Text consolidated by Valsts valodas centrs (State
Language Centre) with amending laws of:
18 June 2015 [shall come
into force on 3 July 2015];
16 June 2016 [shall come into force from 6 July
2016];
15 March 2018 [shall come into force from 3 April
2018].
If a whole or part of a section has been amended, the
date of the amending law appears in square brackets at
the end of the section. If a whole section, paragraph or
clause has been deleted, the date of the deletion appears
in square brackets beside the deleted section, paragraph
or clause.
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The Saeima1 has adopted and
the President has proclaimed the following Law:
Law on
Governance of Capital Shares of a Public Person and Capital
Companies
Division
A
General Provisions
Chapter I
Terms Used in this Law, Purpose and Scope of this Law
Section 1. Terms Used in the Law
(1) The following terms are used in this Law:
1) capital shares - capital shares in a limited
liability company or stocks in a stock company;
2) capital shares of a public person - capital shares
in a limited liability company or stocks in a stock company
belonging to a public person;
3) capital company of a public person - a capital
company, in which all capital shares or voting stocks belong to
one public person;
4) capital company controlled by a public person - a
capital company, in which one or several public persons have a
direct decisive influence;
5) public private capital company - a capital company,
in which all capital shares or voting stocks belong to several
public persons;
6) private capital company - a capital company, in
which capital shares or stocks belong to a public person and
another person (except owners of employee stocks);
7) subsidiary company - a capital company, in which a
capital company of a public person or a public private capital
company has obtained a direct decisive influence on the basis of
participation within meaning of the Group of Companies Law;
8) State capital shares - capital shares belonging to
the State in a limited liability company or stocks in a stock
company;
9) State capital company - a capital company in which
all capital shares or voting stocks belong to the State;
10) capital shares of a derived public person - capital
shares in a limited liability company or stocks in a stock
company belonging to a derived public person;
11) capital company of a derived public person - a
capital company, in which all capital shares or voting stocks
belong to one derived public person;
12) capital shares of a local government - capital
shares belonging to a local government in a limited liability
company or stocks in a stock company;
13) local government capital company - a capital
company, in which all capital shares or voting stocks belong to
one local government;
14) highest decision-making body of a public
person:
a) in relation to the management of State capital shares and
capital companies - the Cabinet,
b) in relation to the management of local government capital
shares and capital companies - the local government council,
c) in relation to the management of capital shares of derived
public persons, except local governments - in accordance with the
law governing the operation of the respective derived public
person;
15) corporate governance - an aggregate of measures for
achieving the operational objectives of the capital company and
operational control of the capital company, as well as for
assessment and governance of risks related to the operation of
the capital company;
16) non-financial objectives - objectives of the
capital company, which arise from the general strategic objective
determined for the capital company, from legal acts and policy
planning documents, and are related to providing the carrying out
of the functions specified for the public person;
17) financial objectives - objectives of the capital
company related to the status of its financial operation
(including profitability, capital structure, turnover, dividends,
and profit);
18) general strategic objectives - objectives of the
capital company specified by the highest decision-making body of
the public person, which the public person wants to achieve
through participation in the capital company and which arise from
legal acts and policy planning documents;
19) medium-term operational strategy - a document for
planning the operation of the capital company for a time period
of at least three years, on the basis of which the operation of
the capital company, the profit share to be disbursed in
dividends, and the budget of the capital company are planned.
(2) Other terms in this Law are used within the meaning of the
Commercial Law, the Group of Companies Law, and the State
Administration Structure Law.
Section 2. Purpose of this Law
The purpose of this Law is to promote efficient management of
capital shares belonging to a public person and capital companies
of a public person, rational and economically justified use of
resources of capital companies of a public person, conformity
with the principles of good corporate governance, as well as to
ensure conformity with the conditions for participation of a
public person.
Section 3. Application of this
Law
(1) This Law determines the procedures by which:
1) a public person shall obtain, terminate and change the
amount of participation in capital companies;
2) obligations of the public person as of a shareholder
(stockholder) of a capital company are fulfilled and rights are
exercised;
3) capital companies of a public person and public private
capital companies, as well as subsidiary companies are
managed;
4) capital companies of a public person are established,
operate and are liquidated;
5) capital companies of a public person are reorganized;
6) capital shares of a public person shall be alienated;
7) a capital company of a public person shall become a private
capital company or a public private capital company;
8) a capital company of a public person is restructured into
an institution or a public agency.
(2) The activities provided for in this Law shall be performed
in conformity with the laws and regulations governing the control
of aid to commercial activity.
(3) The provisions of the Commercial Law and the Group of
Companies Law shall be applied to issues that are not governed by
this Law.
(4) The provisions of this Law shall be applicable to the
operation of credit institutions, unless it is laid down
otherwise in the Credit Institution Law.
(5) The provisions of this Law shall be applicable to taking
over of credit institutions, unless it is laid down otherwise in
the Law on Taking Over of Banks.
(6) The provisions of this Law shall be applicable to the
operation of the public electronic mass media, unless it is laid
down otherwise in the Electronic Mass Media Law.
[15 March 2018]
Chapter
II
Participation of a Public Person and Capital Company of a Public
Person and Decisive Influence in a Capital Company
Section 4. Conditions for
Participation of a Public Person
(1) A public person may obtain and keep participation in a
capital company according to Section 88 of the State
Administration Structure Law.
(2) A capital company of a public person and a public private
capital company may have participation in another capital
company, if one of the following conditions is in effect:
1) the operation of the capital company conforms to the
conditions regarding participation of the public person provided
for in Section 88, Paragraph one of the State Administration
Structure Law;
2) the participation directly ensures achieving of general
strategic objectives and objectives determined in the medium-term
operational strategy of the capital company of the public person
or public private capital company.
(3) In addition to the conditions referred to Paragraph two of
this Section, a capital company, which wants to obtain
participation in another capital company, prior to taking a
decision, shall submit an assessment to the highest
decision-making body of a public person, whether participation in
another capital company will provide rational and economically
justified use of resources of the capital company, in conformity
with the principles of good corporate governance.
[15 March 2018]
Section 5. Obtaining and Change of
Participation
(1) The decision to obtain participation of a public person or
to obtain or terminate decisive influence in a capital company
shall be taken by the highest decision-making body of the
respective public person.
(2) The highest decision-making body of the respective public
person shall give a permission for the capital company of a
public person to obtain participation, to obtain decisive
influence or to terminate decisive influence in another capital
company.
(3) The decision on the necessity of a public private capital
company to obtain participation, to obtain decisive influence or
to terminate decisive influence in another capital company taken
by the highest decision-making body of the respective public
person shall be binding to the representative of the holder of
capital shares, implementing the rights of a shareholder
(stockholder) in a meeting of shareholders (stockholders) and
deciding on the abovementioned issue.
(4) The decisions referred to in Paragraphs one, two, and
three of this Section shall include:
1) an assessment in relation to conformity with the conditions
of Section 4 of this Law;
2) the general strategic objective.
(5) Paragraphs two and three of this Section shall not be
applied to capital companies, which operate as credit
institutions or as investment companies.
Section 6. Prohibition to Conclude a
Group of Companies Contract
(1) A capital company of a public person or a public private
capital company shall not be permitted to conclude the group of
companies contracts provided for in the Group of Companies
Law.
(2) If it is intended, in a meeting of shareholders
(stockholders) of a capital company controlled by a public
person, to decide to conclude a group of companies contract with
another capital company, specified in the Group of Companies Law,
the representative of the holder of capital shares of the public
person has a duty to vote in a way that ensures non-concluding of
the group of companies contract with the capital company, thus
exercising the rights of the shareholder (stockholder).
(3) The capital company of a public person or the public
private company shall ensure that its subsidiary companies do not
conclude the group of companies contracts provided for in the
Group of Companies Law with other capital companies.
Section 7. Revaluation of
Participation
(1) A public person has a duty, not less than once in five
years, to revaluate each of its direct participations in a
capital company and the conformity thereof with the conditions of
Section 4 of this Law. This requirement shall not be applied, if
it is laid down in the law that the capital shares or stocks of
the respective capital company are not to be alienated.
(2) The decision to retain participation of a public person in
capital companies shall be taken by the highest decision-making
body of the respective public person. The decision shall
include:
1) an assessment in relation to conformity with the conditions
of Section 4 of this Law;
2) the general strategic objective.
Section 8. Legal Consequences upon
Obtaining Decisive Influence
(1) If a capital company of a public person obtains all
capital shares or voting stocks in another capital company
(dependent capital company), then:
1) the dependent capital company shall draw up a medium-term
operational strategy in accordance with Section 57 of this
Law;
2) the profit share to be disbursed as dividends of the
dependent capital company shall be determined in accordance with
the Section 28 or 35 of this Law;
3) the executive board and the supervisory board of the
dependent capital company shall be nominated in conformity with
the following conditions:
a) the process of nomination shall be public,
b) candidates of the executive board and supervisory board
members shall be selected on the basis of the criteria of
professionalism and competence;
4) the dependent capital company may establish a council only
in the case referred to in Section 106, Paragraph one of this
Law;
5) the number, monthly remuneration, bonuses and withdrawal
benefit to members of the executive board and supervisory board
of the dependent capital company shall be determined in
conformity with the restrictions laid down in this Law;
6) the dependent capital company shall publish the information
regarding the capital company in accordance with Section 58,
Paragraphs one and two of this Law.
(2) The holder of capital shares shall ensure that in a
capital company controlled by a public person:
1) the medium-term operational strategy is drawn up in
accordance with Section 57 of this Law;
2) information regarding the capital company shall be
published in accordance with Section 58, Paragraphs one and two
of this Law;
3) the profit share to be disbursed as dividends shall be
determined in accordance with Section 28 or 35 of this Law.
(3) The capital company of a public person shall ensure that
its subsidiary companies:
1) do not obtain participation in another capital company,
except the case when it conforms to that laid down in Section 4,
Paragraph two, Clause 1 of this Law and a permit of the highest
decision-making body of the respective public person has been
received;
2) the medium-term operational strategy is drawn up in
accordance with Section 57 of this Law;
3) information regarding the capital company is published in
accordance with Section 58, Paragraphs one and two of this
Law;
4) the profit share to be disbursed as dividends is determined
in accordance with Section 28 or 35 of this Law.
(4) In the dependent capital companies referred to in
Paragraph one of this Section, in which the council is not
established, the meeting of shareholders (stockholders) shall
carry out the tasks of the council in accordance with Section
292, Paragraph one of the Commercial Law.
(5) In the dependent capital companies referred to in
Paragraph one of this Section, in which the supervisory board is
not established, the executive board must receive a consent of
the meeting of shareholders (stockholders) for deciding on the
issues specified in Section 294, Paragraph one of the Commercial
Law.
(6) The conditions of this Section shall not be applied to
subsidiary companies operating as credit institutions, investment
companies or capital companies registered abroad.
[18 June 2015; 15 March 2018]
Section 9. Termination of
Participation
(1) The highest decision-making body of the respective public
person shall take a decision to terminate participation of the
public person in a capital company.
(2) The highest decision-making body of the respective public
person shall take a decision to terminate the participation of
the capital company of a public person in another capital
company.
(3) The decision to terminate participation of a public
private capital company in another capital company taken by the
highest decision-making body of the public person shall be
binding to the representative of the holder of capital shares,
exercising the rights of the shareholder (stockholder) in the
meeting of shareholders (stockholders) and deciding on the
abovementioned issue.
(4) The procedures for terminating participation of a public
person shall be indicated in the decisions referred to in
Paragraphs one, two and three of this Section.
(5) Paragraphs two and three of this Section shall not be
applied to capital companies, which operate as credit
institutions or as investment companies.
Division
B
Administration of Capital Shares of a Public Person
Part III
Holder of Capital Shares and Representative of a Holder of
Capital Shares
Section 10. Holder of State Capital
Shares
(1) A holder of State capital shares in a capital company
shall be:
1) a ministry or other State administration institution
appointed as the holder of State capital shares by the
Cabinet;
2) the institution, which alienates or privatizes State
capital shares in accordance with this Law or the law On
Privatisation of State and Local Government Property Objects.
(2) The Cabinet shall determine the ministry, which is of
significance in management of specific State capital shares in
the respective sector (hereinafter - the sectoral ministry).
(3) State capital shares in one capital company may have only
one holder.
(4) If the holder of State capital shares is reorganised, the
institution, which is the successor to the rights and obligations
of the holder of capital shares, shall become the holder of the
respective capital shares, unless the Cabinet determines other
holder of State capital shares.
(5) If the holder of State capital shares is liquidated, the
Cabinet shall appoint another holder of State capital shares.
Section 11. Holder of Capital Shares
of a Derived Public Person
(1) A holder of capital shares of a derived public person in a
capital company shall be:
1) a derived public person to which such capital shares
belong;
2) a State administration institution, appointed as the holder
of capital shares of a derived public person by the Cabinet
according to request of the highest decision-making body of the
derived public person.
(2) Capital shares of a derived public person in one capital
company may have only one holder.
(3) If the respective derived public person is reorganised,
the derived public person, which is the successor to the rights
and obligations of the reorganised derived public person, shall
become the holder of capital shares belonging thereto, unless it
is determined otherwise in the decision to reorganise the derived
public person.
(4) If the respective derived public person is liquidated, the
holder of capital shares belonging thereto shall be determined in
a law or a decision to liquidate the derived public person.
Section 12. Ministry as the Holder
of Capital Shares
(1) If a ministry is the holder of State capital shares,
decisions of the holder of capital shares provided for in this
Law shall be taken by the State Secretary of the ministry or
another official of the ministry determined by an order of the
State Secretary, who has all the rights, obligations and
responsibility of the representative of the holder of capital
shares provided for in laws and regulations (hereinafter - the
representative of the holder of capital shares).
(2) In the absence of the official of the ministry (leave,
illness or other similar situation when the functions of the
representative of the holder of capital shares are not ensured)
referred to in Paragraph one of this Section, the State Secretary
of the ministry is entitled to take decisions of the holder of
capital shares by himself or herself or to authorise another
official of the ministry for taking of such decisions in the
absence of the abovementioned official. In the absence of the
State Secretary the respective decisions shall be taken by the
person who fulfils the duties of the State Secretary.
(3) The State Secretary of the ministry shall appoint a
responsible employee from amongst the public officials of the
ministry, who shall provide the necessary information to him or
her or the official appointed by the order of the State
Secretary, fulfilling the duties of the representative of the
holder of capital shares, and prepare documents so that the State
Secretary or the respective official could fulfil the functions
of the holder of capital shares in a State capital company,
public private capital company or private capital company or to
take decisions in the meeting of shareholders (stockholders) in a
State capital company.
(4) The representative of the holder of capital shares shall
fulfil his or her duties in conformity with the official duties
specified for him or her at the respective ministry and receive
remuneration for the fulfilment of such duties within the scope
of the monthly wage determined for the position. A supplement for
the fulfilment of the respective duties may be determined for the
responsible employee in accordance with Section 14 of the Law on
Remuneration of Officials and Employees of State and Local
Government Authorities, if the duties of the responsible official
are to be considered as additional duties. The representative of
the holder of capital shares and the responsible employee may not
receive remuneration for any legal transactions, which have been
concluded with the respective capital company.
Section 13. Another State
Administrative Institution as the Holder of Capital Shares
(1) If the holder of capital shares of a public person is
other State administrative institution, the head of the
respective institution (hereinafter - the representative of the
holder of capital shares) shall take the decisions of the holder
of capital shares provided for in this Law or other laws and
regulations governing commercial activity.
(2) In the absence of the head of the institution (leave,
illness or other similar situation when functions of the
representative of the holder of capital shares are not ensured),
the decisions referred to in Paragraph one of this Section shall
be taken by person who fulfils the duties of the head of the
institution.
(3) The head of the institution shall appoint the responsible
employee from amongst the officials of the institution, who shall
provide the necessary information to him or her and prepare
documents so that the head of the institution could fulfil the
functions of the holder of capital shares in a capital company of
a public person, public private capital company or private
capital company, or take decisions in the meeting of shareholders
(stockholders) in a capital company of a public person.
(4) The representative of the holder of capital shares shall
fulfil his or her duties in conformity with the official duties
specified for him or her in the respective institution and
receive remuneration for the fulfilment of such duties within the
scope of the monthly wage determined for the position. A
supplement for the fulfilment of the respective duties may be
determined for the responsible employee in accordance with
Section 14 of the Law on Remuneration of Officials and Employees
of State and Local Government Authorities, if the duties of the
responsible official are to be considered as additional duties.
The representative of the holder of capital shares and the
responsible employee may not receive remuneration for any legal
transactions, which have been concluded with the respective
capital company.
Section 14. Local Government as the
Holder of Capital Shares
(1) If a local government is the holder of capital shares of a
local government, the decisions of the holder of capital shares
provided for in this Law shall be taken by the chairperson of the
local government council (hereinafter also - the representative
of the holder of capital shares).
(2) The local government council may hand over the right of
decision-making of the holder of local government capital shares
to the vice-chairperson of the local government council, to the
executive director of the local government council or to the head
of such city (municipality) local government unit, which is
assigned to manage the respective local government capital shares
(hereinafter - the representative of the holder of capital
shares).
(3) In the absence of the chairperson of the local government
council or the official referred to in Paragraph two of this
Section (leave, illness or other similar situation when the
functions of the representative of the holder of capital shares
are not ensured), decisions of the representative of the holder
of capital shares shall be taken by the person who fulfils the
duties of the chairperson of the local government council, of the
executive director or of the head of the respective local
government unit.
(4) The chairperson of the local government council shall
appoint a responsible employee from amongst the employees of the
local government or local government institution, or the official
referred to in Paragraph two of this Section from amongst the
employees of the subordinate units, who shall provide the
necessary information to the chairperson of the supervisory board
or the respective official and prepare documents so that the
chairperson of the supervisory board or the respective official
could fulfil the functions of the holder of capital shares in a
local government capital company, private capital company or
public private capital company or to take decisions in the
meeting of shareholders (stockholders) in a local government
capital company. The responsible employee may not be appointed,
if fulfilment of the duties of the responsible employee is within
the competence of a unit established by the local government.
(5) The representative of the holder of capital shares shall
fulfil his or her duties in conformity with the official duties
specified for him or her at the respective local government and
receive remuneration for the fulfilment of such duties within the
scope of the monthly wage determined for the position. A
supplement for the fulfilment of the respective duties may be
determined for the responsible employee in accordance with
Section 14 of the Law on Remuneration of Officials and Employees
of State and Local Government Authorities, if the duties of the
responsible official are to be considered as additional duties.
The representative of the holder of capital shares and the
responsible employee may not receive remuneration for any legal
transactions, which have been concluded with the respective
capital company.
Section 15. Derived Public Person,
Except of the Local Government as a Holder of Capital Shares
(1) If the holder of capital shares of a derived public person
(except local government) is a derived public person, the
decisions provided for in this Law of the holder of capital
shares shall be taken by the head of the highest executive body
of the derived public person (hereinafter - the representative of
the holder of capital shares).
