Legal status and regulation
From the 8th of October 2004 it is possible to establish a new type of undertaking in Latvia – a European Company (Societas Europaea – SE), which can transfer its registered office from one EU Member State to another without liquidation of the company or creation of a new legal entity in another Member State. SE may transfer its registered office not only within the EU, but also to Iceland, Norway and Liechtenstein, which are not EU Member States. Registration of a SE in Latvia is performed by The Register of Enterprises. SE is treated like Public Limited Company (PLC) and is governed by the regulations of the respective Member State on operation of such companies.
The subscribed capital of SE shall not be less than EUR 120’000.
Establishment of the SE
The SE may be formed by already existing companies in the following ways:
1. The joint stock companies merge and form a SE, if at least two of companies are governed by the law of different Member States.
2. The joint stock companies and limited liability companies form a holding SE, if at least 2 of companies are governed by the law of different Member States, or if at least 2 of companies had for at least 2 years a subsidiary governed by the law of another Member State or a branch situated in another Member State.
3. The joint stock companies and limited liability companies form the subsidiary SE if at least 2 of companies are governed by the law of different Member States, or if at least 2 of companies had for at least 2 years a subsidiary governed by the law of another Member State or a branch situated in another Member State
4. A joint stock company itself transforms into SE, if the company at least 2 of companies had for at least 2 years had a subsidiary in another Member State.
5. A SE itself forms a subsidiary as a SE.
Until 2004, in order to transfer the registered office of a company to another EU Member State one had to liquidate the company in its origin country and to establish a new company in the desired EU Member State or had to carry out merging or absorption procedures.
Transfer of European company or Societas Europaea
Operations of a SE are governed by the laws of the state where the registered office of the respective SE is located. Before the registered office can be transferred, a certificate confirming that all necessary actions and formalities are concluded and changes can be made must be obtained from the competent public authority. A SE cannot transfer its registered office in case of liquidation, insolvency, cessation of payments or other similar processes.
A management or administration body must prepare a report explaining and justifying all legal and economic aspects of the transfer and also explaining how this transfer will affect shareholders, creditors and employees. Each Member State may adopt regulations regarding SEs registered in this state to ensure decent protection of rights of those minority shareholders, who are against the transfer of the registered office.
According to the Regulation, a SE which has transferred its registered office to another Member State shall be considered, in respect of any cause of action arising prior to the transfer as determined in paragraph 10, as having its registered office in the Member States where the SE was registered prior to the transfer, even if the SE is sued after the transfer.