provisions effectively limit exploitative lending. The Consumer Rights Protec-
information regarding their ultimate beneficial owner (UBO). An alternative to trusts in the Latvian legal system is provided by foundations and funds, which are recog- nised as legal entities functioning similarly to trusts, with property legally separated from their founders and supporters. Latvian investment funds must be officially registered and managed by a licensed or registered management company, ensuring regula- tory compliance and professional oversight. In recent years, the use of foundations and funds has grown significantly, becoming a popular and effective instru- ment for asset management. 3.6 Loan Transfer Mechanisms In Latvia, loan transfer mechanisms are primarily based on cession (assignment) and, in certain cases, novation. Cession The most common mechanism for transferring loans is cession. The lender transfers its rights to another party under an agreement. The borrower’s consent is not required, but the borrower must be notified for the transfer to be enforceable against them. Novation Less common, novation extinguishes the original obli- gation and replaces it with a new one. This requires the borrower’s explicit consent and is typically used when substantial changes to the loan terms are involved. Transfer of Associated Security Package In the case of cession, the benefit of security interests follows the loan automatically under Latvian law; how- ever, in the case of novation, the original claim, along with all related rights, shall be regarded as terminated, as if fully performed. A new claim shall then be estab- lished in its place, which shall not inherit the ancillary rights of the original claim, unless agreed otherwise. However, in both cases the transfer requires registra- tion with the relevant public registers (eg, the Land Register for mortgages or the Commercial Pledge Register for commercial pledges) to be fully effec- tive against third parties and ensure protection of the security rights.
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