(2) The highest decision-making body of the derived public
person may hand over the decision-making rights of the holder of
capital shares of a derived public person to the head of the
institution (unit) established by a derived public person, to
whom the management of capital shares of the derived public
person is assigned (hereinafter - the representative of the
holder of capital shares).
(3) In the absence of the head of the highest executive body
of the derived public person or the official referred to in
Paragraph two of this Section (leave, illness or other similar
situation when the functions of the representative of the holder
of capital shares of a derived public person are not ensured),
decisions of the holder of capital shares shall be taken by the
person who fulfils the duties of the head of the highest
executive body of the derived public person or duties of the head
of the respective institution (unit).
(4) The head of the highest executive body of the derived
public person shall appoint the responsible employee from amongst
the employees of institutions of the derived public person or the
official referred to in Paragraph two of this Section from
amongst the employees of the subordinate institution (unit), who
shall provide the necessary information to the head of the
highest executive body or the respective official and prepare
documents so that the head of the highest executive body or the
respective official could fulfil the functions of the holder of
capital shares in a capital company of the derived public person,
private capital company or public private capital company, or to
take decisions in the meeting of shareholders (stockholders) in
the capital company of the derived public person.
(5) The representative of the holder of capital shares shall
fulfil his or her duties in conformity with the official duties
specified for him or her at the respective derived public person
and receive remuneration for the fulfilment of such duties within
the scope of the monthly wage determined for the position. A
supplement for the fulfilment of the respective duties may be
determined for the responsible employee in accordance with
Section 14 of the Law on Remuneration of Officials and Employees
of State and Local Government Authorities, if the duties of the
responsible official are to be considered as additional duties.
The representative of the holder of capital shares and the
responsible employee may not receive remuneration for any legal
transactions, which have been concluded with the respective
capital company.
[18 June 2015]
Section 16. Duties of the
Responsible Employee
(1) The responsible employee shall inform the representative
of the holder of capital shares regarding each meeting of
shareholders (stockholders) immediately after receipt of a
notification on convening a meeting of shareholders
(stockholders) and acquaints the representative of the holder of
capital shares with the agenda of the meeting.
(2) The responsible employee shall, without delay, provide the
representative of the holder of capital shares with all the
information at the disposal of the employee, which is necessary
for taking of decisions within the competence of the
representative of the holder of capital shares.
(3) The responsible employee shall perform other actions and
tasks assigned to him or her by the representative of the holder
of capital shares in writing.
Section 17. Participation of the
Representative of the Holder of Capital Shares in a Meeting of
Shareholders (Stockholders) of a Public Private Capital Company
or Private Capital Company
(1) The representative of the holder of capital shares shall
represent the holder of capital shares in a meeting of
shareholders (stockholders) of a capital company.
(2) The representative of the holder of capital shares may
authorise the responsible employee or another person (hereinafter
- the authorised person) to represent the holder of capital
shares in the meeting of shareholders (stockholders) of the
capital company. In such case the representative of the holder of
capital shares shall issue a power of attorney and a written
voting assignment to the authorised person in respect of every
issue included on the agenda of the meeting of shareholders
(stockholders). The authorised person may vote in the meeting of
shareholders (stockholders) only according to the voting
task.
(3) If an issue not indicated in the notification on convening
a meeting of shareholders (stockholders) is examined in the
meeting of shareholders (stockholders), the authorised person
shall act as the representative of the holder of capital shares
would act under the respective circumstances in order to achieve
the necessary or the most favourable result.
Section 18. Restrictions Stipulated
for the Authorised Persons of the Representative of the Holder of
Capital Shares of a Public Private Capital Company or Private
Capital Company
(1) The authorised person of the representative of the holder
of capital shares may perform only such actions, which are
provided for by the implementation of the obligations and rights
of a shareholder (stockholder) in a capital company and which are
closely related thereto.
(2) If in addition to the assigned matter the authorised
person has carried out another matter, he or she shall be subject
to the provisions of the Civil Law regarding unauthorised
management in relation to such matter.
(3) The authorised person is prohibited to refuse from
exercising the voting right in a meeting of shareholders
(stockholders) of a public private capital company or private
capital company.
(4) Non-attendance of the meeting of shareholders
(stockholders) after receipt of a respective authorisation shall
also be deemed a refusal to exercise the voting right, if the
authorised person has not informed the representative of the
holder of capital shares regarding his or her inability to
participate in the meeting of shareholders (stockholders) in a
timely manner, which ensures the possibility to authorise another
person for participation in the respective meeting of
shareholders (stockholders).
(5) The authorised person is prohibited to delegate his or her
duties to another person, namely, to perform re-authorisation
(substitution).
(6) The authorised person may not exceed the scope of the
voting task assigned to him or her, and he or she must act
according to instructions of the representative of the holder of
capital shares.
(7) The authorised person who is not a public official shall
receive a prior written consent of the representative of the
holder of capital shares for election of the authorised person as
a member of the executive board or supervisory board, controller
or auditor of the capital company. The authorised person who is a
public official shall receive a permit for holding of multiple
offices in accordance with the procedures laid down in the law On
Prevention of Conflict of Interest in Activities of Public
Officials.
Section 19. Duties of the
Representative of the Holder of Capital Shares in a Public
Private Capital Company or Private Capital Company
(1) The representative of the holder of capital shares shall
provide information and documents to the authorised person
regarding the capital company necessary for successful fulfilment
of the duties of the authorised person.
(2) The representative of the holder of capital shares shall
issue the power of attorney referred to in Section 17, Paragraph
two of this Law, the voting assignment, other documents and
information to the authorised person within a time period, which
ensures the authorised person with a possibility to fulfil his or
her duties.
(3) The representative of the holder of capital shares in a
capital company controlled by a public person shall promote the
implementation of the objectives and tasks laid down in laws,
Cabinet regulations, and approved sectoral development concepts
and strategies, and other documents governing the development of
the sector, as well as the fulfilment of the conditions of this
Law.
Section 20. Resources Necessary for
Fulfilling the Obligations of the Representative of the Holder of
Capital Shares or Authorised Person
The holder of capital shares shall provide the representative
of the holder of capital shares or the authorised person with the
resources necessary for the fulfilment of their obligations,
however, if the representative of the holder of capital shares or
the authorised person utilises his or her own resources, the
holder of capital shares shall, without delay, reimburse such
expenses as soon as the representative of the holder of capital
shares or the authorised person has submitted documents
justifying such expenses.
Section 21. Responsibility of the
Authorised Person
The authorised person shall not be responsible for activities,
which he or she has performed according to the voting assignment
given by the representative of the holder of capital shares
referred to in Section 17, Paragraph two of this Law.
Chapter
IV
Co-ordination Institution
Section 22. Co-ordination
Institution and its Tasks
(1) The Cabinet shall determine the State administration
institution, which shall perform the tasks determined in this Law
and other laws and regulations, the tasks being related to the
management of State capital companies and State capital shares
(hereinafter - the co-ordination institution).
(2) The co-ordination institution shall perform the following
tasks:
1) draw up guidelines for efficient management of capital
companies and capital shares;
2) issue a statement to holders of State capital shares on the
financial objectives set in the medium-term operational strategy
of the capital company and on the financial indicators of the
performance (profit share to be disbursed in dividends, profit
indicators, return on capital, etc.), as well as on the
conformity of such objectives with the non-financial objectives
set in the medium-term operational strategy;
3) advise the Cabinet, holders of capital shares of a public
person, and capital companies on issues related to the
implementation of the corporate governance;
4) arrange training of such members of the executive board and
supervisory board, officials and employees of capital companies
of a public person and of capital companies controlled by a
public person, as well as of officials and employees of holders
of capital shares of a public person whose work duties are
related to the management of capital shares of a public person,
on issues related to corporate governance;
5) ensure that current information is published regarding
State capital companies and capital companies under decisive
influence of the State, as well as ensure the preparation of an
annual public report on State capital companies and State capital
shares in the previous year;
6) issue a statement to the Cabinet on obtaining, maintaining
or terminating State participation, as well as upon request of
the derived public person issue an opinion on obtaining or
terminating participation of the respective derived public person
in a specific capital company;
7) according to the competence draw up and, in accordance with
the procedures laid down in laws and regulations, submit draft
legal acts and policy planning documents to the Cabinet for
approval;
71) co-operate with other State administration,
non-governmental and international institutions in issues related
to the management of capital companies and capital shares;
8) perform other tasks, which are laid down in this Law and
other laws governing the operation of an institution of direct
administration.
[18 June 2015]
Section 23. Rights of the
Co-ordination Institution
(1) In implementing the tasks laid down in Section 22 of this
Law, the Co-ordination Institution has the right:
1) to require and receive from institutions of public persons,
holders of capital shares or State capital companies information
necessary for the performance of the respective tasks;
2) to provide statements on policy planning documents and
legal acts prepared by other State institutions, which directly
or indirectly concern issues related to the management of capital
shares of a public person;
3) [18 June 2015].
(2) The Coordination Institution has the right to perform
other activities permitted in laws and regulations in order to
perform the tasks laid down in the law.
[18 June 2015]
Section 24. Council of the
Co-ordination Institution
(1) In order to ensure efficient management of capital
companies of public persons and capital shares, the Cabinet shall
establish the Council of the Co-ordination Institution.
(2) The Council of the Co-ordination Institution is a
collegial institution, which:
1) reviews the draft guidelines drawn up by the Co-ordination
Institution in the field of management of capital shares of a
public person and co-ordinates them before approval;
2) assesses the statement of the Co-ordination Institution
regarding the draft medium-term operational strategy of a capital
company referred to in Section 26 of this Law, if the holder of
State capital shares or the council of a State capital company
(if such has been established) does not agree with the statement
prepared by the Co-ordination Institution and the holder of State
capital shares or the council of a capital company has requested
to examine the issue at the Council of the Co-ordination
Institution;
3) examines the statement of the Co-ordination Institution
regarding the transaction of a capital company referred to in
Section 26, Paragraph six of this Law, if the holder of State
capital shares or the council of a State capital company (if such
has been established) does not agree with the statement prepared
by the Co-ordination Institution and the holder of State capital
shares or the council of a State capital company has requested to
examine the issue at the Council of the Co-ordination
Institution, and provides an assessment regarding the
abovementioned statement to the holder of State capital shares or
the council of a State capital company;
4) provides proposals to the Co-ordination Institution
regarding other issues related to the management of capital
shares of a public person.
(3) The by-law and staff of the Council of the Co-ordination
Institution shall be approved by the Cabinet. Members of the
Council of the Co-ordination Institution shall not receive any
remuneration for their work in the Council.
[18 June 2015]
Chapter V
Management of State Capital Shares
Section 25. Assessment of the
Necessity for State Participation in Capital Companies
(1) The sectoral ministry or the holder of State capital
shares may propose obtaining or termination of State
participation, as well as obtaining or termination of decisive
influence in a capital company by submitting a respective
proposal to the Cabinet. A conformity assessment of obtaining of
participation or decisive influence with the conditions of
Section 88, Paragraph one of the State Administration Structure
Law in relation to participation of a public person in a capital
company, as well as with the general strategic objective that the
submitter of the proposal offers for the State to achieve through
participation in the capital company, shall be appended to the
proposal.
(2) A statement of the Co-ordination Institution shall be
appended to the proposal referred to in Paragraph one of this
Section and submitted to the Cabinet.
(3) Whenever necessary, but no less than every five years, the
Co-ordination Institution shall ensure that the holder of State
capital shares submits to the Cabinet the assessment of State
participation in the respective capital company and the
conformity of such participation with conditions of Section 4 of
this Law.
(4) If the assessment referred to in Paragraph three of this
Section includes a proposal to retain State participation in a
capital company, the general strategic objective shall be
included therein.
(5) The Co-ordination Institution shall draw up the guidelines
for determination of general strategic objectives of State
participation.
Section 26. Drawing up and
Assessment of the Medium-Term Operational Strategy
(1) If the holder of State capital shares in a capital
company, in which the State holds the decisive influence, is not
a sectoral ministry, prior to approval [application of the voting
right in the meeting of stockholders (shareholders)] of the
medium-term operational strategy drawn up by the capital company
it shall receive a statement of the sectoral ministry and the
Co-ordination Institution.
(2) If the sectoral ministry is the holder of State capital
shares in a capital company, in which the State holds the
decisive influence, prior to approval [application of the voting
right in the meeting of stockholders (shareholders)] of the
medium-term operational strategy drawn up by the capital company
it shall receive a statement of the Co-ordination
Institution.
(3) If a Council has been established in the State capital
company, prior to approval of the medium-term operational
strategy drawn up by the capital company the Council shall
receive a statement of the sectoral ministry and the
Co-ordination Institution.
(4) In the statement referred to in Paragraphs one, two and
three of this Section the Co-ordination Institution shall provide
an assessment of the financial objectives brought forward in the
medium-term operational strategy of the capital company and the
performance financial indicators (profit indicators, profit share
to be disbursed in dividends, return on capital, etc.), as well
as their conformity with the non-financial objectives brought
forward in the medium-term operational strategy. The
Co-ordination Institution shall provide a statement regarding the
medium-term operational strategy within three months after its
receipt.
(5) In the statement referred to in Paragraphs one and three
of this Section, the sectoral ministry shall provide an
assessment of the non-financial objectives brought forward in the
medium-term operational strategy of the capital company and their
conformity with the sectoral policy objectives.
(6) The holder of State capital shares in a State capital
company or the Council of the State capital company (if such has
been established) shall receive a statement of the Co-ordination
Institution prior to approval [application of the voting right in
the meeting of stockholders (shareholders) or in the
decision-making process] of a transaction, which has significant
influence (at least by 15 per cent and such action is not
provided for in the medium-term operational strategy) on the
amount of assets determined in the medium-term operational
strategy of the capital company.
(7) The Co-ordination Institution shall assess the impact of
the transaction referred to in Paragraph six of this Section on
the value of the capital company and achievement of its financial
objectives by evaluating the risks or benefits related to the
planned decisions, long-term costs and alternatives, as well as
expedience of the transaction.
(8) If the holder of State capital shares or the Council of
the State capital company (if such has been established) does not
take into account that indicated in the statement of the
Co-ordination Institution, then in approving the medium-term
operational strategy of the capital company or giving consent to
the transaction referred to in Paragraph six of this Section,
respective arguments are sent to the Co-ordination Institution in
writing.
(9) If the Council of the State capital company (if such has
been established) does not take into account that indicated in
the statement of the sectoral ministry, then in approving the
medium-term operational strategy of the capital company the
Council shall send its arguments to the sectoral ministry in
writing.
(10) If the holder of State capital shares does not take into
account that indicated the statement of the sectoral ministry and
cannot reach an agreement on the non-financial objectives to be
included in the medium-term operational strategy of the capital
company, the respective issue shall be examined by the Cabinet.
In such case, the holder of State capital shares, in approving
the medium-term operational strategy of the capital company
[application of the voting right in the meeting of stockholders
(shareholders)], shall conform to the respective decision of the
Cabinet on the non-financial objectives to be included in the
medium-term operational strategy of the capital company.
(11) The sectoral ministry, the Co-ordination Institution and
the Council of the Co-ordination Institution, which provides a
statement to the holder of State capital shares or the Council of
the State capital company (if such has been established) in
accordance with the procedures laid down in this Law, shall be
responsible for the assessment provided thereby.
(12) If in approving the medium-term operational strategy of
the capital company or giving consent to the transaction referred
to in Paragraph six of this Section the holder of State capital
shares does not comply with that indicated in the statement of
the Co-ordination Institution, the holder of State capital shares
shall be responsible for the respective decision taken.
(13) The holder of State capital shares or the Council of the
State capital company (if such has been established) shall send
the approved medium-term operational strategy of the capital
company to the Co-ordination Institution.
(14) The Co-ordination Institution shall send the assessment
of the Council of the Co-ordination Institution to the holder of
State capital shares or the Council of the State capital company
(if such has been established), if such assessment has been
adopted in accordance with the procedures laid down in Section
24, Paragraph two, Clauses 2 and 3 of this Law.
[18 June 2015]
Section 27. Assessment of
Performance Results of a Capital Company
(1) The Co-ordination Institution shall draw up methods
(guidelines) for a capital company, in which the State holds the
decisive influence, for assessment of its performance results,
providing for that reports on achievement of financial objects
are to be provided according to a unified form.
(2) Each year the representative of the holder of State
capital shares shall assess the achievement of the objectives
bought forward for the capital company in conformity with the
statement of the sectoral ministry and the Co-ordination
Institution.
(3) In the statement referred to in Paragraph two of this
Section the Co-ordination Institution (if it is not the holder of
capital shares) shall provide an assessment on achievement of the
financial objectives determined in the medium-term operational
strategy in the previous year.
(4) In the statement referred to in Paragraph two of this
Section the sectoral ministry shall provide an assessment on
achievement of the non-financial objectives determined in the
medium-term operational strategy of the capital company in the
previous year, as well as proposals for further activities.
(5) In assessing the achieved objectives, the representative
of the holder of State capital shares shall take a decision on
further activities in order to ensure an increase in return on
assets and their value, as well as to achieve the objectives
brought forward in the medium-term operational strategy.
(6) The Co-ordination Institution may propose for the holder
of State capital shares to perform an audit in a capital company
if there are grounds for suspecting inexpedient, inefficient
actions or violations and if substantial risks in relation to the
possibility to achieve the objectives brought forward are
detected.
(7) The Cabinet shall determine the procedures by which the
performance results and financial indicators of the capital
company shall be assessed in accordance with conditions of this
Section.
[18 June 2015]
Section 28. Procedures for
Determining the Profit Share to be Foreseen and Disbursed as
Dividends in a State Capital Company and Public Private Capital
Company where the State is a Stockholder (Shareholder)
(1) The foreseeable profit share to be disbursed in dividends
and the profit share to be disbursed in dividends shall be
determined on the basis of the medium-term operational strategy
of the capital company, the objectives of the capital company
brought forward in the strategy and their implementation.
(2) The executive board of the capital company, on the basis
of the medium-term operational strategy, shall prepare a proposal
on the foreseeable profit share to be disbursed in dividends and
the profit share to be disbursed in dividends, and submit the
proposal to the holder of capital shares.
(3) If the proposal of the executive board of the capital
company on the foreseeable profit share to be disbursed in
dividends and the profit share to be disbursed in dividends
differs from the one determined in the medium-term operational
strategy, the holder of State capital shares shall submit a
proposal to the Ministry of Finance and to the Co-ordination
Institution on justification for the profit share to be disbursed
in dividends.
(4) If the Co-ordination Institution does not reach an
agreement with the Ministry of Finance and the holder of State
capital shares regarding the foreseeable profit share to be
disbursed in dividends and the profit share to be disbursed in
dividends, the holder of State capital shares shall prepare and
submit a draft order to the Cabinet, which shall take a decision
binding to the holder of State capital shares.
(5) The meeting of shareholders (stockholders) shall take a
decision on the profit share to be disbursed in dividends after
approval of the annual account of the company.
(6) The Cabinet shall stipulate, in accordance with the
conditions of this Section, the procedures, by which the profit
share to be disbursed in dividends shall be foreseen in State
capital companies and public private capital companies, in which
the State is a shareholder (stockholder), as well as the actions
of the holder of State capital shares in exercising the right of
the State as the shareholder (stockholder) to decide on the
profit share to be disbursed in dividends.
