The Saeima¹ has adopted
the President has proclaimed the following law:

Law on Prevention of Squandering of Financial Resources and Property of Public Entities

[1 November 2012]

Section 1. Purpose of the Law

The purpose of this Law is to ensure that the financial resources and property of public entities are used lawfully and in conformity with the public interest, to prevent the squandering and ineffective use of such financial resources and property, and also to restrict the corruption of State officials.

[1 November 2012]

Section 1.¹ Application of the Provisions of the Law to Derived Public Entities

[1 November 2012]

Section 2. Obligation to Lawfully Administer Financial Resources and Property

(1) A public entity must act with its financial resources and property lawfully, that is, any action with the financial resources and property of a public entity must conform to the objectives provided for in external legal acts and also the procedures laid down in the laws and regulations.

(2) If an authority with which a public entity shall keep the financial resources is not determined in the law, the public entity is entitled to keep the financial resources only with a credit institution registered in the Republic of Latvia or a branch of a credit institution registered in another European Union Member State in the Republic of Latvia. This provision shall not apply to such State authorities which are located in foreign countries in accordance with the laws of Latvia.

(3) A capital company of a public entity, a capital company in which the share of the equity interest of a public entity separately or combined exceeds 50 per cent, and also a capital company in which the share of the equity interests of a capital company of one or several public entities separately or combined exceeds 50 per cent (hereinafter - the capital company) shall conform to the basis for commercial activities of a public entity laid down in the State Administration Structure Law in its actions with financial resources and property, and also the obligations and restrictions laid down in this law and other laws and regulations for the abovementioned capital companies. Within the meaning of this Law, the capital company is not a private individual.

[5 February 1997; 13 November 2008; 1 November 2012]

Section 3. Obligation to Handle Financial Resources and Property Efficiently

A public entity and also the capital company shall handle financial resources and property efficiently, that is:

1) actions must be such as to achieve the objective with the least use of financial resources and property;

2) property shall be alienated and transferred to the ownership or use of another person at the highest price possible;

3) the ownership or use of property shall be acquired for the most profitable price.

[6 March 2008; 2 September 2010; 1 November 2012; 28 September 2017]

Section 3.¹ Handling of Property under the Ownership of the State

The Cabinet shall determine the competent State authorities of direct and indirect administration and the procedures for the takeover, storage, accounting, disposal, transfer free of charge, and destruction of a property under the ownership of the State, and the transfer of the revenues from the disposal into the State and local government budgets.

[30 May 2024]

Section 4. Restrictions on the Granting of Credits, Issuing of Loans, Provision of Suretyship and Guarantees

(1) If a credit institution is a capital company, it shall grant credit in accordance with the procedures laid down in the Credit Institution Law and other laws and regulations.

(2) A public entity and the capital company is prohibited from issuing any loans and providing suretyships or guarantees, except for the cases provided for in Paragraphs three, four, and five of this Section and other laws.

(3) The provisions of Paragraph two of this Section do not apply to:

1) the cases where the capital company issues loans and provides suretyships and guarantees by evaluating beforehand their conformity with the provisions laid down in Paragraph seven of this Section and receiving a written permit from the holder of capital shares owned by a public entity or the capital company of a public entity;

2) [2 September 2010];

3) the suretyships which a local government provides for the debt liabilities undertaken by a student for the receipt of a study loan and a student loan stipulated in the Law on Higher Education Institutions from a credit institution.

(4) If the capital company referred to in the Paragraph two of this Section is privatised or if the capital shares of a public entity in the capital company are privatised or alienated, the abovementioned authorisation must be received from the authority which performs the alienation of the property of the public entity.

(5) The holder of the capital shares of a public entity in the capital company referred to in Paragraph two of this Section and the authority which performs privatisation or alienation shall establish a suretyship and guarantee register, and also keep one original of every suretyship or guarantee. Suretyships and guarantees shall not be valid unless they are registered in the relevant register.

(6) If the capital company referred to in Paragraph one of this Section is transferred for privatisation or alienation, and also in case if the capital shares of a public entity in such capital company are privatised or alienated, the holder of the capital shares of the public entity shall transfer the relevant register to the authority which performs the alienation of the State property.

