Mergers, divisions and changes in the form of Latvian companies fall under the reorganization rules. Here is the summary of main legal points which must be taken into account in reorganizations in Latvia.
Mergers
Merging can take the form of an acquisition or a consolidation.
– An acquisition is the process in which the acquired company transfers all of its property to the acquiring company.
– A consolidation is when two or more companies transfer all of their property to a newly founded acquiring company.
In the case of a merger, the acquired company ceases to exist without liquidation procedures. All the rights and obligations of the acquired companies are transferred to the acquiring company. The shareholders of the acquired companies shall become shareholders of the acquiring company.
Division of companies
Division is a process by which the dividing company transfers all its property to one or more acquiring companies through splitting up or divesting its sets. In the case of splitting up, the dividing company transfers all its property to two or more acquiring companies and ceases to exist without liquidation procedures. But in the case of divestiture, the dividing company transfers part of its property to one or more acquiring companies and the dividing company shall continue to exist. The acquiring company can be an already existing company or a newly founded company.
All the shareholders of the dividing company or part of them become shareholders of the acquiring company. Alternatively, the dividing company can become the sole shareholder of the acquiring company in accordance with a decision regarding the divestiture of the company.
Restructuring
Restructuring is a process in which a company is restructured into a different type of company through acquisition. All rights and obligations of the restructured company are transferred to the acquiring company and the restructured company ceases to exist without liquidation procedures. The shareholders of the restructured company become shareholders of the acquiring company.