[18 June 2015; 15 March 2018]
Section 29. Provision of Disclosure
of Information
(1) The Co-ordination Institution shall:
1) provide free access to comparable information regarding
return on State capital, assets and their value, financial
efficiency, disbursement of dividends, and other issues of
importance to the management of capital companies;
2) draw up unified guidelines for the framework of disclosure
of information and provision of reports of capital companies for
State capital companies and holders of capital shares;
3) establish an interactive website on the Internet - a
database providing access to current information regarding State
capital shares and their governance, introduction of corporate
governance principles and individual aspects of governance,
including the following information:
a) a list of capital companies grouped by criteria of the
holder, sector or size, by volume of State participation in the
capital,
b) the average financial results of the group of selected
capital companies,
c) the development of funding allocated by the State by years,
the funding allocated to the group of selected capital companies
or a specific sector,
d) payments of the capital company made into the State budget,
including dividends, tax payments;
4) post the latest information on its website regarding the
current amendments to the laws and regulations directly affecting
the governance of the capital company of a public person and
capital shares, as well as publish explanatory materials.
(2) The holder of State capital shares shall provide the
latest information regarding capital companies, in which it is
the holder of shares, on its website on the Internet, including
the following information:
1) the firm name, legal address, volume of the equity capital
and size of the State participation in the capital company;
2) conformity of State participation with the conditions of
Section 4, Paragraph one of this Law, and the general strategic
objective;
3) participation of the capital company in other companies and
its conformity with the conditions of Section 4, Paragraph two of
this Law;
4) representative of the holder of State capital shares in the
capital company;
5) approved annual account of the capital company;
6) dividends disbursed to the State by the capital company and
payments made into the state budget;
7) information that the State has intended to terminate
participation in the capital company;
8) information regarding the initiated reorganisation or
transformation of the capital company;
9) other information, which the holder of State capital shares
considers as necessary for publishing or publishing of which is
determined in the guidelines drawn up by the Co-ordination
Institution.
(3) If there are objective reasons, due to which the
information referred to in Paragraphs one and two of this
Section, to which the status of commercial secret has been
determined in accordance with Section 19 of the Commercial Law,
cannot be published, the Co-ordination Institution or the holder
of State capital shares shall publish the explanation provided by
the respective capital company.
Section 30. Annual Public Report
(1) The Co-ordination Institution shall, by 1 October of the
current year, prepare and submit to the Cabinet and the
Saeima the annual public report on capital companies and
capital shares belonging to the State in the previous year.
(2) The report referred to in Paragraph one of this Section
shall include information regarding State participation in
capital companies, resources invested by the State and return of
such resources, the services provided by capital companies,
information regarding sectors, in which capital companies with
State participation operate, as well as other information
necessary in order to provide an insight in State capital
companies and capital shares.
(3) In accordance with the procedures stipulated by the
Co-ordination Institution, the holder of State capital shares
shall provide thereto the information necessary for preparation
of the report referred to in Paragraph one of this Section.
[15 March 2018]
Section 31. Procedures for
Nominating Members of the Executive Board and Supervisory
Board
(1) The holder of State capital shares shall ensure nomination
of a candidate for a member of the supervisory board or executive
board (if no supervisory board has been established in the
capital company). The supervisory board of the capital company
(if such has been established) shall ensure nomination of the
candidate of a member of the executive board of the capital
company.
(2) The nomination proceedings of a member of the executive
board and supervisory board shall conform to the principles of
good corporate governance, ensure open, fair and professional
selection of members of the executive board and supervisory
board, promoting the establishment of a professional and
competent administrative institution of the capital company.
(3) Initially the holder of State capital shares or the
supervisory board of the State capital company shall prepare a
list of potential members of the executive board or supervisory
board on the basis of the criteria of professionalism and
competence necessary for the respective candidate of the member
of the executive board or supervisory board. Potential candidates
of members of the executive board and supervisory board are
selected by organising a public application procedure for
candidates, involving recruitment consultants or using other
methods for recruiting personnel.
(4) The following persons may not be nominated as members of
the executive board or supervisory board:
1) a person with no higher education;
2) a person who has been punished for an intentional criminal
offence without extinguishing or removing the criminal
record;
3) a person who on the basis of a decision taken within the
scope of criminal proceedings has been removed the right to
perform a specific or any commercial activity or any other
professional activity;
4) a person whom the court has declared to be an insolvent
debtor.
(5) The holder of State capital shares or the supervisory
board of the capital company (if such has been established) shall
establish a nomination committee, the task of which is to
evaluate the candidates of members of the executive board or
supervisory board. The nomination committee shall include the
representatives nominated by the holder of State capital shares
or the Council (if such has been established) and by the
Co-ordination Institution, as well as independent experts and, if
necessary, observers with advisory rights.
(6) The nomination committee shall nominate a candidate
(candidates) for election to the position of the member of the
executive board or supervisory board from the list referred to in
Paragraph three of this Section.
(7) On the basis of justified arguments, the holder of State
capital shares or the Council has right to reject the candidates
proposed by the nomination committee. In such case the process
for selection of the necessary candidates referred to in this
Section shall be organised repeatedly.
(8) The conditions of this Section, except the restrictions
laid down in Paragraph four of this Section, shall not be
applied, if:
1) after assessing the performance of a member of the
executive board or supervisory board in the previous term of
office, the holder of State capital shares or the supervisory
board has decided to nominate the member for the next term of
office;
2) the candidate of the member of the executive board or
supervisory board cannot be nominated in a time period that would
ensure the capacity to act of the institution of the capital
company. In such case the holder of State capital shares or the
supervisory board (if such has been established) shall appoint
such candidate as the member of the executive board or
supervisory board who complies with the criteria of
professionalism and competence of the respective candidate of the
member of the executive board or supervisory board.
(9) A person elected in accordance with the procedures laid
down in Paragraph eight, Clause 2 of this Section shall fulfil
the official duties until the moment when the holder of State
capital shares or the Council of the State capital company elects
him or her or other candidate to the position in accordance with
the nomination procedures laid down this Section.
(10) The Cabinet shall determine the procedures, by which
candidates shall be nominated for positions of members of the
executive board and the supervisory board in capital companies,
in which the State as the shareholder (stakeholder) has the right
to nominate members of the executive board or supervisory board,
and members of the executive board in State capital companies, in
which the supervisory board has been established.
Chapter
VI
Governance of Capital Shares of a Derived Public Person
Section 32. Procedures for Receiving
the Statement of the Co-ordination Institution
Prior to taking the decision referred to in Sections 5, 7, and
9 of this Law to obtain participation of a derived public person
or to obtain or terminate decisive influence in a capital
company, to revaluate the participation of a derived public
person or to terminate participation in a capital company, the
derived public person may request the Co-ordination Institution
to provide a statement. The Co-ordination Institution shall
provide a statement within one month. The statement of the
Co-ordination Institution shall be of recommendatory nature.
Section 33. Assessment of the
Medium-Term Operational Strategy Drawn up by a Capital
Company
The highest decision-making body of the derived public person
may determine the procedures by which the representative of the
holder of capital shares of a derived public person or the
council of the capital company shall receive and assess the
opinion of individual institutions of derived public persons
before approval of the medium-term operational strategy.
Section 34. Assessment of
Performance Results of a Capital Company
(1) Each year the representative of the holder of capital
shares of a derived public person shall perform a comprehensive
assessment of efficiency of financial activities of the capital
company and achievement of the financial and non-financial
objectives specified in the medium-term operation strategies.
(2) Upon assessing the progress of implementation of
objectives, the representative of the holder of capital shares of
a derived public person shall, as necessary, decide on further
activities in order to ensure return on assets and increase in
value, as well as achievement of the objectives specified in the
medium-term operational strategy.
(3) The highest decision-making body of the derived public
person may determine the procedures by which the representative
of the holder of capital shares of a derived public person shall
assess the performance results of the capital company, referred
to in Paragraph one of this Section.
Section 35. Determination of Profit
Share to be Disbursed in Dividends in a Capital Company, in which
the Derived Public Person has the Decisive Influence
(1) The highest decision-making body of the derived public
person shall stipulate the procedures for determining the profit
share to be disbursed in dividends in a capital company, in which
the derived public person has decisive influence.
(2) In determining the profit share to be disbursed in
dividends in a capital company, in which the derived public
person has decisive influence, the representative of the holder
of capital shares shall take into account the following:
1) the objectives of the capital company and their
implementation;
2) the budget of the capital company and the profit prognosis
included therein;
3) information, included in the medium-term operational
strategy, regarding the planned company budget for next years,
further directions for the development of and attraction of
investments for the capital company, financial investments and
their sources, and other measures increasing the value of the
capital company and further return on capital;
4) the necessity to ensure optimal structure of capital (ratio
between own funds and borrowed capital) by balancing financial
risks, as well as assessing indicators of capital sufficiency and
return.
Section 36. Provision of Disclosure
of Information
A derived public person shall ensure that current information
regarding capital companies, in which it participates, is
published on its website, including the following
information:
1) a list of capital companies grouped by the criteria of
sector or size;
2) the firm name, legal address, size of the equity capital of
the capital company and amount of participation of the derived
public person;
3) conformity of the derived public person with the conditions
of Section 4, Paragraph one of this Law and the general strategic
objective;
4) participation of the capital company in other companies and
its conformity with the conditions of Section 4, Paragraph two of
this Law;
5) the representative of the holder of capital shares of the
derived public person in the capital company;
6) approved annual account of the capital company;
7) the dividends disbursed by the capital company to the
derived public person and payments of the capital company into
the State and local government budgets (including deductibles and
tax payments);
8) information that the derived public person has intended to
terminate participation in the capital company;
9) information regarding the commenced reorganisation or
transformation of the capital company;
10) other information considered by the derived public person
necessary to be published.
Section 37. Procedures for
Nominating the Executive Board and Supervisory Board of a Derived
Public Person
(1) The highest decision-making body of a derived public
person shall determine the procedures for nominating candidates
of members of the executive board and supervisory board in a
capital company, in which the derived public person as a
shareholder (stockholder) has the right to nominate members of
the executive board or supervisory board, and members of the
executive board in a derived capital company of a public person,
in which the supervisory board has been established. In
determining the procedures for nomination, the following
conditions are taken into account:
1) the process of nomination is open;
2) candidates of members of the executive board and
supervisory board are chosen on the basis of the criteria of
professionalism and competence.
(2) The following persons may not be nominated as members of
the executive board or supervisory board:
1) a person with no higher education;
2) a person who has been punished for an intentional criminal
offence without extinguishing or removing the criminal
record;
3) a person who on the basis of a decision taken within the
scope of criminal proceedings has been removed the right to
perform a specific or any commercial activity or any other
professional activity;
4) a person whom the court has declared to be an insolvent
debtor.
(3) The procedures laid down in Paragraph one of this Section
shall be binding to the representative of the holder of capital
shares of a derived public person, in choosing a candidate for a
vacant position of the member of the executive board or of the
supervisory board of the capital company, and to the supervisory
board (if such has been established) of the capital company of a
derived public person, in choosing a candidate for the vacant
position of the member of the executive board of the capital
company.
(4) The conditions of this Section, except the restrictions
laid down in Paragraph two of this Section, shall not be applied
if:
1) after assessment of the performance of the member of the
executive board or supervisory board during the previous term of
office, the holder of capital shares of a derived public person
or the supervisory board has decided to nominate the member for
the next term of office;
2) the candidate of the member of the executive board or
supervisory board cannot be nominated in a time period that would
ensure the capacity to act of the institution of the capital
company. In such case the representative of the holder of capital
shares of a derived public person or the supervisory board (if
such has been established) shall appoint such candidate as a
member of the executive board or supervisory board who complies
with the criteria of professionalism and competence necessary for
the respective candidate of the member of the executive board or
supervisory board.
(5) The person elected in accordance with the procedures laid
down in Paragraph four, Clause 2 of this Section shall fulfil the
duties of the position until the moment when the representative
of the holder of capital shares of a derived public person or the
council of the capital company of the derived public person
elects him or her or other candidate to the position in
accordance with the procedures for nominating laid down in this
Section.
[18 June 2015]
Division
C
Capital Companies of a Public Person and Public Private Capital
Companies
Chapter
VII
General Provisions for Governance of Operation of Capital
Companies of a Public Person and Public Private Capital
Company
Section 38. Stocks of a Stock
Company of a Public Person
Stocks of a stock company of a public person and of a public
private stock company may not be an object of public circulation,
except cases when the highest decision-making body of the
respective public person takes a decision to alienate the stocks
by quoting them on the stock market in accordance of Division H
of this Law.
Section 39. Capital Company with
Supplemental Liability
A capital company of a public person and a public private
capital company may not be founded as a capital company with
supplemental liability.
Section 40. Exceptions from the Duty
of Certifying a Signature of a Public Person
(1) A signature of the representative of the holder of capital
shares of a public person on an application of a capital company
of a public person and a public private capital company in the
Commercial Register need not be publicly certified.
(2) Also signature of a person regarding issuance, revocation
of a procuration or any changes in its amount, as well as on
documents to be appended to the application to be submitted to
the Commercial Register, which are referred to in Section 10,
Paragraph two, Clause 2 of the Commercial Law, except the consent
of a person specified in Sub-clauses "f" and "g" of this Clause
to take the position of the member of the executive board or
liquidator of the capital company, need not be publicly
certified.
Section 41. Requirements to be
Conformed to in Governance of a Public Private Capital
Company
All the requirements and restrictions laid down in Divisions
B, D, and E of this Law, which are applicable to the executive
board and supervisory board, as well as members of the executive
board and supervisory board of a capital company of a public
person (including the criteria for establishment of the
supervisory board, the requirements for members of the executive
board and supervisory board, determination of monthly
remuneration, restrictions on disbursement of premiums and other
requirements laid down in this Law), shall be conformed to in the
governance of a public private capital company.
Chapter
VIII
Founding of a Capital Company of a Public Person
Section 42. Founding of a State
Capital Company
(1) The Cabinet shall determine the following in an order
regarding foundation of a State capital company:
1) the firm name of the capital company;
2) the type of the capital company;
3) the amount of equity capital of the capital company and
type of its payment;
4) the holder of capital shares of the capital company;
5) other issues related to founding of the capital
company.
(2) The holder of capital shares shall carry out the functions
of the founder of a State capital company laid down in this Law,
issuing respective orders.
Section 43. Founding of a Capital
Company of a Derived Public Person
(1) The following shall be indicated in a decision to found a
capital company of a derived public person:
1) the name and address the location of the capital company of
a derived public person;
2) the firm name of the capital company;
3) the type of the capital company;
4) the amount of equity capital of the capital company and
type of its payment;
5) the holder of capital shares of the capital company;
6) other issues related to founding of the capital
company.
(2) In the decision, no specific right or privilege during
founding of the capital company shall be specified to any
person.
(3) The representative of the holder of capital shares of a
derived public person shall carry out the functions specified in
this Law for the founder of a capital company of a derived public
person, taking respective decisions or signing documents.
Section 44. Documents of
Incorporation of a Capital Company
(1) Documents of incorporation of a State capital company are
a Cabinet order on founding of a capital company, an order of the
holder of capital shares (Section 45 of this Law) and articles of
association of the capital company.
(2) Documents of incorporation of a capital company of a
derived public person are a decision to found a capital company
issued by the highest decision-making body of the derived public
person and articles of association of the capital company.
Section 45. Orders of the Holder of
State Capital Shares
(1) The provisions of the Commercial Law regarding a
memorandum of association (Section 143, Paragraph five of the
Commercial Law) shall apply to orders of the holder of State
capital shares.
(2) The holder of State capital shares shall indicate the
following information regarding the founder of a State capital
company in the order:
1) the name and address of the State administration
institution;
2) the given name, surname, personal identification number and
position of the person who signs the order.
(3) In an order of the holder of State capital shares, no
specific right or privilege during founding of the capital
company shall be specified for any person.
Section 46. Articles of Association
of a Capital Company
(1) A capital company of a public person shall operate on the
basis of articles of association, which are drawn up according to
standard articles of association of a capital company of a public
person (hereinafter - standard articles of association).
(2) Standard articles of association shall be approved by the
Cabinet.
(3) The conditions of standard articles of association may be
different from the provisions of this Law and the Commercial Law
only if these laws directly allow such difference.
(4) Conditions of articles of association of a capital company
of a public person may differ from provisions of standard
articles of association only if standard articles of association
directly allow such difference.
(5) The meeting of shareholders (stockholders) shall approve
the articles of association of a capital company of a public
person. In such case the representative of the holder of capital
shares shall sign the articles of association (also amendments
thereto) of the capital company of the public person.
Section 47. Election of the
Executive Board, Supervisory Board and Auditor of a Capital
Company
The executive board and supervisory board established until
registration of the company is elected, as well as the auditor is
appointed for a full term of office.
Section 48. Activities Prior to
Entering a Capital Company in the Commercial Register
The holder of capital shares may not act on behalf of the
capital company to be founded before it is entered into the
Commercial Register, except performance of activities directly
related to founding of the capital company.
Chapter
IX
Equity Capital of a Capital Company of a Public Person and Public
Private Capital Company
Section 49. Evaluation of Financial
Investment
(1) The financial investment shall be evaluated in accordance
with Section 154 of the Commercial Law.
(2) If the equity capital of a capital company of a public
person is paid with financial investment, the total value of
which does not exceed EUR 14 000, the holder of capital shares
may assess the financial investment and provide a statement.
Section 50. Consequences of
Non-conformity with the Time Period for Paying a Share
If a public person does not pay the full price of the signed
share within the time period of payment for capital shares
indicated in the provisions for increase of equity capital, only
the paid amount of shares in the capital company shall be
registered for the public person.
Chapter X
Liability, Prohibition of Competition and Prevention of a
Conflict of Interest
Section 51. Liability of Members of
the Executive Board and Supervisory Board, a Shareholder
(Stockholder) and Holder of Capital Shares
(1) A member of the executive board and supervisory board of a
capital company of a public person and a public private capital
company shall not be liable for losses caused to the capital
company, if he or she has acted as a prudent and careful manager,
and also in good faith according to a lawful decision of the
highest decision-making body of a public person, meeting of
shareholders (stockholders), a shareholder (stockholder) or the
representative of the holder of capital shares.
(2) If losses to the capital company of a public person or its
dependent capital company, or to the capital company under its
decisive influence are caused by implementing a lawful decision
of the shareholder (stockholder) or the representative of the
holder of capital shares, the respective shareholder
(stockholder) or the representative of the holder of capital
shares shall be liable for them. If losses to the capital company
of a public person or its dependent capital company, or to the
capital company under its decisive influence are caused if the
meeting of shareholders (stockholders), executive board (if any
has been established) and supervisory board implements a lawful
decision of the highest decision-making body of a public person,
the highest decision-making body of a public person shall be
responsible for them and shall decide on the covering thereof.
The shareholder (stockholder) who voted for taking of the
abovementioned decision shall be liable for losses caused to the
public private capital company by implementation of a lawful
decision of the meeting of shareholders (stockholders).