(7) It is permitted to issue loans, provide suretyships and guarantees in accordance with the procedures laid down in this Section only when the lender or the provider of suretyships or guarantees has paid all State or local government taxes and wages to employees, and also the performance of the previous calendar year of the relevant capital company and expediency of granting a loan, suretyship, or guarantee and impact thereof on further activity of the capital company have been assessed.

[5 February 1997; 15 November 2001; 13 June 2002; 6 March 2008; 2 September 2010; 1 November 2012]

Section 5. Prohibition to Transfer a Property of a Public Entity for Use without Compensation

(1) It is prohibited to transfer a property of a public entity to a private individual or the capital company for use without compensation.

(2) The provisions of Paragraph one of this Section shall not apply to cases where:

1) [1 November 2012];

2) [1 November 2012];

2¹) an authority of a public entity transfers the State property for use to a public benefit organisation or a social enterprise;

2²) [1 November 2012];

3) [1 November 2012];

4) [1 November 2012];

4¹) a derived public entity transfers its property for use to a public benefit organisation or a social enterprise;

5) a public entity transfers its property to a private individual or the capital company for the fulfilment of the State administration tasks delegated thereto, also for the provision of public entity services;

6) other laws or Cabinet regulations allow the transfer of a property of a public entity for use without compensation.

(3) If a property of a public entity is transferred for use without compensation, a decision shall be taken thereon. The following information shall be indicated in the decision:

1) the property to be transferred for use without compensation, its size, book value, condition, and description;

2) necessity and expediency of the transfer;

3) the purpose and term of the use of the property to be transferred;

4) the cases when the transferred property shall be returned;

5) other necessary provisions, including the provisions to ensure maintenance and appropriate use of the relevant property.

(3¹) The legal subject to which a property is transferred for use without compensation shall ensure the maintenance of the relevant property and also cover the expenditures related thereto.

(4) If an immovable or movable property of a public entity is planned to be transferred for use without compensation for a period exceeding five years, the decision thereon shall be taken by the Cabinet or body of a derived public entity accordingly, unless it is laid down otherwise in a law or Cabinet regulations.

(5) The decision to transfer a property of a public entity to a public benefit organisation or a social enterprise for use without compensation shall be taken by the Cabinet or body of a derived public entity accordingly. A property of a public entity shall be transferred to a public benefit organisation or a social enterprise for use without compensation for a period while the relevant status is valid for them, however, not exceeding 10 years. A property of a public entity can be repeatedly transferred to a public benefit organisation or a social enterprise for use without compensation.

(5¹) If a public entity transfers property to a public benefit organisation or a social enterprise for use without compensation and the book value of the property according to the accounting data does not exceed EUR 1500or the period for transferring the property for use without compensation does not exceed one month, the decision to transfer such property to a public benefit organisation or a social enterprise for use without compensation shall be taken by such institution of the public entity which possesses the relevant property.

(6) On the basis of the decision to transfer a property of a public entity for use without compensation, a written contract shall be concluded. The contract shall also determine the right of the relevant authority of a public entity to control whether the property transferred for use without compensation has been used lawfully and efficiently.

[6 March 2008; 13 November 2008; 2 September 2010; 1 November 2012; 13 March 2014; 21 December 2017]

Section 5.¹ Provisions for the Transfer of a Property of the Capital Company for Use Without Compensation

(1) In addition to other cases when the transfer of a property of the capital company for use without compensation may be considered as expedient in accordance with the provisions of Section 3, Clause 1 of this Law, the property of the capital company may also be transferred to a derived public entity or an authority of a public entity, public benefit organisation, or social enterprise for use without compensation. Transfer of a property of the capital company to another capital company or another private individual for the performance of the delegated state administration tasks, also the provision of public entity services, may also be considered as expedient.

(2) A property of the capital company may be transferred to a public benefit organisation for use without compensation only by the decision of the executive board of the relevant capital company if a consent of the holder of the capital shares owned by a public entity or the capital company of a public entity has been received and the property to be transferred is planned to be used only for the promotion of culture, art, science, education, sports, environment, or health protection, and also social assistance.

(2¹) A property of the capital company may be transferred to a social enterprise for use without compensation only by the decision of the executive board of the relevant capital company if a consent of the holder of the capital shares owned by a public entity or the capital company of a public entity has been received and the property to be transferred is planned to be used only for the purpose specified in the articles of association of the social enterprise.