(3) The capital company of a public person and public private
capital company may release a member of the executive board or
supervisory board from liability or enter into settlement with
him or her (within the meaning of Section 173 of the Commercial
Law) for activities performed, if the meeting of shareholders
(stockholders) makes a respective decision.
[15 March 2018]
Section 52. Prohibition of
Competition and Prevention of a Conflict of Interest for Members
of the Executive Board of a Capital Company
(1) A member of the executive board of a capital company of a
public person and a public private capital company must comply
with the following in his or her activities:
1) the provisions of the Commercial Law in relation to
restrictions on concluding transactions with the related
person;
2) the prohibition of competition (Section 171 of the
Commercial Law);
3) the restrictions determined in the law On Prevention of
Conflict of Interest in Activities of Public Officials.
(2) If a member of the executive board of a capital company of
a public person and a public private capital company violates the
restrictions laid down in Paragraph one, Clause 2 of this
Section, the capital company has the right to request
compensation for losses or recognition of respective transactions
as such, which are concluded on behalf of the capital company,
and transfer of the derived income or right of claim it to the
capital company.
(3) The claims referred to in Paragraph two of this Section
shall expire within six months from the day when other members of
the executive board, supervisory board (if such has been
established) or the representative of the holder of capital
shares have discovered the violation of the prohibition of
competition, but not later than within five years from the day of
committing the violation.
[15 March 2018]
Chapter
XI
Annual Account and Profit Distribution of a Capital Company
Section 53. Auditor
The executive board or supervisory board of a capital company
of a public person and a public private capital company may not
object to the auditor elected by the meeting of shareholders
(stockholders).
Section 54. Approval of the Annual
Account of a Capital Company
The executive board of a capital company of a public person
and a public private capital company shall ensure that the annual
account (Section 174 of the Commercial Law) is prepared and the
meeting of shareholders (stockholders) is convened in order to
approve the annual account of the capital company by 30 April of
the respective year (included), but if the capital company,
according to the criteria of the Law on the Annual Financial
Statements and Consolidated Financial Statements, is a
medium-sized or large capital company, or the capital company is
the parent capital company of a group of companies, which
prepares a consolidated annual account - by 31 May of the
respective year (included), if international agreements do not
provide for otherwise.
[16 June 2016]
Section 55. Disbursement of Cash
Funds of a Capital Company to the Holder of Capital Shares
(1) The cash funds of a capital company of a public person and
a public private capital company may be disbursed to the
shareholder (stockholder) in conformity with the restrictions
specified in Section 182 of the Commercial Law.
(2) The cash funds disbursed by a capital company of a public
person and a public private capital company shall be transferred
into the budget of the respective public person.
Section 56. Distribution of Profit
of a Capital Company of a Public Person
(1) The meeting of shareholders (stockholders) of a State
capital company shall determine the profit share to be disbursed
dividends in conformity with Section 28 of this Law.
(2) The meeting of shareholders (stockholders) of a capital
company of a derived public person shall determine the profit
share to be disbursed in dividends in conformity with Section 35
of this Law.
(3) The meeting of shareholders (stockholders) of a capital
company of a public person shall determine the principles for
distribution of the profit of the capital company in conformity
with the performance results of the capital company and the
medium-term operational strategy.
Chapter
XII
Individual Issues Related to the Governance of a Capital
Company
Section 57. Drawing up of the
Medium-Term Operational Strategy
(1) A capital company of a public person and a public private
capital company shall draw up the medium-term operational
strategy, taking into account:
1) the general strategic objectives of the capital company
determined by the highest decision-making body of the public
person;
2) the non-financial objectives brought forward by the
sectoral ministry or institution of a derived public person (if
applicable);
3) the financial objectives of the capital company, as well as
result-based parameters characterising the operational efficiency
of the capital company (for example, market share, efficiency of
disbursement and processes, customer satisfaction, productivity
of employees).
(2) The council of the capital company or the meeting of
shareholders (stockholders) (if council has not been established)
shall approve the medium-term operational strategy drawn up by
the capital company.
(3) The Co-ordination Institution shall prepare the guidelines
for drawing up of the medium-term operational strategy. Such
guidelines shall be of recommendatory nature in relation to a
capital company of a derived public person and a public private
capital company.
(4) The medium-term operational strategy includes at least the
following information:
1) general information regarding capital company [firm name of
the capital company, amount of equity capital, composition of
stakeholders (shareholders) and the number of shares belonging to
them, payments made into State or local government budget,
information regarding received financing from State or local
budget, information regarding the property structure (including
participation in other companies), type of operation, history,
governance model of the capital company];
2) information regarding the business model, including
products and services of the capital company;
3) analysis of strengths and weaknesses of the capital
company;
4) market analysis, description of competitors and
clients;
5) general strategic objectives of the capital company;
6) non-financial objectives (if applicable);
7) financial objectives, as well as result-based indicators
characterising the efficiency of operation of the capital
company;
8) forecast profit and loss calculation, balance sheet and
cash flow statement;
9) risk analysis.
[15 March 2018]
Section 58. Publishing of
Information Regarding a Capital Company
(1) A capital company of a public person and a public private
capital company shall publish general strategic objectives of the
capital company, information regarding the types of operation and
commercial activity of the capital company, as well as the
following information on its website, but if there is none - on
the website of the holder of capital shares:
1) at least once in a year:
a) the results of implementation of financial objectives
(according to an approved annual account) and non-financial
objectives (including total sum of balance, net turnover, profit
or loss calculation, cash flow report, different result-based
indicators characterising the operation of the capital
company),
b) the payments made into the State or local government budget
(including dividends, deductions, tax payments),
c) information regarding the received funding of the State or
local government budget and its distribution (if applicable),
d) the principles of remuneration policy,
e) the strategy of donating (giving gifts) and procedures for
donating (giving gifts) of the capital company;
2) the reports drawn up by the capital company:
a) an interim report not checked by a sworn auditor for three,
six, and nine months, and also an annual account not checked by a
sworn auditor (within two months after the end of the reporting
period),
b) an annual account not checked by a sworn auditor (within
five months after the end of the report period);
3) constantly, with necessary updates:
a) information regarding property structure (including
participation in other companies),
b) information regarding organisational structure,
c) information regarding sum of each received and performed
donation (gift) and recipient,
d) information regarding procurements,
e) other significant information unless it is related to
disclosure of a commercial secret,
f) the articles of association,
g) the by-laws of the executive board, supervisory board (if
any has been established) or another equivalent document
regulating the operation thereof,
h) information regarding the members of the supervisory board
(if any has been established) and the executive board (for each
separately): professional work experience, education, positions
in other capital companies, and also the term of office of the
members of the executive board and supervisory board.
(2) If there are impartial reasons, due to which the capital
company cannot publish the information referred to in Paragraph
one of this Section, which has been assigned the status of a
commercial secret in accordance with Section 19 of the Commercial
Law, the capital company shall publish a respective explanation
on its website.
(3) A capital company of a public person and a public private
capital company shall ensure that its subsidiary company also
publishes the information referred to in Paragraph one of this
Section and the explanation referred to in Paragraph two of this
Section.
(4) The interim reports referred to in Paragraph one, Clause
2, Sub-clause "a" of this Section shall be prepared in accordance
with the laws and regulations governing the preparation of annual
accounts, and they shall include:
1) an interim financial report which consists of a balance
sheet, profit or loss statement, a report on changes of the
equity capital, an interim cash flow statement and an appendix.
The appendix shall provide information which ensures
comparability of the balance of interim report with the balance
at the end of the previous reporting period (a balance sheet) or
in the respective period of the previous reporting year (a profit
or loss statement, cash flow statement, report on changes of the
equity capital), as well as sufficient information and
explanations, so that the user of the interim financial report
could obtain a reliable and clear overview regarding any
significant changes in the items of the balance sheet and profit
or loss statement items and regarding the development tendency of
the capital company;
2) an interim governance report that provides information
regarding significant events in the time period from the
beginning of the financial year to the reporting date and
regarding their impact on the interim financial reports,
describes the main risks and indicates those potential uncertain
circumstances which the capital company could face in the coming
months of the financial year and which could affect its financial
position and financial performance;
3) a statement of the liability of the governance, which is
prepared in addition to the statutory requirements regarding
preparation of annual accounts. It shall be indicated in the
statement that, on the basis of the information at the disposal
of the executive board of the capital company, the interim
financial reports are prepared in accordance with the
requirements of the laws and regulations in force and provide a
reliable and clear overview regarding assets, financial position
and profit or loss of the capital company and the consolidated
group, and that the interim governance report includes true
information.
[18 June 2015; 15 March 2018]
Division
D
Limited Liability Company of a Public Person
Chapter
XIII
Equity Capital and Capital Shares
Section 59. Payment of Equity
Capital, Nominal Value and Registration of Capital Shares
(1) Equity capital of a limited liability company of a public
person (hereinafter in this Division - company) shall be paid in
full until registration application is submitted to the
Commercial Register Office.
(2) The nominal value of a capital share of the company
(hereinafter in this Division - share) shall be one euro.
(3) Also the name, registration number (if any), as well as
legal address or address of the location of the holder of capital
shares shall be entered into the register of the shareholders of
the company.
(4) Any person has the right to become acquainted with the
register of shareholders of the company.
(5) The representative of the holder of capital shares, the
responsible employee and the authorised representative of the
holder of capital shares have the right to receive an extract
from the register of shareholders of the company, certified by a
person authorised by the executive board, regarding shares
belonging to the public person in the company.
Section 60. Pledging of Shares
Shares of a company may not be pledged.
Section 61. Acquisition of Own
Shares
A company may not acquire own shares, except a case when the
company reduces the equity capital by cancelling them.
Chapter
XIV
Changes in Equity Capital
Section 62. Decision on Changes in
the Equity Capital
The equity capital may be increased or reduced only on the
basis of a decision of a meeting of shareholders, which includes
the provisions for increasing or reducing the equity capital.
Section 63. Increase of the Equity
Capital
(1) The equity capital of a company may be increased:
1) upon shareholders investing in the equity capital of the
company and receiving a respective amount of new shares in
return;
2) after the annual account or report on economic activity for
a time period less than one year is approved, including the
positive difference between the own capital and the sum formed by
the equity capital reserves, which may not be transferred for
increasing the equity capital in accordance with the law, in the
equity capital in full or partially, and receiving a respective
amount of new shares in return. The report on economic activity
shall be prepared in accordance with the requirements of the Law
on the Annual Financial Statements and Consolidated Financial
Statements.
(2) If the equity capital of the company is increased in the
way referred to in Paragraph one, Clause 1 of this Section,
complete increase of the equity capital shall be paid for by the
shareholder within the time period determined in the decision to
increase the equity capital. The abovementioned time period may
not exceed three months from the day, on which the decision to
increase the equity capital was taken.
(3) The holder of capital shares of a public person need not
submit to the company an application for obtaining of shares.
(4) The company shall enter the new shares of the shareholder
in the register of shareholders on the basis of documents
certifying payment for such shares.
(5) The executive board shall submit an application to the
Commercial Register Office regarding increasing the equity
capital after payment for shares is made and new shares are
recorded into the register of shareholders.
[16 June 2016]
Section 64. Reducing of Equity
Capital
The equity capital of a company shall be reduced by cancelling
shares.
Chapter
XV
Administration of a Company
Section 65. Administrative
Institutions of a Company
(1) The administration of a company shall be implemented by a
shareholder, the meeting of shareholders and the executive board,
as well as the supervisory board (if such has been
established).
(2) The decisions within the competence of the meeting of
shareholders shall be taken by the representative of the holder
of capital shares.
Section 66. Competence of the
Meeting of Shareholders
(1) Only the meeting of shareholders has the right to take
decisions:
1) to approve the annual account of the company;
2) to distribute the profit;
3) to elect and revoke members and chairperson of the
executive board, except cases when a supervisory board has been
established in the company;
4) to elect and revoke members of the council (if such has
been established);
5) to elect and revoke of an auditor;
6) to bring a claim against a member of the executive board or
supervisory board (if such has been established) or withdrawal of
claim against them, as well as to appoint a representative of the
company for representation of the company in court;
7) to approve and amend the articles of association of the
company;
8) on the amount of remuneration for an auditor, members of
the supervisory board (if such has been established) and members
of the executive board (except cases when a supervisory board has
been established);
9) to increase or decrease the equity capital;
10) to reorganise the company;
11) to elect and revoke of a liquidator;
12) on the medium-term operational strategy, except cases when
a council is established;
13) on other issues, if it is provided for in the law.
(2) Upon request of the executive board the meeting of
shareholders shall examine and take decisions also on such
issues, for deciding of which the executive board requires a
prior consent of the meeting of shareholders (Section 82 of this
Law).
Section 67. Competence of a
Shareholder
(1) In accordance with Sections 5, 7, and 9 of this Law, a
shareholder shall take decisions to obtain, continue or terminate
participation in the company.
(2) The decisions referred to in Paragraph one of this Section
in the name of the respective public person shall be taken by the
highest decision-making body of public person.
Section 68. Convening of a Meeting
of Shareholders
(1) Regular meetings of shareholders and extraordinary
meetings of shareholders shall be convened.
(2) Meetings of shareholders shall be convened by the
executive board, except the cases provided for in this Law.
Section 69. Convening of a Regular
Meeting of Shareholders
(1) The executive board shall convene a regular meeting of
shareholders within a time period which ensures a possibility of
approving the annual account within the time period provided for
in this Law.
(2) If the executive board has not convened the regular
meeting of shareholders in the intended time period, it shall be
convened by the supervisory board (if such has been established)
or the representative of the holder of capital shares within not
more than five working days from the day, on which the executive
board had to convene the meeting of shareholders. Such action of
the executive board may be the basis for a decision of the
supervisory board or the meeting of shareholders to revoke the
executive board on the basis of non-fulfilment of the
obligations.
(3) If the council (if such has been established) has not
convened the regular meeting of shareholders in the case and
within the time period referred to in Paragraph two of this
Section, the decision to convene a meeting of shareholders shall
be taken by the representative of the holder of capital shares
within not more than five days from the day, on which the council
had to convene the meeting of shareholders.
(4) If the council (if such has been established) does not
convene the meeting of shareholders in case referred to in
Paragraph two of this Section without justified reason, such
action of the council may be the basis for a decision of the
meeting of shareholders to revoke members of the council on the
basis of non-fulfilment of the obligations.
(5) If a dispute arises whether the action of members of the
executive board or supervisory board had justified reason, the
burden of proof shall lie with members of the executive board and
supervisory board accordingly.
Section 70. Convening of an
Extraordinary Meeting of Shareholders
(1) The executive board shall convene an extraordinary meeting
of shareholders upon its own initiative or if it is requested in
writing by the supervisory board (if such has been established),
the auditor or the representative of the holder of capital
shares.
(2) The initiators of convening an extraordinary meeting of
shareholders shall indicate the reasons for convening the meeting
and the agenda in the request, as well as submit draft decisions
on issues of the agenda. The request to convene a meeting shall
be submitted to the executive board and supervisory board (if
such has been established), and the auditor and the holder of
capital shares shall be notified thereof.
(3) The executive board shall convene an extraordinary meeting
of shareholders not later than within two weeks after receipt of
the request.
(4) If the executive board does not convene an extraordinary
meeting of shareholders within the time period laid down in
Paragraph three of this Section, it may be convened by the
initiator of convening an extraordinary meeting of shareholders
himself or herself.
(5) If a decision must be made urgently in the issue to be
examined, an extraordinary meeting of shareholders shall be
convened within a time period, which ensures a possibility of
receiving a notification on convening a meeting of shareholders
in due time, as well as draft decisions and other materials of
the meeting of shareholders. The time period for convening an
extraordinary meeting of shareholders shall not be less than
seven days. The initiator of urgent convening of the meeting of
shareholders shall justify the urgency in writing.
(6) If the executive board does not convene the extraordinary
meeting of shareholders without justified reason, the meeting of
shareholders may revoke it by itself or to propose the
supervisory board (if such has been established) revocation of
members of the executive board on the basis of non-fulfilment of
the obligations.
(7) If a dispute arises whether actions of members of the
executive board have a justified reason, the burden of proof
shall lie with the members of the executive board.
Section 71. Convening of Meeting of
Shareholders in Special Cases
If losses of the company exceed half of the equity capital of
the company or the company has a limited solvency, indications of
insolvency are detected or are likely to set in, the executive
board shall notify the supervisory board (if such has been
established) thereof, convene a meeting of shareholders in
accordance with Section 70 of this Law and provide explanations
therein.
Section 72. Convening of a Meeting
of Shareholders if a Company is Being Liquidated
(1) If a decision to terminate the operation of the company
and to elect a liquidator is taken, the meeting of shareholders
shall be convened by the liquidator.
(2) The liquidator shall convene the regular meeting of
shareholders during a time period which ensures a possibility to
approve the annual account within the time period provided for in
the law.
(3) The liquidator shall convene the extraordinary meeting of
shareholders upon its own initiative or if it is requested in
writing by the representative of the holder of capital
shares.
(4) The initiators of convening an extraordinary meeting of
shareholders shall indicate the reasons for convening the meeting
and the agenda in the request. The request to convene a meeting
shall be submitted to the liquidator and the auditor and the
holder of capital shares shall be notified thereof.
(5) If a decision in the issue to be examined must be taken
urgently, an extraordinary meeting of shareholders shall be
convened in accordance with the procedures laid down in Section
70, Paragraph five of this Law.
(6) If the liquidator has not convened a regular or
extraordinary meeting of shareholders within the intended time
period, the representative of the holder of capital shares shall
convene it.
(7) If the liquidator does not convene the meeting of
shareholders without justified reason, the meeting of
shareholders may revoke the liquidator.
(8) If there is a dispute regarding whether the action of a
liquidator has a justified reason, the burden of proof shall lie
with the liquidator.
Section 73. Procedures for Convening
a Meeting of Shareholders
(1) The executive board shall send a notification on convening
a meeting of shareholders to the representative of the holder of
capital shares, all members of the supervisory board and the
auditor not later than two weeks before the meeting.
(2) The place and time of the meeting of shareholders, the
type of the meeting, the institution which requested to convene
the meeting, the agenda of the meeting of shareholders, draft
decisions, as well as other information related to convening and
course of the meeting shall be indicated in the notification.
(3) If the meeting of shareholders is convened in accordance
with the procedures laid down in Section 69, Paragraphs two and
three or Section 70, Paragraph five of this Law, the initiator of
convening the meeting shall ensure that the holder of capital
shares, members of the council and the auditor receive the draft
decisions of the meeting and other materials not later than two
working days before the meeting.
Section 74. Issues to be Examined in
a Meeting of Shareholders
(1) A meeting of shareholders may take decisions only in such
issues, which are indicated in the notification determined in
Section 73 of this Law, except the cases referred to in Paragraph
two of this Section.
(2) A meeting of shareholders may take decisions in the
following issues (also if they have not been indicated in the
notification determined in Section 73 of this Law):
1) revocation of members of the executive board, members of
the supervisory board, the liquidator or the auditor and election
of new ones, as well as determination of remuneration of the new
members of the executive board, members of the supervisory board,
the liquidator or the auditor;
2) bringing of a claim against members of the executive board
and supervisory board, the liquidator or the auditor;
3) performance of an internal audit of the capital
company;
4) determination of a new time period or date of the meeting
of shareholders.
(3) A meeting of shareholders may take decisions only if the
time and means of convening a meeting of shareholders provided
for in this Law has been conformed to (this provision does not
apply issues referred to in Paragraph two of this Section).
Section 75. Participation in a
Meeting of Shareholders
(1) A representative of the holder of capital shares shall
participate in a meeting of shareholders.
(2) Members of the executive board and supervisory board, as
well as the liquidator have a duty to participate in the meeting
of shareholders. The auditor has a duty to participate in the
meeting of shareholders when the issue of approval of an annual
account is examined.
(3) The representative of the holder of capital shares shall
determine the other persons who must also participate in a
meeting of shareholders.
Section 76. Course of a Meeting of
Shareholders
(1) A representative of the holder of capital shares shall
open and chair a meeting of shareholders.
(2) The representative of the holder of capital shares shall
appoint a secretary (minute-taker) of the meeting of
shareholders.
(3) After an issue is examined the representative of the
holder of capital shares shall announce his or her decision in
relation to the issue examined.
Section 77. Minutes of a Meeting of
Shareholders
(1) The course of a meeting of shareholders shall be recorded
in minutes.
(2) The following shall be included in the minutes:
1) the firm name of the company;
2) the location, date and time of the meeting of
shareholders;
3) the given name, surname and position of the persons who
participate in examining the issue;
4) the size of the subscribed equity capital, paid-up equity
capital and equity capital with voting rights of the company;
5) the given name and surname of the chairperson and secretary
(minute-taker) of the meeting;
6) the agenda of the meeting;
7) the course of discussion and content of issues of the
agenda;
8) decisions of the meeting taken on all issues of the
agenda;
9) objections of members of the executive board and
supervisory board, the auditor, and the liquidator.
(3) Minutes shall be signed by the chairperson and secretary
(minute-taker) of the meeting of shareholders.
Section 78. Council
The provisions of Sections 106, 107, 108, 109, 110, 111, and
112 of this Law shall be applied in relation to establishment,
operation and competence of the council, unless it is laid down
otherwise in this Chapter.
Section 79. Executive Board
(1) The Cabinet shall determine the number of members of the
executive board according to the indicators characterising the
size of the company.
(2) A natural person whose work experience, education and
qualification ensures professional fulfilment of the duties of a
member of the executive board and who is elected in conformity
with Section 31 or 37 of this Law is elected as a member of the
executive board of the company.
(3) A member of the executive board shall be elected for five
years.
(4) Monthly remuneration of a member of the executive board
shall be determined in conformity with the maximum amount of
monthly remuneration provided for in Cabinet regulations. The
Cabinet shall determine the maximum amount of the monthly
remuneration of a member of the executive board, taking into
account the average remuneration for the governance in similarly
sized (net turnover, total sum of the balance, number of
employees) capital companies in the private sector or - in
individual cases - in the sector, in which the respective capital
company is operating. The maximum amount of the monthly
remuneration of a member of the executive board may not exceed
the amount of the average monthly work remuneration of the
previous year for persons working in the State published in the
official statistics report of the Central Statistical Bureau,
which has been rounded up to full euros and to which the
coefficient 10 has been applied. The monthly remuneration of a
member of the executive board shall be determined for the whole
term of office of the member with the right to review it once a
year.
(5) An authorisation contract regarding fulfilment of the
duties of a member of the executive board shall be concluded with
the member of the executive board of the company.
(6) The contract referred to in Paragraph five of this Section
may provide for insurance and revocation benefit. The contract
may include a revocation benefit only if the member of the
executive board is revoked from the position before expiry of the
term of office and the revocation is not related to violation of
authorisation, non-fulfilment or insufficient fulfilment of
obligations, as well as harm incurred to the favour of company. A
revocation benefit may not be provided for, if a member of the
executive board was elected in accordance with the procedures
laid down in Section 31, Paragraph eight, Clause 2 or Section 37,
Paragraph four, Clause 2 of this Law. If the authorisation
contract does not provide for insurance and a revocation benefit,
they shall not be granted.
(7) A member of the executive board may be disbursed a premium
once a year after approval of the annual account. The premium may
not exceed the amount of remuneration for two months of the
member of the executive board of the capital company. The
following criteria shall be taken into account in determining the
premium:
1) performance results of the capital company in the previous
reporting year;
2) implementation of the medium-term operational strategy and
performance results of the capital company in accordance with the
defined financial and non-financial objectives;
3) performance results of the member of the executive board in
the previous reporting year.
(8) The contract referred to in Paragraph five of this Section
may provide for a revocation benefit in the amount not exceeding
three monthly remunerations, if the member of the executive board
loses the position in case of reorganisation or liquidation of
the company, as well as in the cases specified in Paragraph six
of this Section.
[18 June 2015]
Section 80. Rights of Representation
of the Executive Board
The executive board is the executive body of the company,
which jointly manages and represents the company.
Section 81. Revocation of Members of
the Executive Board
(1) A member of the executive board may be revoked, if there
is an important reason for it, as well as in the cases determined
in Section 31, Paragraph nine or Section 37, Paragraph five of
this Law.
(2) In any case an important reason is violation of
authorisation, non-fulfilment or insufficient fulfilment of
obligations, inability to manage the company, causing of harm to
the interests of the company, as well as a decision of the
meeting of shareholders on loss of trust.
Section 82. Taking of Decisions of
the Executive Board
(1) The executive board shall take decisions on all issues
related to the operation of the company, except issues on which
decisions in accordance with this Law and the articles of
association of the company are taken by shareholder, holder of
capital shares, meeting of shareholders as well as supervisory
board (if such has been established) accordingly.
(2) The executive board shall need a prior consent of the
highest decision-making body of a public person for obtaining or
terminating participation, as well as for obtaining or
terminating decisive influence in other company.
(3) The executive board shall need a prior consent of the
meeting of shareholders for taking a decision on the following
issues:
1) acquisition or alienation of an undertaking;
2) termination of specific kinds of operation and commencement
of new kinds of operation.
(4) The board shall need a prior consent of the supervisory
board on the following issues:
1) opening or closing of branches and representative
offices;
2) entering into such transactions, which exceed the sum
stipulated in the articles of association or decisions of the
council;
3) issuing of such loans, which are not related to the regular
commercial activity of the company;
4) issuing of credits to employees of the company;
5) determining of the general principles of commercial
activity.
(5) The executive board of a State capital company shall need
a prior consent of the supervisory board for concluding the
transactions referred to in Section 26, Paragraph six of this
Law.
(6) If the supervisory board rejects the proposal of the
executive board on the issues referred to in Paragraphs four and
five of this Section, the executive board has the right to hand
over the examination of such issue to the meeting of
shareholders, which shall take a decision on the respective
issue.
(7) The articles of association of the company may also
provide for other issues that require for the executive board to
receive a written prior consent of the meeting of shareholders or
supervisory board (if such has been established).
(8) If the company does not establish a council, the meeting
of shareholders shall take a decision on the issues referred to
in Paragraphs four and five of this Section.
(9) The executive board shall have a quorum if more than one
half of members of the executive board participate in the meeting
thereof. If there are less members in the composition of the
executive board than provided for in the articles of association,
a quorum shall be determined according to the number of members
of the executive board provided for in the articles of
association.
(10) The executive board shall take its decisions with simple
majority of present votes, unless a larger number of votes is
determined in the articles of association.
Section 83. Minutes of a Meeting of
the Executive Board
(1) Minutes shall be taken at meetings of the executive board.
The following information shall be indicated in the minutes:
1) the firm name of the company;
2) the location, date and time of the meeting of the executive
board;
3) the members of the executive board and other persons who
participate in the meeting;
4) the agenda issues;
5) the decision taken on every issue;
6) the results of voting, indicating the vote of each member
of the executive board separately for each decision with an entry
"for" or "against";
7) other information which a member of the executive board
requests to be included in the minutes or which is necessary in
order to accurately record the course of the meeting of the
executive board.
(2) If a member of the executive board does not agree with a
decision of the executive board and votes against it, the
dissenting opinion of the member of the executive board shall be
recorded in the minutes of the meeting of the executive board
upon his or her request.
(3) Minutes of meetings of the executive board shall be signed
by the person chairing the meeting of the executive board, the
minute-taker of the meeting and all members of the executive
board who participate in the meeting.
Division
E
Stock Company of a Public Person
Chapter
XVI
Capitals and Securities of a Stock Company
Section 84. Equity Capital of a
Stock Company
The equity capital defined in the articles of association in
founding a stock company of a public person (hereinafter in this
Division - company) shall be paid in full amount before
submitting an application for registration to the Commercial
Register Office.
Section 85. Stocks
(1) All stocks of a company are stocks of one category, except
cases when the company has employee stocks.
(2) All stocks of the company shall be registered stocks.
(3) All stocks of the company shall be dematerialised
stocks.
(4) The nominal value of each stock of the company shall be
one euro.
Section 86. Register of
Stockholders
(1) The name, registration number (if any), legal address or
address of location of the stockholder shall be also entered in
the register of stockholders of the company.
(2) Any person is entitled to become acquainted with the
register of stockholders of the company.
(3) The representative of the holder of stocks, the
responsible employee and the authorised representative of the
holder of stocks have the right to receive an extract, certified
by an authorised person of the executive board, from the register
of stockholders of the company regarding the stocks belonging to
the public person in the company.
Section 87. Employee Stocks
(1) The highest decision-making body of a public person shall
determine, which capital companies may have employee stocks.
(2) Employee stocks shall be without voting rights.
(3) Employee stocks may only belong to employees and members
of the executive board of the company.
(4) An owner of employee stocks may not alienate such stocks
from other persons, including other employees.
(5) If legal employment relationship between the company and
the employee terminates or the member of the executive board is
revoked or has left his or her position, the employee or the
member of the executive board must sell his or her employee
stocks to the company and the company must repurchase them
according to their nominal value.
Section 88. Prohibition to Acquire
Own Stocks
A company may not acquire its own stocks. It is permitted only
if the company reduces the equity capital by withdrawing a part
of stocks from circulation and extinguishing them or obtaining
its employee stocks.
Section 89. Transfer and
Extinguishing of Own Stocks Belonging to a Company
(1) If the company has obtained its employee stocks, they
shall be handed over to employees or members of the executive
board within six month from the day of obtaining of such
stocks.
(2) If employee stocks are not handed over to employees or
members of the executive board of the company within the time
period provided for in Paragraph one of this Section, they shall
be extinguished, reducing the equity capital accordingly.
(3) If a company acquires stocks by reducing its equity
capital, such stocks shall be extinguished.
Section 90. Convertible
Debentures
A company is not entitled to issue convertible debentures.
Chapter
XVII
Increasing and Reducing of the Equity Capital
Section 91. Conditions for
Increasing and Reducing the Equity Capital
(1) The equity capital shall be increased or reduced only on
the basis of a decision of a meeting of stockholders, in which
the provisions for increasing or reducing the equity capital are
governed.
(2) The equity capital of a company may be increased:
1) upon a stockholder making investments in the equity capital
of the company and receiving a corresponding number of new stocks
in return;
2) after approval of the annual account, by transferring
completely or partially the positive difference to the equity
capital between the own capital and the sum formed by the equity
capital and reserves that in accordance with the law may not be
transferred for increasing the equity capital, and receiving a
corresponding number of new stocks in return.
(3) If the equity capital of the company is increased in the
way referred to in Paragraph two, Clause 1 of this Section, the
stockholder - public person - must pay the complete increase of
the equity capital within the time period determined in the
decision to increase the equity capital. The abovementioned time
period may not exceed three months from the day when the meeting
of shareholders took the decision to increase the equity
capital.
(4) The holder of stocks of a public person need not sign on
stocks of new issue.
(5) The company shall enter the new stocks of the stockholder
in the register of stockholders on the basis of documents
certifying payment for such stocks.
(6) Only completely paid stocks provide the stockholder with
voting rights.
(7) The executive board shall submit an application to the
Commercial Register Office regarding increase of the equity
capital after payment for stocks is made and the new stocks are
recorded in the register of stockholders.
Section 92. Increasing of the Equity
Capital with Special Purpose
(1) The equity capital shall be increased with a special
purpose in accordance with Section 254 of the Commercial Law,
unless it is laid down otherwise in this Law.
(2) The equity capital may be increased only for the following
purposes:
1) exchange of new stocks for capital shares or stocks of the
capital company of a public person to be merged in case of
reorganization;
2) for the issue of employee stocks.
(3) Increase of the equity capital, as a result of which the
company becomes a private stock company with capital share of a
public person, may happen only in the cases and in accordance
with the procedures provided for in Division I of this Law.
Chapter
XVIII
Administration of a Stock Company
Section 93. Administrative
Institutions of a Stock Company
(1) The governance of a company shall be implemented by a
stockholder, meeting of stockholders, executive board and
supervisory board (if such has been established).
(2) The decisions within the competence of the meeting of
stockholders shall be taken by the representative of the holder
of stocks.
Section 94. Competence of a Meeting
of Stockholders
(1) Only a meeting of stockholders has the right to take
decisions:
1) to approve the annual account of the company;
2) to distribute the profit;
3) to elect and revoke members of the executive board and the
chairperson of the executive board (if a supervisory board has
not been established in the company);
4) to elect and revoke members of the council (if such has
been established);
5) to elect and revoke an auditor;
6) to bring a claim against a member of the executive board or
supervisory board (if such has been established) and the auditor
or to withdraw a claim against them, as well as to appoint a
representative of the company for representation of the company
in court;
7) to approve and amend the articles of association of the
company;
8) on the amount of remuneration for the auditor, members of
the supervisory board (if such has been established) and members
of the executive board (except cases when a supervisory board has
been established);
9) to increase or decrease the equity capital;
10) to reorganise the company;
11) to elect and revoke of a liquidator;
12) to approve the medium-term operational strategy, except
the case if a council has been established;
13) other issues referred to in this Law.
(2) Upon request of the executive board a meeting of
stockholders shall examine and take decisions also on issues, for
deciding on which the executive board needs a prior consent of
the meeting of stockholders (Section 118).
Section 95. Competence of
Stockholder
(1) In accordance with Sections 5, 7, and 9 of this Law, the
stockholder shall take decisions to obtain, continue and
terminate participation in the company.
(2) The decisions referred to in Paragraph one of this Section
in the name of the respective public person shall be taken by the
highest decision-making body of public person.
Section 96. Convening of a Meeting
of Stockholders
(1) Regular meetings of stockholders and extraordinary
meetings of stockholders shall be convened.
(2) Meetings of stockholders shall be convened by the
executive board, except the cases provided for in this Law.
Section 97. Convening of a Regular
Meeting of Stockholders
(1) The executive board shall convene a regular meeting of
stockholders within a time period which ensures a possibility of
approving the annual account within the time period provided for
in the law.
(2) If the executive board has not convened the regular
meeting of stockholders in the planned period, the supervisory
board (if such has been established) or the representative of the
holder of stocks shall convene it within not more than five
working days from the day when the executive board had to convene
the meeting of stockholders. Such action of the executive board
may be the basis for a decision of the supervisory board or
meeting of stockholders to revoke the executive board on the
basis of non-fulfilment of the obligations.
(3) If the council (if such has been established) has not
convened the regular meeting of stockholders in the case and
within the time period referred to in Paragraph two of this
Section, the representative of the holder of stocks shall take a
decision to convene the meeting of stockholders within not more
than five days from the day when the council had to convene the
meeting of stockholders.
(4) If the council (if such has been established) does not
convene the meeting of stockholders in the case referred to in
Paragraph two of this Section without justified reason, such
action of the council may be the basis for a decision of the
meeting of stockholders to revoke members of the council on the
basis of non-fulfilment of the obligations.
(5) If a dispute arises whether the action of members of the
executive board or supervisory board had justified reason, the
burden of proof shall lie with members of the executive board and
supervisory board accordingly.
Section 98. Extraordinary Meeting of
Stockholders
(1) An extraordinary meeting of stockholders shall be convened
by the executive board upon its initiative or if it is requested
in writing by the supervisory board (if such has been
established), auditor or holder of stocks.
(2) In the request the initiator of an extraordinary meeting
of stockholders shall indicate the reasons for convening the
meeting and the agenda, and submit draft decisions on issues of
the agenda. The request to convene a meeting shall be submitted
to the executive board and supervisory board (if such has been
established), and the auditor and the holder of stocks shall be
notified thereof.
(3) The executive board shall convene an extraordinary meeting
of stockholders not later than within two weeks after receipt of
the request.
(4) If the executive board does not convene an extraordinary
meeting of stockholders within the time period referred to in
Paragraph three of this Section, it may be convened by the
initiator of convening an extraordinary meeting of stockholders
himself or herself.
(5) If a decision must be made urgently in the issue to be
examined, an extraordinary meeting of stockholders shall be
convened within a time period which ensures a possibility of
receiving a notification on convening a meeting of stockholders
in due time, as well as draft decisions and other materials of
the meeting of stockholders. The time period for convening an
extraordinary meeting of stockholders may not be less than seven
days. The initiator of urgent summoning of the meeting of
stockholders shall justify the urgency in writing.
(6) If the executive board does not convene the extraordinary
meeting of stockholders without justified reason, the meeting of
stockholders may revoke it by itself or propose the supervisory
board (if such has been established) to revoke members of the
executive board on the basis of non-fulfilment of the
obligations.
(7) If a dispute arises whether actions of members of the
executive board have a justified reason, the burden of proof
shall lie with the members of the executive board.
Section 99. Convening of a Meeting
of Stockholders on Special Occasions
If losses of the company exceed half of the equity capital of
the company or the company has a limited solvency, indications of
insolvency are detected or are in danger of setting in, the
executive board shall notify the supervisory board (if such has
been established) thereof, convene a meeting of stockholders in
accordance with Section 98 of this Law and provide explanations
therein.
Section 100. Convening of a Meeting
of Stockholders if a Company is Being Liquidated
(1) If a decision to terminate the operation of the company
and to elect a liquidator is taken, the liquidator shall convene
a meeting of stockholders.
(2) The liquidator shall convene the regular meeting of
stockholders during a time period which ensures a possibility to
approve the annual account within the time period provided for in
the law.
(3) An extraordinary meeting of stockholders shall be convened
by a liquidator upon its initiative or if it is requested in
writing by an auditor or a holder of stocks.
(4) Initiators of convening an extraordinary meeting of
stockholders shall indicate the reasons for convening the meeting
and the agenda in the request. The request for convening a
meeting shall be submitted to the liquidator, and the auditor and
the holder of stocks shall be notified thereof.
(5) If a decision on the issue to be examined must be taken
urgently, an extraordinary meeting of stockholders shall be
convened in accordance with the procedures laid down in Section
98, Paragraph five of this Law.
(6) If the liquidator has not convened a regular or
extraordinary meeting of stockholders within the time period
provided for, it shall be convened by the holder of stocks.