(3) The executive board of the capital company shall take the decision to transfer a property of the capital company for use without compensation in which at least the following information shall be indicated:

1) the property to be transferred, its size, book value, condition, and description;

2) necessity and expediency of the transfer;

3) the purpose and term of the use of the property to be transferred;

4) the cases when the transferred property shall be returned;

5) other necessary provisions, including the provisions for the maintenance and appropriate use of the relevant property.

(4) A written contract shall be concluded on the basis of the decision to transfer a property of the capital company for use without compensation. The contract concluded with a private individual or the capital company shall also stipulate the right of the capital company to control whether the property transferred for use without compensation has been used lawfully and efficiently.

(5) A legal subject to whom a property has been transferred for use without compensation shall ensure maintenance of the relevant property and also cover the expenditures related thereto.

[1 November 2012; 21 December 2017; 5 October 2023]

Section 5.² Provisions for the Use of Road Transport

(1) In addition to the provisions included in this Law and other legal acts regarding actions with a property of a public entity, the provisions of this Section for the use of road transport of a public entity shall also be complied with.

(2) The road transport owned, possessed or used by a public entity, including operational transport, shall be used only for the performance of the service, work, official duties (hereinafter - the work duties).

(3) Use of road transport for work needs shall be such use of road transport which is necessary for the fulfilment of the work duties of an official or employee, ensuring the performance of the functions of a public entity or an authority of a public entity.

(4) Use of road transport shall be considered as the use of road transport for work needs also in the following cases:

1) the work duties of the relevant official or employee are related to the necessity to provide him or her with a possibility to return to the fulfilment of the work duties at any time or it is necessary to ensure the fulfilment of the work duties as a matter of special urgency, also in order to prevent emergency situations and their consequences, a threat to public health or safety;

2) the specific character of the work duties of an official or employee provides for their fulfilment in such territory which cannot be reached by public transport or without the use of public transport due to objective reasons;

3) the safety of public officials is being protected;

4) an official or employee is taken from the work place to the place of residence or from the place of residence to the work place if, due to objective reasons, public transport services cannot be used or its use hampers efficient performance of the work duties.

(5) In order to ensure fulfilment of the provisions of this Section, a public entity or an authority of a public entity shall issue a legal act regarding the procedures for the use of road transport, also determining the range of such persons who are allowed to use the relevant road transport in accordance with the provisions of this Section.

[2 September 2010; 1 November 2012]

Section 6. Prohibition to Transfer a Property of a Public Entity for Use with the Intermediation of Private Individuals

A public entity or an authority of a public entity, and also the capital company are prohibited from transferring a property of the public entity or capital company for use to another public entity, authority of a public entity or capital company with the intermediation of private individuals. These provisions shall not apply to cases when a lessee has acquired the right to lease the property of the public entity at a public auction.

[1 November 2012]

Section 6.¹ Provisions for the Lease of a Property of a Public Entity

(1) Unless provided for otherwise by a law or Cabinet regulations, a lease contract of movable property shall be concluded for a period which does not exceed five years, and a lease contract of immovable property shall be concluded for a period which does not exceed 30 years.

(1¹) If the lease contract of immovable property referred to in Paragraph one of this Section is concluded for a period which exceeds six years, the lessor of the immovable property of a public entity shall unilaterally review the amount of the lease payment and, if necessary, change not less than once in six years in accordance with the procedures laid down in laws and regulations. If the lessee does not agree to the reviewed amount of the lease payment, he or she has the right to unilaterally withdraw from the lease contract in accordance with the procedures provided for in Cabinet regulations. The right of the lessee to unilaterally withdraw from the land lease contract shall not apply to cases when such land of a public entity has been leased on which a building (structure) as an independent property object is located and to cases when the land of a public entity has been leased for the extraction of mineral resources.

(2) A lessor of a property of a public entity shall maintain records of the objects to be leased and leased objects, and also ensure public accessibility of the information on them in conformity with the restrictions of access to information provided for in the laws and regulations.

(3) The procedures for leasing a property of a public entity, the methodology for the determination of lease payment and exceptions thereto, and also individual standard conditions to be included in a lease contract shall be stipulated by the Cabinet.

[17 September 2009; 1 November 2012; 28 September 2017 / Amendment to Paragraphs one and 1.¹ shall come into force on 1 January 2018. See Paragraph 10 of Transitional Provisions]

Section 6.² Management of an Immovable Property of a Public Entity

(1) Management of an immovable property of a public entity shall be the task of the possessor of such property which includes the obligation to ensure the use and maintenance of the immovable property (physical maintenance throughout the entire service thereof) in accordance with the requirements of laws and regulations and to promote its improvement.