(7) If the liquidator does not convene the meeting of
stockholders without justified reason, the meeting of
stockholders may revoke the liquidator.
(8) If there is a dispute regarding whether the action of a
liquidator has a justified reason, the burden of proof shall lie
with the liquidator.
Section 101. Procedures for
Convening a Meeting of Stockholders
(1) The executive board shall send a notification on convening
a meeting of stockholders to the holder of stocks, all members of
the supervisory board (if a supervisory board has been
established in the company) and the auditor not later than two
weeks before the meeting.
(2) If there are employee stocks in the company, a
notification shall also be sent to owners of employee stocks.
(3) The place and time of the meeting of stockholders, the
type of the meeting, the institution which requested to convene
the meeting, the agenda of the meeting of stockholders, draft
decisions, as well as other information related to convening and
course of the meeting shall be indicated in the notification.
(4) If the meeting of stockholders is convened in accordance
with Section 97, Paragraphs two and three and Section 98,
Paragraph five of this Law, the initiator of convening the
meeting shall ensure that the holder of stocks, members of the
council (if a council has been established in the company) and
the auditor receive draft decisions of the meeting and other
materials not later than two working days before the meeting.
Section 102. Issues to be Examined
in a Meeting of Stockholders
(1) A meeting of stockholders may take decisions only on such
issues, which are indicated in the notification determined in
Section 101 of this Law, except the cases provided for in
Paragraph two of this Section.
(2) A meeting of stockholders may take decisions on the
following issues (also if they have not been indicated in the
notification determined in Section 101 of this Law):
1) revocation of members of the supervisory board (if a
supervisory board has been established in the company), members
of the executive board (in a company, in which a supervisory
board has not been established), the liquidator or the auditor,
and election of new ones, as well as determination of
remuneration for members of the supervisory board, members of the
executive board, liquidator or auditor;
2) bringing of a claim against members of the executive board
and supervisory board (if a supervisory board has been
established in the company), the liquidator or auditor;
3) performance of an internal audit of the capital
company;
4) determination of a new time period or date of the meeting
of stockholders.
(3) A meeting of stockholders may take decisions only if the
time and means of convening a meeting of stockholders provided
for in this Law have been conformed to (this provision shall not
apply to the issues referred to in Paragraph two of this
Section).
Section 103. Course of a Meeting of
Stockholders
(1) A representative of the holder of stocks shall open and
chair a meeting of stockholders.
(2) The representative of the holder of stocks shall appoint a
secretary (minute-taker) of the meeting of stockholders.
(3) Members of the executive board and supervisory board, as
well as the liquidator have a duty to participate in the meeting
of stockholders. The auditor has a duty to participate in the
meeting of stakeholders when the issue of approval of the annual
account is examined.
Section 104. Taking of Decisions of
a Meeting of Stockholders
(1) After an issue is examined the representative of the
holder of stocks shall announce his or her decision in relation
to the issue examined.
(2) If there are employee stocks in the company, owners of
employee stocks shall not participate in decision-making and
shall not vote on the draft decisions prepared.
Section 105. Minutes of a Meeting of
Stockholders
(1) The course of a meeting of stockholders shall be recorded
in minutes.
(2) The following shall be included in the minutes:
1) the firm name of the company;
2) the location, date and time of the meeting of
stockholders;
3) the given name, surname and position of the persons who
participate in examining the issue;
4) the size of the subscribed equity capital, paid-up equity
capital and equity capital with voting rights of the company;
5) the given name and surname of the chairperson and secretary
(minute-taker) of the meeting;
6) the agenda of the meeting;
7) the course of discussion and content of issues of the
agenda;
8) decisions of the meeting taken on all issues of the
agenda;
9) objections of members of the executive board and
supervisory board (if a supervisory board has been established in
the company), the auditor and liquidator.
(3) Minutes shall be signed by the chairperson and secretary
(minute-taker) of the meeting of stockholders.
Section 106. Conditions for
Establishment of a Council, Number of Members of the Council
(1) A council may be established in a company only if the
indicators of the company conform to all of the following
criteria during the previous reporting year:
1) the net turnover exceeds 21 million euros;
2) the sum total of the balance exceeds 4 million euros.
(2) If a council has been established in the company and any
of the conditions of Paragraph one of this Section is not met for
two reporting years in succession, the council shall be
liquidated.
(3) The Cabinet shall determine the number of members of the
council according to the criteria characterising the size of the
company.
Section 107. Tasks of the
Council
(1) The supervisory board is a supervisory institution of the
company representing the interests of stockholders between
meetings and supervising activities of the executive board.
(2) The council shall have the following tasks:
1) to elect and revoke the chairperson of the executive board
and the members of the executive board;
2) to determine the remuneration for members of the executive
board;
3) to approve the medium-term operational strategy;
4) to constantly supervise that the matters of the company are
conducted in accordance with the requirements of laws and
regulations, articles of association of the company, and
decisions of the meeting of stockholders;
5) to examine the annual account of the company, the report of
the executive board and proposals of the executive board on
profit distribution, to prepare a report of the supervisory board
thereon, and to submit them to the meeting of stockholders;
6) to represent the company in all claims brought by the
company against members of the executive board and claims brought
by members of the executive board against the company;
7) to approve concluding of a transaction between the company
and a member of the executive board or an auditor;
8) to examine in advance all issues within the competence of
the stockholder or the meeting of stockholders or the issues
initiated by members of the executive board or members of the
supervisory board recommended for examination at the meeting of
stockholders, and to provide a statement on such issues;
9) to submit proposals on improvement of the operation of the
company to the stockholder.
(3) It may be determined in the articles of association that
the executive board must receive an approval of the supervisory
board for deciding on important issues. If the supervisory board
rejects a proposal of the executive board, the executive board
has the right to convene an extraordinary meeting of
stockholders, which shall take a decision on the respective
issue.
[15 March 2018]
Section 108. Requirements for a
Candidate of a Member of the Council
(1) A natural person whose work experience, education and
qualification ensures professional carrying out of the tasks of a
member of the council and who has been selected in accordance
with Section 31 or 37 of this Law may be a member of the council
of the company.
(2) The articles of association of the company may provide for
other (not referred to in this Law) restrictions to a member of
the council.
Section 109. Election and Revocation
of a Member of the Council
(1) A member of the council shall be elected to the position
for five years.
(2) Members of the council shall be elected and revoked by the
meeting of stockholders.
(3) The right of combining the position of a member of the
council with other positions is laid down in the law On
Prevention of Conflict of Interest in Activities of Public
Officials.
(4) A member of the council shall not receive a revocation
benefit or any other compensation, if he or she is revoked from
the position before the end of the term of office.
(5) An authorisation contract regarding fulfilment of the
duties of a member of the council shall be concluded with the
member of the council of the company.
[15 March 2018]
Section 110. Convening of Meetings
of the Council
(1) A meeting of the council shall be convened by the
chairperson of the council, during his or her absence or upon his
or her assignment - by the vice-chairperson of the council. Each
member of the supervisory board, the executive board and the
holder of stocks have the right to demand convening of a meeting
of the supervisory board, justifying the necessity and purpose
for convening the meeting.
(2) If the agenda of the council includes the issues referred
to in Section 107, Paragraph two of this Law, but the council has
no right to decide because the necessary number of members of the
council is not participating in the meeting, the non-examination
of such issues in a meeting of the council shall not be an
obstacle for them to examined by the stockholder and the meeting
of stockholders.
Section 111. Taking of Decisions of
the Council and Signing of the Minutes of a Meeting of the
Council
(1) A member of the council may vote only if he or she is
participating in a meeting of the council.
(2) The person who is chairing the meeting of the council, the
minute-taker of the meeting, as well as all members of the
council who participate in the meeting shall sign minutes of the
meeting of the council.
Section 112. Remuneration for
Members of the Council
(1) Monthly remuneration for members of the council shall be
determined in conformity with the maximum amount of monthly
remuneration provided for Cabinet regulations. The Cabinet shall
determine the maximum amount of monthly remuneration for members
of the council, taking into account the average remuneration for
governance in similarly sized (net turnover, total sum of
balance, number of employees) companies in the private sector or
- in individual cases - in the sector, in which the respective
company is operating. The maximum amount of monthly remuneration
for a member of the supervisory board shall not exceed the amount
of the average monthly remuneration of the preceding year of
persons working in the State, published in the official
statistics statement by the Central Statistical Bureau, which has
been rounded up to full euros and to which the coefficient of 10
has been applied.
(2) Members of the council may be disbursed a premium once a
year after approval of the annual account and assessment of
performance results of the member of the council. The premium may
not exceed the amount of one monthly remuneration of the member
of the council of the capital company.
Section 113. Right to Represent the
Executive Board of a Stock Company
The executive board is the executive body of the company,
which jointly manages and represents the company.
Section 114. Number of Members of
the Executive Board and Restrictions for Members of the Executive
Board
(1) The Cabinet shall determine the number of members of the
executive board according to the indicators characterising the
size of the company.
(2) A natural person whose work experience, education and
qualification ensures professional fulfilment of the duties of a
member of the executive board and who is elected in conformity
with Section 31 or 37 of this Law is elected as a member of the
executive board of the company.
Section 115. Election of a Member of
the Executive Board
(1) A member of the executive board shall be elected for five
years.
(2) An authorisation contract regarding fulfilment of the
duties of a member of the executive board shall be concluded with
the member of the executive board of the company.
Section 116. Revocation of Members
of the Executive Board
(1) A member of the executive board may be revoked, if there
is an important reason for it, as well as in the cases specified
in Section 31, Paragraph nine or Section 37, Paragraph five of
this Law.
(2) In any case an important reason is violation of
authorisation, non-fulfilment or insufficient fulfilment of
obligations, inability to manage the company, causing of harm to
the interests of the company, as well as a decision of the
meeting of stockholders or the council (if a council has been
established in the company) regarding loss of trust.
Section 117. Remuneration to Members
of the Executive Board
(1) Monthly remuneration of a member of the executive board
shall be determined in conformity with the maximum amount of
monthly remuneration provided for in Cabinet regulations. The
Cabinet shall determine the maximum amount of the monthly
remuneration of a member of the executive board, taking into
account the average remuneration for the governance in similarly
sized (net turnover, total sum of the balance, number of
employees) capital companies in the private sector or - in
individual cases - in the sector, in which the respective capital
company is operating. The maximum amount of the monthly
remuneration of a member of the executive board may not exceed
the amount of the average monthly work remuneration of the
previous year for persons working in the State published in the
official statistics report of the Central Statistical Bureau,
which has been rounded up to full euros and to which the
coefficient 10 has been applied. The monthly remuneration of a
member of the executive board shall be determined for the whole
term of office of the member with the right to review it once a
year.
(2) A member of the executive board may be disbursed a premium
once a year after approval of the annual account. The premium may
not exceed the amount of remuneration for two months of the
member of the executive board of the capital company. The
following criteria shall be taken into account in determining the
premium:
1) performance results of the capital company in the previous
reporting year;
2) implementation of the medium-term operational strategy and
performance results of the capital company in accordance with the
defined financial and non-financial objectives;
3) performance results of the member of the executive board in
the previous reporting year.
(3) The contract referred to in Section 115, Paragraph two of
this Law may provide for insurance and revocation benefit for a
member of the executive board. The contract may include a
revocation benefit only if the member of the executive board is
revoked from the position before expiry of the term of office and
the revocation is not related to violation of authorisation,
non-fulfilment or insufficient fulfilment of obligations, as well
as harm incurred to the favour of company. A revocation benefit
may not be provided for, if a member of the executive board was
elected in accordance with the procedures laid down in Section
31, Paragraph eight, Clause 2 or Section 37, Paragraph four,
Clause 2 of this Law. If the authorisation contract does not
provide for insurance and a revocation benefit, they shall not be
granted.
(4) The contract referred to in Section 115, Paragraph two of
this Law may provide for a revocation benefit in the amount not
exceeding three monthly remunerations, if the member of the
executive board loses the position due to reorganization or
liquidation of the capital company, as well as in the cases
specified in Paragraph three of this Section.
[18 June 2015]
Section 118. Taking of Decisions by
the Executive Board of a Stock Company
(1) The executive board shall take decisions on all issues
related to the operation of the company, except the issues, on
which in accordance with this Law and articles of association of
the company decisions are taken by the stockholder or meeting of
stockholders and the supervisory board accordingly.
(2) The executive board shall need a prior consent of the
highest decision-making body of a public person for obtaining or
terminating participation, as well as for obtaining or
terminating decisive influence in other company.
(3) The executive board shall need a prior consent of the
meeting of stockholders for taking a decision on the following
issues:
1) acquisition or alienation of an undertaking;
2) termination of specific kinds of operation and commencement
of new kinds of operation.
(4) The articles of association may also determine other
issues, in which the executive board must receive a prior written
consent of the meeting of stockholders.
(5) The executive board shall need a prior consent of the
supervisory board on deciding the following issues:
1) opening or closing of branches and representative
offices;
2) entering into such transactions, which exceed the sum
stipulated in the articles of association or decisions of the
council;
3) issuing of such loans, which are not related to the regular
commercial activity of the company;
4) issuing of credits to employees of the company;
5) determining of the general principles of commercial
activity.
(6) The executive board of a State capital company shall need
a prior consent of the supervisory board for concluding the
transactions referred to in Section 26, Paragraph six of this
Law.
(7) The articles of association may also provide for other
issues, for deciding of which the executive board must receive a
prior consent of the supervisory board.
(8) If the supervisory board rejects a proposal of the
executive board in the issues referred to in Paragraphs five and
six of this Section, the executive board has the right to hand
over the examination of the abovementioned issue to the meeting
of stockholders that shall take a decision on the respective
issue.
(9) If a council is not established in the company, the
meeting of stockholders shall take a decision on the issues
referred to in Paragraphs five and six of this Section.
Section 119. Minutes of a Meeting of
the Executive Board of a Stock Company
(1) Minutes shall be taken at meetings of the executive board.
The following information shall be indicated in the minutes:
1) the firm name of the company;
2) the location, date and time of the meeting of the executive
board;
3) the members of the executive board and other persons who
participate in the meeting;
4) the agenda issues;
5) the decision taken on every issue;
6) the results of voting, indicating the vote of each member
of the executive board separately for each decision with an entry
"for" or "against";
7) other information which a member of the executive board
requests to be included in the minutes or which is necessary in
order to accurately record the course of the meeting of the
executive board.
(2) If a member of the executive board does not agree with a
decision of the executive board and votes against it, the
dissenting opinion of the member of the executive board shall be
recorded in the minutes of the meeting of the executive board
upon his or her request.
(3) Minutes of meetings of the executive board shall be signed
by the person chairing the meeting of the executive board, the
minute-taker of the meeting and all members of the executive
board who participate in the meeting.
Division F
Chapter
XIX
General Provisions for Termination of Operation of a Capital
Company
Section 120. Grounds for Termination
of Operation of a Capital Company
(1) The operation of a capital company shall be
terminated:
1) by a decision of a shareholder (stockholder);
2) by a court adjudication;
3) by a decision on termination of insolvency proceedings due
to completion of insolvency proceedings of the company;
4) upon expiration of the time period laid down in the
articles of association (if the capital company was established
for a specific time period);
5) upon reaching the objectives laid down in the articles of
association (if the capital company was established for achieving
specific objectives);
6) in other cases laid down in the law or the articles of
association.
(2) The insolvent capital company of a public person shall
terminate its operation in accordance with the Insolvency
Law.
Section 121. Appointing of a
Liquidator
(1) Members of the executive board shall perform liquidation
of the capital company, if the institution that took a decision
to terminate the operation of the capital company has not
stipulated otherwise in the decision.
(2) If it is specified in the decision of the highest
decision-making body of a public person to terminate the
operation of the capital company of a public person that
liquidation of the capital company shall not be performed by
members of the executive board, the meeting of shareholders
(stockholders) shall elect the liquidator.
(3) Remuneration for a liquidator and the procedures for
disbursement thereof shall be determined by the institution which
appoints the liquidator.
(4) If liquidation is performed by members of the executive
board, remuneration for a liquidator and the procedures for
disbursement thereof shall be determined by a meeting of
shareholders (stockholders).
(5) The restrictions provided for in this Law in relation to
remuneration of members of the executive board of the capital
company of a public person shall be conformed to in determining
remuneration for liquidators.
Section 122. Application Regarding
Termination of the Operation of a Capital Company and Liquidation
Thereof
A capital company shall submit a decision terminate the
operation of the capital company within three days after election
of the liquidator, for entering in the Commercial Register. The
information referred to in Section 8 of the Commercial Law
regarding the liquidator shall be indicated in the application
and the following shall be appended accordingly:
1) a decision of the respective institution to terminate the
operation of the capital company;
2) a written consent of the liquidator to be a liquidator. The
written consent shall be signed with a safe electronic signature,
or the signature on the consent shall be certified notarially or
by an official of the Commercial Register Office.
Section 123. Removal of a
Liquidator
(1) A liquidator may be removed by a decision of the
institution, which took the decision to appoint a liquidator.
(2) A liquidator appointed by a court may be removed only by a
court adjudication on the basis of an application of the holder
of capital shares or a third party, if there is good cause
therefor, concurrently appointing a new liquidator.
Chapter
XX
Closing Financial Report of Liquidation, Property Division Plan
and Division of the Remaining Property or Continuation of
Operation
Section 124. Closing Financial
Account and Property Division Plan
(1) After satisfying claims of creditors or transfer of the
money provided for them in storage to a sworn notary and covering
expenses of liquidation, the liquidator shall prepare the closing
financial report of liquidation and the plan for division of the
remaining property of the capital company in conformity with
Section 125 of this Law.
(2) A liquidation quota need not be calculated for owners of
employee stocks in stock companies of a public person.
Section 125. Division of the
Remaining Property of a Capital Company
(1) Property may be divided not earlier than four months from
the day when a notification on termination of the operation of a
capital company has been published and one month from the day
when a closing financial account and a property division plan for
the remaining property of the capital company has been sent to
the holder of capital shares.
(2) The liquidator is not entitled to sell the property, which
is not necessary for satisfying the claims of creditors, but it
shall be transferred to the institution determined in the
decision to terminate the operation of the capital company,
unless it has been determined otherwise in this decision.
(3) The costs, which in case of liquidation are due to the
shareholder (stockholder) are transferred into the budget of the
respective public person.
(4) Property may be divided prior to the time period
determined in Paragraph one of this Section only if the meeting
of shareholders (stockholders) agrees thereto and such division
does not cause losses to creditors.
Section 126. Continuing of the
Operation of a Capital Company
If a capital company is under liquidation on the basis of the
provisions referred to in the documents of incorporation
regarding termination of operation or a decision of the highest
decision-making body of a public person, the highest
decision-making body of the respective public person may take a
decision to continue the operation of the capital company or to
reorganise the capital company before division of the property is
commenced.
Division
G
Reorganization of a Capital Company of a Public Person
Chapter
XXI
General Provisions of Reorganisation
Section 127. Merging of Capital
Companies
(1) The highest decision-making body of a public person shall
take a decision to commence merging of capital companies of a
public person.
(2) The decision referred to in Paragraph one of this Section
shall determine the holder of capital shares of the acquiring
company.
(3) The procedures for merging capital companies of public
persons, if any of the companies involved in the merging process
is a capital company belonging to another public person, a public
private or private capital company, are laid down in Division I
of this Law.
Section 128. Division of Capital
Companies
(1) The highest decision-making body of a public person shall
take a decision to commence division of the capital company of a
public person.
(2) The decision referred to in Paragraph one of this Section
shall determine the holder of capital shares of the acquiring
company.
(3) The method of divestiture (Section 336, Paragraphs four
and five of the Commercial Law) may not be applied to division of
the capital company of a public person.
(4) The procedures for dividing a capital company of a public
person, if the acquiring company is a capital company already
belonging to another public person, a public private or private
capital company, are laid down in Division I of this Law.
Section 129. Restructuring of
Capital Companies
(1) The meeting of shareholders (stockholders) of a capital
company shall take a decision to restructure the respective
capital company of a public person into a different type of
capital company of a public person.
(2) A capital company of a public person may not be
restructured, by means of reorganisation, into a public private
capital company or private capital company in accordance with the
procedures laid down in this Division.
Section 130. Conditions of
Reorganisation
The highest decision-making body of a public person may
provide for conditions of reorganisation in taking a decision to
commence reorganisation (Sections 127 and 128 of this Law).
Chapter
XXII
Procedures for Reorganisation
Section 131. Reorganisation
Agreement
(1) In drawing up a reorganisation agreement, capital
companies of a public person shall comply with the conditions
provided for in the decision of the highest decision-making body
of the public person (Section 130 of this Law). The draft
reorganisation agreement shall be co-ordinated by the meeting of
shareholders (stockholders).
(2) The following shall be indicated in the reorganisation
agreement:
1) the firm names, legal addresses and registration numbers of
all capital companies involved in reorganisation;
2) the date from which transactions of the capital company to
be acquired, divided or restructured will be deemed as
transactions of the acquiring capital company in the accounting
of the acquiring capital company;
3) the rights, which the acquiring company grants to members
of supervisory and executive bodies of the company to be
acquired, divided or restructured, as well as to the auditor of
the company;
4) the consequences of reorganisation for employees of the
capital company to be acquired, divided or restructured;
5) the type, firm name and legal address of the acquiring
company;
6) the activities to be performed in the reorganisation
proceedings and the time periods for the performance thereof.
(3) The conditions precedent provided for in Section 338 of
the Commercial Law may not be determined in a draft
reorganisation agreement.
(4) If one capital company of a public person participates in
the division process of the capital company of a public person,
the meeting of shareholders (stockholders) shall adopt
regulations regarding division of the capital company in
conformity with Paragraphs one, two, and three of this Section.
Such regulations shall substitute the reorganisation agreement
referred to in Paragraphs two and three of this Section. The act
of property division shall be appended to the regulations
regarding division of a capital company as a separate
document.
(5) In order to reorganise a capital company of a public
person by restructuring it, the meeting of shareholders
(stockholders) of such capital company shall adopt regulations
regarding restructuring of the capital company in conformity with
Paragraphs one, two, and three of this Section.
Section 132. Evaluation of Financial
Investment during Reorganisation Proceedings
(1) If the acquiring capital company must increase the equity
capital as a result of reorganisation or if it is a new capital
company, the property of each capital company to be merged or the
respective property share of each capital company to be divided
shall be evaluated in order to determine its sufficiency for
increasing the equity capital of the acquiring capital company or
for its founding.
(2) A person included in the list of the persons evaluating
financial investment shall perform the evaluation and provide a
written statement.
(3) If as a result of reorganisation a new company is founded,
the conditions of Section 49 of this Law shall be conformed
to.
(4) The statement shall be appended to the application to be
submitted to the Commercial Register Office regarding
reorganisation.
Section 133. Reorganisation
Prospectus
Capital companies of a public person involved in the
reorganisation proceedings need not prepare a reorganisation
prospectus in performing reorganisation in accordance with the
procedures provided for in this Division.
Section 134. Examination by an
Auditor
In performing reorganisation in accordance with the procedures
provided for in this Division, the auditor need not examine the
decision to reorganise.
Section 135. Decision to
Reorganise
(1) The meeting of shareholders (stockholders) shall take a
decision to reorganise a capital company of a public person.
(2) If due to reorganisation amendments to the articles of
association of a capital company must be made, the meeting of
shareholders (stockholders) shall take a decision thereon
immediately after taking the decision to reorganise.
Section 136. Contesting of a
Decision to Reorganise
The persons referred to in Section 346, Paragraph one of the
Commercial Law may not contest the decision to reorganise a
capital company of a public person in court.
Section 137. Application to the
Commercial Register Office
(1) After claims of creditors applied within a specific time
period are secured or satisfied, each capital company involved in
the reorganisation proceedings shall submit an application to the
Commercial Register Office for making an entry on reorganisation
in the Commercial Register.
(2) The following shall be appended to the application:
1) the decision provided for in this Law and the
reorganisation agreement or regulations regarding
reorganisation;
2) in the cases laid down in the law - the reorganisation
permit;
3) the closing financial account of the acquired capital
company or the capital company divided by way of splitting up (if
the application is being submitted by the acquired or the
dividing capital company);
4) the articles of association of the acquiring capital
company (if a new capital company is established as a result of
reorganisation, or if the capital company is being
restructured);
5) a list of such members of the executive board of the
acquiring capital company who have the right to represent the
company (if a new company is established as a result of
reorganisation);
6) a list of members of the council of the acquiring capital
company (if a new capital company is established as a result of
reorganisation or if the capital company being restructured and a
council is intended for the acquiring capital company).
(3) The capital company shall confirm in the application that
claims of creditors applied within the specified time period are
secured or satisfied.
Division
H
Alienation of Capital Shares
Chapter
XXIII
Selling of Capital Shares Belonging to a Public Person
Section 138. Decision to Sell
Capital Shares
(1) The highest decision-making body of the respective public
person shall take a decision to sell capital shares.
(2) The holder of State capital shares or the institution,
which has been appointed (delegated) by the Cabinet for carrying
out the task of selling State capital shares in accordance with
the conditions of this Chapter (hereinafter - alienation
institution), shall submit a proposal regarding selling of State
capital shares and a respective draft legal act to the
Cabinet.
Section 139. Seller of Capital
Shares
(1) State capital shares shall be sold by the alienation
institution.
(2) Capital shares of a derived public person shall be sold by
an institution (unit) determined by the highest decision-making
body of the derived public person, or the alienation institution
shall be authorised to do it.
(3) A decision to sell capital shares shall be published at
least on the website by the holder of capital shares, seller and
capital company within one week after entering into effect
thereof.
Section 140. Initial Sales Value of
Capital Shares
(1) The initial sales value of capital shares of a public
person (hereinafter - initial value) shall be determined as
follows:
1) if capital shares, whose value which was determined using
the equity method (according to the last audited annual account)
is less than EUR 15 000, are sold, the initial value shall be
determined by the seller of capital shares, using the equity
method or applying the condition referred to in Clause 3 of this
Paragraph;
2) if capital shares, which are publicly traded, are sold, the
highest decision-making body of the public person, in taking the
decision provided for in Section 9, Paragraph one of this Law,
shall determine the procedures for determining the initial
value;
3) in other cases the initial value shall be determined by an
independent certified evaluator in accordance with evaluation
standards recognised in Latvia.
(2) The initial value may be reduced, if capital shares are
not sold in accordance with the procedures laid down in Section
141 of this Law.
[18 June 2015]
Section 141. Procedures for Selling
Capital Shares in a Capital Company of a Public Person, Public
Private Capital Company or Private Capital Company
(1) The seller of capital shares shall draw up and approve the
selling regulations, which shall include at least the following
information:
1)the firm name, legal address and addresses of location of
the capital company, capital shares of which are on sale;
2) the sales price of capital shares, which has been
determined in accordance with Section 140, Paragraph one of this
Law, as well as the procedures for correcting the price, if there
is no success in selling capital shares according to the initial
value;
3) the conditions for selling of capital shares, if such are
provided for in accordance with the procedures laid down in
Section 142 of this Law;
4) information regarding shareholders (stockholders),
regarding the pre-emption right with regard to the capital shares
to be sold and the procedures for exercising it;
5) the amount of the security deposit and the fee for
participation at an auction and payment procedures, the
procedures and time periods for payment of the purchase fee;
6) the provisions of the auction;
7) the procedures and criteria for selecting candidates
(buyers) of capital shares, if such are provided for;
8) the time period, in which interest applications for buying
of capital shares shall be submitted, the procedures for
extending, renewing or determining a new period of
application;
9) the list of documents to be submitted by the buyer of
capital shares;
10) actions with unsold capital shares;
11) other conditions to be conformed to in the sales process
of capital shares, and guarantees.
(2) The seller of capital shares shall, within one week after
approval of the sales regulations, publish information regarding
sales regulations on its website, as well as post a notification
in the official journal Latvijas Vēstnesis on where one
may become acquainted with sales regulations. The seller of
capital shares must, within the abovementioned time period, send
the regulations regarding selling capital shares to the executive
board of the respective capital company. The executive board of
the capital company of a public person shall inform employees
regarding the conditions and procedures for selling capital
shares.
(3) The seller of capital shares shall offer the shareholders
(stockholders) of a public private capital company or private
capital company with the pre-emptive right to buy capital shares
of a public person in accordance with the procedures provided for
in the articles of association and according to the sales
regulations, determining that shareholders (stockholders) of the
company have to apply together or separately for all marketable
capital shares of the public person, otherwise it shall be
considered that they have refused from exercising the pre-emptive
right.
(4) If persons with the pre-emptive right do not exercise
their right or if there is no person with the pre-emptive right,
the seller of capital shares shall sell them at an open auction,
unless other sales method is determined in the procedures
provided for in Section 142, Paragraphs one and two of this
Law.
(5) The regulations regarding selling of capital shares must
be available to the public at least one month before the time
period when a person must submit an application for the purchase
of capital shares.
[18 June 2015]
Section 142. Conditions for Selling
Capital Shares
(1) The highest decision-making body of a public person may
determine the conditions for selling capital shares of a public
person or to change them until approval of regulations regarding
selling of such capital shares.
(2) The capital shares to be sold to employees of a capital
company shall not exceed 20 per cent from the equity capital of
the capital company.
(3) In selling capital shares of a public person in accordance
with the procedures laid down in this Law, euros shall be used as
the means of payment.
(4) If capital shares are sold by instalments, sales
regulations shall provide for establishment of a commercial
pledge in favour of the seller in order to ensure the claims of
the seller against the buyer, which may arise due to
non-fulfilment, undue fulfilment or delayed fulfilment of
obligations of the buyer provided for in the sales regulations
and the purchase contract.
Section 143. Funds Obtained as a
Result of Selling Capital Shares of a Public Person
(1) The funds obtained as a result of selling capital shares
of a public person shall be transferred into the budget of the
respective public person, except the deductions specified in
Paragraph three of this Section.
(2) If an institution authorised by the derived public person
- the alienation institution - is selling its capital shares, the
derived public person shall compensate the actual expenses caused
to such institution, organising and selling its capital shares.
The derived public person and the alienation institution shall
agree on expenses.
(3) The Cabinet shall determine the amount of deductions,
which a State capital company shall receive from the income
obtained by selling State capital shares, if the company is the
alienation institution of State capital shares.
[18 June 2015]
Chapter
XXIV
Other Cases of Selling Capital Shares of a Public Person
Section 144. Selling of Capital
Shares Transferred to the State Special Budget for Pensions
(1) Capital shares transferred to the State special budget for
pensions shall be sold in accordance with the conditions of
Chapter XXIII of this Law.
(2) The alienation institution shall sell capital shares
transferred to the State special budget for pensions.
(3) The funds obtained as a result of selling the capital
shares transferred to the State special budget for pensions shall
be transferred into the State special budget for pensions.
Section 145. Selling of Capital
Shares Arisen as a Result of Capitalisation of Tax Payment
Debts
(1) The capital shares arisen as a result of capitalisation of
tax payment debts shall be sold in accordance with the provisions
of Chapter XXIII of this Law.
(2) Funds obtained as a result of selling the capital shares
owned by the State or local government shall be transferred
accordingly into the State budget or local government budget.
[16 June 2016]
Chapter
XXV
Investment of Capital Shares of a Public Person
Section 146. Decision to Invest
Capital Shares
(1) The highest decision-making body of the respective public
person shall take a decision to invest capital shares.
(2) The holder of State capital shares or the alienation
institution shall submit a proposal to the Cabinet regarding
investment of State capital shares.
(3) A public person may invest capital shares in a capital
company of a public person or a capital company controlled by
public persons.
Section 147. Publishing and
Implementation of the Decision to Invest Capital Shares
(1) The holder of capital shares shall publish the decision to
invest capital shares on its website within a week after entering
into effect thereof.
(2) The holder of capital shares shall implement the decision
to invest capital shares.
Division
I
Turning of a Capital Company of a Public Person into a Public
Private Capital Company or Private Capital Company
Chapter
XXVI
General Provisions for Turning of a Capital Company into a Public
Private Capital Company or Private Capital Company
Section 148. Types of Attraction
Without selling capital shares, a capital company of a public
person may become a private capital company or a public private
capital company:
1) by increasing the equity capital of the capital company
(Section 149 of this Law);
2) by reorganising the capital company (Section 150 of this
Law);
3) by handing over capital shares of a public person to other
public person without remuneration (Sections 159 and 160 of this
Law).
Section 149. Purposes for Increasing
the Equity Capital of a Capital Company
The equity capital of a capital company may be increased only
for the following purposes:
1) for substituting debts of the capital company with its
capital shares (hereinafter in this Division - capitalisation of
debts);
2) for acquisition of specific property, paying for the
capital shares by a financial investment (hereinafter in this
Division - acquisition of property);
3) for the attracting of capital, paying for the capital
shares in cash (hereinafter in this Division - attracting of
capital).
[15 March 2018]
Section 150. Types of Reorganisation
of a Capital Company
A capital company may become a private capital company through
reorganisation:
1) by acquiring a capital company (hereinafter in this
Division - acquiring of a capital company);
2) by merging with a capital company (hereinafter in this
Division - merging with a capital company);
3) by consolidating with a capital company (hereinafter in
this Division - consolidation with a capital company);
4) by dividing a capital company if the acquiring capital
company is already a private capital company (hereinafter in this
Division - merging with a private capital company as a result of
division).
Chapter
XXVII
Increasing the Equity Capital of a Capital Company
Section 151. Decision to Increase
the Equity Capital
(1) On the basis of a proposal of the holder of capital
shares, the Cabinet shall issue an order regarding capitalisation
of specific debts (except tax debts) in a State capital
company.
(2) The highest decision-making body of a derived public
person shall take a decision on capitalisation of specific debts
(except tax debts) in a capital company of a derived public
person.
(3) On the basis of a proposal of the holder of capital shares
the Cabinet shall issue an order to acquire property in the
ownership of a State capital company.
(4) The highest decision-making body of a derived public
person shall take a decision to acquire property in the ownership
of a capital company of a derived public person.
(5) On the basis of a proposal of the holder of capital shares
the Cabinet shall issue an order to attract capital to a State
capital company.
(6) The highest decision-making body of a derived public
person shall take a decision to attract capital to a capital
company of a derived public person.
[15 March 2018]
Section 152. Conditions for
Increasing the Equity Capital
(1) The equity capital is increased in order to use the new
capital shares only for one of the purposes referred to in
Section 149 of this Law.
(2) The purpose of increasing the equity capital shall be
indicated in the provisions for increasing the equity capital of
a capital company.
(3) The increase in the equity capital shall not exceed the
sum necessary for the respective purpose.
(4) The highest decision-making body of a public person may
determine additional conditions for increasing the equity
capital.
Section 153. Activities to be
Performed in Increasing the Equity Capital
Activities of a capital company to be performed in increasing
the equity capital shall be organised by the holder of capital
shares.
Section 154. Procedures for
Increasing the Equity Capital
(1) The equity capital is increased in accordance with the
provisions of the Commercial Law, in conformity with the
conditions of this Law.
(2) The meeting of shareholders (stockholders) shall approve
the provisions for increasing the equity capital.
(3) In addition to approving the provisions for increasing the
equity capital, the meeting of shareholders (stockholders) of a
capital company determines a time period for convening a meeting
of shareholders (stockholders) of such private capital company or
public private capital company, which will be established as a
result of increasing the equity capital. In the meeting of
shareholders (stockholders), draft articles of association of the
private capital company or public private capital company, which
will be established as a result of increasing the equity capital,
shall be appended to the decision.
(4) The executive board of a capital company shall convene a
meeting of shareholders (stockholders) of such private capital
company or public private capital company, which will be
established as a result of increasing the equity capital, within
the time period provided for in the provisions for increasing the
equity capital. The meeting shall approve the articles of
association of the private capital company or public private
capital company, re-elect or elect (if such was not established)
the supervisory institution and perform other actions provided
for in this Law. The articles of association of the private
capital company or public private capital company shall be
approved with not less than three fourths of the number of votes
of the members present, and the provisions of this Law governing
the convening and course of a meeting of shareholders
(stockholders) of a capital company of the respective type shall
be applicable to such meeting.
(5) In addition to the documents referred to in the Commercial
Law (Sections 202 and 261), to be submitted to the Commercial
Register Office in case of increasing the equity capital, the
capital company shall also submit the decision of the highest
decision-making body of a public person referred to in Section
151 of this Law.
[15 March 2018]
Chapter
XXVIII
Reorganisation of a Capital Company of a Public Person into
Private Capital Company
Section 155. Capital Companies
Involved in Reorganisation of a Capital Company of a Public
Person
(1) Only limited liability companies and stock companies may
be involved in reorganisation proceedings.
(2) The company acquiring in the process of merging is a
capital company of a public person while the company to be merged
is a capital company that is being merged.
(3) The company to be merged in the process of merging is a
capital company of a public person while the acquiring company is
the capital company with which the company merges.
(4) Companies to be merged in the process of consolidation are
capital companies of a public person and a private company
capital company while the acquiring company is the newly-founded
capital company.
(5) Merging with a private company as a result of division is
a process, in which the capital company of a public person is the
company to be divided and the divided company is the company to
be merged while the acquiring company is the private capital
company.
Section 156. Decision to Initiate
Reorganisation
(1) On the basis of a proposal of the holder of capital shares
the Cabinet shall issue an order regarding initiation of
reorganisation of a State capital company, determining which
capital company may be merged with the State capital company.
(2) The highest decision-making body of a derived public
person shall take a decision to reorganise a capital company of a
derived public person, determining the capital company with which
it may be merged.
(3) On the basis of a proposal of the holder of capital shares
the Cabinet shall issue an order regarding commencing of
reorganisation of a State capital company, determining with which
capital company the State capital company may be merged.
(4) The highest decision-making body of a derived public
person shall take a decision to reorganise a capital company of a
derived public person, determining the capital company with which
it may be merged.
(5) On the basis of a proposal of the holder of capital shares
the Cabinet shall issue an order to commence reorganisation of a
State capital company, determining with which capital company the
State capital company will be consolidated.