(2) A possessor of an immovable property of a public entity shall ensure direct or mediated management of the property by assigning the performance of management activities to an institution subordinated thereto or the capital company whose type of principal activity is immovable property management. The Cabinet shall determine the procedures for assigning management activities and also individual management activities of State immovable property which may be assigned to other State institutions or bodies governed by private law.

(3) The Cabinet shall determine the principles and procedures for the management of State immovable property and also the procedures by which information on the management of State immovable property and immovable properties used by State institutions shall be compiled.

(3¹) The issues referred to in Paragraphs two and three of this Section in relation to a property of a derived public entity shall be governed by a body of the derived public entity.

(4) The provisions of Paragraph three of this Section shall not be applied to a State property which is transferred into possession of the port authority and also in other cases determined by the Cabinet.

[2 September 2010; 1 November 2012; 16 May 2019 / Amendment to Paragraph three regarding the delegation to the Cabinet to determine the procedures by which information on immovable properties used by State institutions shall be compiled shall come into force on 1 January 2020. See Paragraph 12 of Transitional Provisions]

Section 6.³ Lease of the Property Necessary for Ensuring the Activities of a Public Entity from a Private Individual or the Capital Company

(1) A public entity shall lease an immovable property which is necessary for ensuring the activities of the public entity from a private individual or the capital company in accordance with the provisions of this Law and other laws, and also ensure public accessibility of the information in conformity with the restrictions of the information accessibility provided for in the laws and regulations.

(2) The procedures by which a public entity shall lease an immovable property from a private individual or the capital company and publish information on the leased immovable properties, and also the immovable properties to be leased shall be determined by the Cabinet.

[1 November 2012]

Section 6.⁴ Lease of an Immovable Property of the Capital Company and Lease of an Immovable Property Necessary for Ensuring the Activities of the Capital Company from Other Persons

(1) If the capital company leases its immovable property or leases the immovable property necessary for ensuring its activity from another person, it has the obligation to draw up the procedures for the lease of an immovable property of the capital company and the procedures for the lease of immovable property agreed upon with the holder of capital shares, and also to ensure its public availability at the legal address of the capital company and on its website, if any.

(2) In order to ensure public accessibility of information on the immovable property to be leased and immovable property already leased, the capital company shall publish at least the following information on the website of valsts akciju sabiedrība "Valsts nekustamie īpašumi" [State joint-stock company State Real Estate] free of charge:

1) at least 10 working days before concluding the contract - address of the immovable property, its cadastre number, area, purpose of use and the expected term of validity of the contract;

2) within 10 working days after concluding the contract - address of the immovable property, its cadastre number, area, purpose of use, lessee, amount of the lease payment, and the term of validity of the contract.

(3) In order to ensure public accessibility of information on the leased immovable property and the immovable property to be leased, the capital company shall publish at least the following information on the website of valsts akciju sabiedrība "Valsts nekustamie īpašumi" (State joint-stock company State Real Estate) free of charge:

1) at least 20 working days before concluding the contract - the preferable location of the immovable property, its area, planned amount of the lease payment, expected term of validity of the contract, purpose of use;

2) within 10 working days after concluding the contract - address of the immovable property, its cadastre number, area, purpose of use, lessor, amount of the lease payment, and the term of validity of the contract.

(4) Paragraph two of this Section need not be applied if:

1) the capital company leases its immovable property to a public entity;

2) the capital company leases its immovable property to a public service provider in which the share of the equity interests of a public entity separately or combined exceed 50 per cent;

3)The lessee is the capital company which is in the composition of the same group of companies as the lessor which is the capital company;

4) the land is leased for the maintenance of a building (structure) located on the land and owned by another person;

5) the the object of the lease is transferred to the lessee for single use for not more than 10 days.

(5) Paragraph three of this Section need not be applied if:

1) the capital company leases immovable property from a public entity;

2) the lessor is the capital company which is in the composition of the same group of companies as the lessee - the capital company;

3) the land is leased for the maintenance of a building (structure) located on the land and owned by the capital company;

4) the object of the lease is transferred to the capital company for single use for not more than 10 days.