(6) The highest decision-making body of a derived public
person shall take a decision to reorganise a capital company of a
derived public person, determining the capital company with which
it will be consolidated.
(7) On the basis of a proposal of the holder of capital shares
the Cabinet shall issue an order regarding commencing of
reorganisation of a State capital company, determining with which
capital company the State capital company may be merged as a
result of division thereof.
(8) The highest decision-making body of a derived public
person shall take a decision to commence reorganisation of a
capital company of such public person, determining with which
capital company a capital company of derived public person may be
merged as a result of its division.
Section 157. Conditions for
Reorganisation of a Capital Company of a Public Person
The highest decision-making body of a public person is
entitled to determine the conditions for reorganization. If
reorganisation of a capital company of a public person results in
a private capital company, in which capital shares belong to
several derived public persons or the State and one derived
public person or several public persons, public persons shall
agree on conditions for reorganisation before the decision to
commence reorganisation is taken.
Section 158. Procedures for
Reorganising a Capital Company of a Public Person
(1) In addition the time period when a meeting of shareholders
(stockholders) of a private capital company must be convened
shall be indicated in the reorganisation agreement. If a capital
company of a public person is being reorganised as a result of
merging or consolidation or by merging it with the capital
company as a result of division, in addition the representatives
of the holder of capital shares of a public person in the
executive board and supervisory board (if such has been
established) of the private capital company shall be indicated in
the reorganisation agreement.
(2) Draft amendments to the articles of association of a
private capital company and complete wording of the articles of
association with amendments shall be appended to the draft
reorganisation agreement.
(3) The meeting of shareholders (stockholders) shall take the
decision to reorganise a capital company of a public person
provided for in Section 343 of the Commercial Law, and the
representative of the holder of capital shares shall sign the
reorganisation agreement.
(4) The persons referred to in Section 346, Paragraph one of
the Commercial Law may not contest in court the decision of the
meeting of shareholders (stockholders) of the capital company of
a public person to reorganise.
(5) The executive board of a capital company shall convene a
meeting of shareholders (stockholders) of such private capital
company, which will be formed as a result of reorganisation,
within the time period provided for in the reorganisation
agreement. The meeting shall approve the articles of association
of the private capital company, elect the supervisory authority
and the executive authority and perform other activities provided
for in the law. The articles of association of the private
capital company shall be approved with not less than three
fourths of the number of votes of the members present, and the
provisions of this Law governing the convening and course of a
meeting of shareholders (stockholders) of a capital company of
the respective type shall be applicable to such meeting. Such
shareholders (stockholders) shall be indicated in the minutes of
a meeting of shareholders (stockholders) who voted against
approval of the articles of association.
(6) In addition to the documents referred to in the Commercial
Law to be submitted to the Commercial Register Office in order to
make an entry regarding reorganisation, the capital company shall
submit the Cabinet order referred to in Section 156 of this Law
or the decision of the highest decision-making body of a derived
public person.
Chapter
XXIX
Transfer of Capital Shares Belonging to a Public Person to
Another Public Person without Remuneration
Section 159. Transfer of State
Capital Shares to a Derived Public Person
(1) The State may transfer the capital shares belonging
thereto in the ownership of a derived public person without
remuneration by a Cabinet order issued each time, in conformity
with the provisions of the Commercial Law and articles of
association of the respective capital company.
(2) The State capital shares may be transferred in the
ownership of a derived public person, if the respective derived
public person has expressed such a request and the highest
decision-making body of the derived public person has taken a
respective decision.
(3) The provisions of Division H of this Law regarding
alienation, as well as the provisions of Sections 5 and 9 of this
Law regarding obtaining or termination of participation or
obtaining or termination of decisive influence shall not apply to
the transfer of State capital shares in the ownership of a
derived public person.
Section 160. Transfer of Capital
Shares of a Derived Public Person to State or Other Derived
Public Person without Remuneration
(1) A derived public person may transfer capital shares
belonging thereto in the ownership of the State or other derived
public person without remuneration by a decision of the highest
decision-making body of the respective derived public person
issued each time, in conformity with the provisions of the
Commercial Law and articles of association of the respective
capital company.
(2) Capital shares of a derived public person may be
transferred in the ownership of the State, if the Cabinet has
expressed such a request and taken a respective decision.
(3) A derived public person may transfer capital shares in the
ownership of other derived public person, if the respective
derived public person has expressed such a request and taken a
respective decision.
(4) The provisions of Division H of this Law regarding
alienation, as well as the provisions of Sections 5 and 9 of this
Law regarding obtaining or termination of participation or
obtaining or termination of decisive influence shall not apply to
the transfer of capital shares of a derived public person in the
ownership of the State or other derived public person.
Division J
Chapter
XXX
Commencement of Restructuring of a Capital Company of a Public
Person into an Institution (Public Agency)
Section 161. Main Conditions for
Restructuring a Capital Company
(1) A capital company of a public person, which issues
administrative acts or administers the State fee and the income
of which is formed by grant (subsidy) or provision of a service,
carrying out the State administration tasks delegated thereto,
shall be restructured into an institution or public agency,
unless the highest decision-making body of the public person has
decided otherwise in accordance with Section 162, Paragraph two
of this Law.
(2) A capital company shall be restructured into an
institution, unless it is determined otherwise by the decision of
the highest decision-making body of the public person to
restructure and the capital company to be restructured conforms
to the characteristics of a public agency determined in the
Public Agencies Law.
Section 162. Commencement of
Restructuring of a Capital Company
(1) The highest decision-making body of a public person may
take a decision to commence restructuring of a capital company of
a public person into an institution (public agency).
(2) In taking the decision referred to in Paragraph one of
this Section, the highest decision-making body of a public person
may request a statement of the auditor regarding restructuring
risks, as well as assess all financial and legal risks that may
arise upon the capital company being restructured into an
institution or public agency.
(3) A proposal regarding taking of the decision referred to in
Paragraph one of this Section shall be submitted to the Cabinet
by the holder of State capital shares, but to the local
government council - by the representative of the holder of local
government capital shares. The proposal shall contain the
following information:
1) the status, function (administration tasks) and
subordination form of the newly-founded institution;
2) the material and financial status of the capital company,
as well as its ability to cover claims of known creditors;
3) the time period, in which the capital company would be
restructured into an institution (public agency);
4) other significant information related to restructuring of
the capital company.
(4) The following shall be determined in a decision of the
highest decision-making body of a public person to commence
restructuring:
1) the firm name and registration number of the capital
company to be restructured into an institution (public
agency);
2) the institution (public agency) to be established, its
name, subordination form and the member of the Cabinet or
institution of a derived public person and an official who is in
charge of the institution.
(5) The decision to commence restructuring of a capital
company shall be published in the official journal Latvijas
Vēstnesis and notified in writing to all known creditors of
the capital company.
(6) The notification referred to in Paragraph five of this
Section shall include an invitation for the unknown creditors of
the company to apply their claims within two months after
publishing the notification. The content, grounds and extent of
the claim shall be indicated in the claim, and the documents
justifying the claim shall be appended thereto.
(7) The unknown creditors of the capital company of a public
person, which have not applied their claim in accordance with the
procedures laid down in Paragraph six of this Law, shall lose
their right to request that the public person fulfils its
obligations after the capital company is restructured into an
institution (public agency).
Chapter
XXXI
Completion of Restructuring of a Capital Company of a Public
Person into an Institution (Public Agency)
Section 163. Restructuring of a
Capital Company into an Institution (Public Agency)
(1) After gathering information regarding creditors in
accordance with the procedures laid down in Section 162 of this
Law, the highest decision-making body of a public person shall
take a decision to restructure a capital company of a public
person into an institution (public agency), determining:
1) the firm name and registration number of the capital
company to be restructured into an institution (public
agency);
2) the institution (public agency) to be established, its
name, subordination form and the member of the Cabinet or
institution of a derived public person and an official who is in
charge of the institution;
3) the procedures for appointing the head of the established
institution (public agency);
4) the time period, by which the executive board shall submit
an application regarding deletion of the capital company from the
Commercial Register;
5) the date, from which the capital company shall be deleted
from the Commercial Register.
(2) The merchant shall be deleted from the Commercial Register
on the basis of the decision of the highest decision-making body
of a public person referred to in Paragraph one of this Section.
A capital company shall be deleted from the date determined in
the decision of the highest decision-making body of a public
person in accordance with Paragraph one, Clause 5 of this
Section.
(3) The executive board shall submit an application to the
Commercial Register Office regarding deletion of the capital
company from the Commercial Register. The decision of the highest
decision-making body of a public person shall be appended to the
application.
(4) In restructuring a capital company of a public person into
an institution or public agency, the whole property of the
capital company shall be transferred to the established
institution (public agency), unless it is determined otherwise in
the decision to restructure. The established institution (public
agency) is the legal successor of rights and obligations of the
restructured capital company of a public person.
(5) The institution (public agency) shall commence its
operation as soon as the capital company is deleted from the
Commercial Register.
(6) Deletion of the capital company from the Commercial
Register shall terminate all powers of members of the executive
board and supervisory board of the capital company.
(7) After deletion of the capital company from the Commercial
Register, members of the executive board and supervisory board
shall still be responsible for the losses incurred to the public
person in accordance with Section 51 of this Law.
Section 164. Employees of a
Newly-Founded Institution (Public Agency) or Civil Servants
(1) The head of the institution (public agency) shall, within
two months after beginning of operation of the institution
(agency), notify in writing the respective employee (official)
regarding amendments to the employment contract, in conformity
with the Law on Remuneration of Officials and Employees of State
and Local Government Authorities.
(2) If after receipt of the notification referred to in
Paragraph one of this Section the employee does not agree to the
determined amendments to the employment contract or does not
provide an answer within one month, the head shall terminate
employment legal relationship with the employee.
(3) The head of the State administration institution (public
agency) shall, within two months after beginning of operation of
the institution (agency), determine positions of civil servants
in the institution (agency) in accordance with the procedures
laid down in the State Civil Service Law and notify in writing
the employee, who holds the position determined as the position
of a civil servant in the institution (agency), regarding changes
in the status of the position and warn him or her regarding
termination of employment legal relationship and commencement of
State civil service relationship.
(4) If after receipt of the notification referred to in
Paragraph three of this Section the employee does not agree to
accept the position of a civil servant or does not provide an
answer within one month and the public agency cannot offer him or
her another position that is not the position of a civil servant,
or he or she does not agree to take other offered position, the
head shall terminate employment legal relationship with the
employee. The employee who agrees to take the position of a civil
servant after receipt of the notification and who conforms to the
mandatory requirements laid down in Section 7 of the State Civil
Service Law, shall be appointed to the position of a civil
servant and shall be granted the status of a civil servant.
Transitional
Provisions
1. With the coming into force of this Law, the law On State
and Local Government Capital Shares and Capital Companies
(Latvijas Republikas Saeimas un Ministru Kabineta
Ziņotājs, 2002, No.21; 2003, No. 15; 2004, No. 23; 2005, No.
2, 15; 2006, No. 24; 2008, No. 1; 2009, No. 2, 6, 9, 12, 14;
Latvijas Vēstnesis, 2009, No. 136, 205; 2013, No. 119,
193, 194; 2014, No.75), is repealed.
2. The Cabinet:
1) by 1 March 2015 shall determine a State administration
institution, which will carry out the tasks of the Co-ordination
Institution (Section 22, Paragraph one of this Law);
2) by 1 October 2015:
a) shall determine the procedures by which candidates for
positions of members of the executive board and supervisory board
in capital companies, in which the State as the shareholder
(stakeholder) has the right to nominate members of the executive
board or supervisory board, and members of the executive board in
State capital companies, in which a supervisory board has been
established (Section 31, Paragraph ten of this Law), shall be
nominated,
b) shall determine the procedures by which the conditions of
Section 27 of this Law are fulfilled (Section 27, Paragraph seven
of this Law),
c) shall determine the procedures by which the conditions of
Section 28 of this Law are fulfilled (Section 28, Paragraph six
of this Law),
d) shall approve the standard articles of association of a
capital company of a public person (Section 46, Paragraph two of
this Law),
e) shall determine the indicators characterising the size of
the company necessary for determination of the number of members
of the executive board and supervisory board of a capital company
(Section 79, Paragraph one, Section 106, Paragraph three, Section
114, Paragraph one of this Law),
f) [16 June 2016];
g) shall determine the amount of deductions to be received by
a State capital company as the alienation institution from the
revenue obtained from selling State capital shares (Section 143,
Paragraph three of this Law);
3) by 1 September 2015 shall approve the by-laws and staff of
the Council of the Co-ordination Institution referred to in
Section 24, Paragraph three of this Law.
[18 June 2015; 16 June 2016]
3. By 1 January 2016, the Cabinet shall issue regulations
regarding the maximum amount of monthly remuneration to a member
of the executive board and supervisory board, taking into account
the average amount of remuneration to the governance in similarly
sized (net turnover, sum total of the balance, number of
employees) capital companies in the private sector or - in
individual cases - in the sector, in which the respective capital
company is operating (Section 79, Paragraph four, Section 112,
Paragraph one, Section 117, Paragraph one of this Law).
[18 June 2015]
4. Until issuance of the regulations provided for in Paragraph
3 of Transitional Provisions, the meeting of shareholders
(stockholders) of the capital company shall determine the monthly
remuneration of members of the executive board and supervisory
board, applying Cabinet Regulation No. 311 of 30 March 2010,
Regulations Regarding the Number of Members of the executive
board of State or Local Government Capital Companies, the
Remuneration of a Member of the supervisory board and executive
board, Representative of a Holder of Capital Shares of a Local
Government and the Responsible Employee.
5. By 1 December 2015 the highest decision-making body of a
derived public person shall determine:
1) the procedures by which candidates shall be nominated for
the positions of members of the executive board and supervisory
board in a capital company, in which the derived public person as
a shareholder (stockholder) has the right to nominate members of
the executive board or supervisory board, and members of the
executive board in a capital company of a public person, in which
a supervisory board has been established (Section 37, Paragraph
one of this Law);
2) the procedures by which the profit share to be disbursed in
dividends in a capital company, in which the derived public
person has decisive influence, shall be determined (Section 35,
Paragraph one of this Law).
[18 June 2015]
6. By 1 November 2015 the Co-ordination Institution shall draw
up and approve:
1) the guidelines for determining the general strategic
objectives of State participation (Section 25, Paragraph five of
this Law);
2) the methods (guidelines) for assessment of performance
results of a capital company, in which the State has decisive
influence (Section 27, Paragraph one of this Law);
3) the guidelines for publishing information for State capital
companies and holders of capital shares (Section 29, Paragraph
one, Clause 2 of this Law);
4) the procedures by which information necessary for
preparation of the annual public account on the capital companies
and capital shares belonging to the State shall be submitted to
the Co-ordination Institution (Section 30, Paragraph three of
this Law);
5) the guidelines for drawing up the medium-term operational
strategy (Section 57, Paragraph three of this Law).
7. Until drawing up of the documents referred to in Paragraph
6, Sub-paragraphs 1, 2, 3, and 5 of Transitional Provisions,
holders of capital shares, capital companies and their executive
institutions may carry out the tasks specified in the Law without
guidelines drawn up by the Co-ordination Institution.
8. A council may be established in a capital company of a
public person and a public private capital company starting from
1 January 2016, if it conforms to the criteria laid down in
Section 78 or 106 of this Law.
9. By 1 December 2015 the Co-ordination Institution shall
prepare and submit to the Cabinet and the Saeima the
centralised public report on State capital companies and State
capital shares in 2014.
[18 June 2015]
10. In determining the amount of summary revenue to be
obtained from dividends in 2016 in accordance with Section 28 of
this Law, the prognosis determined in the law on the medium-term
budget framework shall be conformed to.
11. By 1 October 2016 the highest decision-making body of a
public person shall take a decision on its direct participation
in capital companies in accordance with Section 7 of this
Law.
[16 June 2016]
12. The State stock company "Privatisation Agency"
(hereinafter - Agency) shall perform the functions of the
institution alienating State capital shares provided for in this
Law until the moment when the Cabinet takes a decision on the
institution performing alienation of State capital shares and the
Agency has transferred the capital shares held by it.
13. By 1 July 2015 the State Social Insurance Agency shall
transfer such State capital shares in holding of the Agency,
which have been transferred to the State special budget for
pensions until the day of coming into force of this Law and are
to be sold in accordance with a Cabinet decision. The State
Social Insurance Agency shall carry out the tasks of the holder
of State capital shares and the alienation institution provided
for in this Law until the moment when State capital shares are
transferred to the Agency. In the abovementioned time period the
State Social Insurance Agency shall alienate capital shares in
accordance with Cabinet Regulation No. 366 of 9 May 2006,
Regulations Regarding Conditions and Procedures for Selling
Capital Shares Transferred to the State Special Budget for
Pensions.
14. A public person shall ensure that by 1 January 2016:
1) the number of members of the executive board and
supervisory board in capital companies of a public person, as
well as in public private capital companies, in which the capital
company of a public person has obtained all capital shares or
voting shares, conforms to that laid down in Cabinet
regulations;
2) the articles of association of a capital company of a
public person conform to the standard articles of association
drawn up and approved in accordance with Section 46, Paragraph
two of this Law.
[18 June 2015]
15. The firm names of State or local government capital
companies containing the word "State" or "local government" until
the day of coming into force of this Law may retain the word also
after the day of coming into force of this Law.
16. The holder of capital shares of a public person shall
ensure that group of companies contracts concluded by capital
companies of a public person are terminated by 1 March 2015.
17. The contracts concluded with members of the executive
board before the day of coming into force of this Law shall
remain valid until the end of the term of office of the member of
the executive board, determined in the articles of association of
the capital company, which were effective at the time when the
member of the executive board was elected.
[18 June 2015]
18. Section 54 of this Law shall be applicable starting from
the report of year 2015.
19. A capital company of a public person and a public private
capital company shall draw up the medium-term operational
strategy in accordance with Section 57 of this Law by 30 March
2016. The Council of the Co-ordination Institution shall commence
the provision of statements regarding medium-term operational
strategies of the capital companies under decisive influence of
the State, which have been drawn up starting from 1 January
2016.
[18 June 2015]
20. Until approval of the medium-term operational strategy the
operation of a capital company shall be evaluated according to
pre-defined objectives, planned performance results and financial
indicators (Sections 27 and 34 of this Law).
[18 June 2015]
21. The Co-ordination Institution shall publish the
information specified in Section 29, Paragraph one of this Law by
30 March 2016.
[18 June 2015]
22. The Co-ordination Institution shall, in accordance with
Section 31, Paragraph five of this Law, nominate representatives
for participation in nomination committees, starting from 1
August 2015.
[18 June 2015]
23. The Co-ordination Institution shall, in accordance with
Section 32 of this Law, provide statements, starting from 1
January 2016.
[18 June 2015]
This Law shall come into force on 1 January 2015.
This Law has been adopted by the Saeima on 16 October
2014.
President A. Bērziņš
Adopted 31 October 2014
1 The Parliament of the Republic of
Latvia
Translation © 2018 Valsts valodas centrs (State Language
Centre)