(6) Application of the exceptions provided for in Paragraphs four and five of this Section shall be determined by the procedures for the lease of the immovable properties of the capital company and the lease of immovable property.

[1 November 2012]

Section 6.⁵ Granting of Right of Superficies to a Vacant Plot of Land of a Public Entity

(1) The right of superficies to a vacant plot of land of a public entity may be granted for compensation for a period which is not less than the minimum period of the right of superficies specified in the Civil Law and does not exceed the period which has been specified for the lease of land of a public entity in Section 6.¹, Paragraph one of this Law or in other external legal acts.

(2) The decision to grant the right of superficies to a vacant plot of land of a public entity shall be taken by such authority of the public entity under the possession of which is the relevant vacant plot of land.

(3) The procedures for granting the right of superficies to a vacant plot of land of a public entity, the methodology for the determination of the fee for granting the right of superficies, exceptions for granting the right of superficies, and also individual standard conditions to be included in a contract for granting the right of superficies shall be stipulated by the Cabinet.

[28 September 2017 / Section shall come into force on 1 January 2018. See Paragraph 10 of Transitional Provisions]

Section 7. Prohibition to Alienate a Property of a Public Entity for a Reduced Price

(1) A private individual or the capital company is prohibited from alienating a property of a public entity for an evidently reduced price.

(2) The provisions of Paragraph one of this Section shall not apply to cases where:

1) a property of a public entity is alienated in a public auction;

2) [1 November 2012];

3) [1 November 2012];

4) other laws or Cabinet regulations allow to alienate a property of a public entity for an evidently reduced price.

[6 March 2008; 2 September 2010; 1 November 2012]

Section 8. Prohibition to Acquire Property in Ownership or for Use or Use Services or Work for an Increased Price

A public entity or the capital company is prohibited from acquiring a property in ownership or for use or ordering services or work for an evidently increased price.

[2 September 2010; 1 November 2012]

Section 9. Restrictions to Pledge a Property

(1) It is prohibited to pledge a property in the possession of State institutions.

(2) Capital shares of the capital company owned by a public entity or the capital company of a public entity may be pledged if a consent of the holder of the capital shares owned by a public entity or the capital company of a public entity and the permission of the Minister for Finance have been received beforehand, except when a prohibition to pledge capital shares is stipulated in the law or articles of association.

(3) A derived public entity is permitted to pledge only such property which is not necessary for the performance of its regular functions or the pledging of which is not prohibited by the law or Cabinet regulations.

(3¹) If the State has transferred a property to a derived public entity without compensation, it may be pledged only with the consent of the Cabinet by stipulating a condition for actions with such property. If a derived public entity has transferred a property to the State or another derived public entity without compensation, it may be pledged by stipulating a condition for actions with such property only with the consent of the body of the derived public entity which stipulated the condition.

(4) A property of a derived public entity may be pledged only by the decision of the relevant body of the derived public entity.

[6 March 2008; 13 November 2008; 17 September 2009; 2 September 2010; 1 November 2012]

Section 9.¹ Restrictions for the Conclusion of Contracts in Matters the Addressing of which is the Obligation of Officials or Employees of an Institution

(1) A public entity is prohibited from concluding contracts for services in matters the addressing of which is the obligation of an official or employee of the relevant authority.

(2) The provisions of Paragraph one of this Section need not be applied if:

1) an in-depth expert-examination of sectoral issues (development planning, construction, information technologies, medicine, etc.) is needed for the fulfilment of the tasks stipulated by the authority because the expert-examination cannot be ensured by the scope of competence of officials or employees of the authority, and the service provider is able to perform it more efficiently, taking into account its experience, reputation, qualification, and other justified criteria;

2) a scientific institution concludes a contract for the performance of the scientific activity;

3) it is provided for in law, Cabinet regulations or stipulated by a separate decision of the Cabinet.

(3) A public entity or an authority of a public entity shall publish a relevant notification (parties, subject-matter of the contract, price, deadline) on its website within five working days from the conclusion of the contract referred to in Paragraph two of this Section, except when the notification must be published in accordance with the procedures laid down in another law or Cabinet regulations.

[17 September 2009; 1 November 2012]

Section 9.² Restrictions on Commissioning Research

When commissioning a research, a public entity shall comply with the restrictions and prohibitions laid down in this Law, the Public Procurement Law, and other laws and regulations. The Cabinet shall determine the classification of public entity research, the management provisions for commissioning and development, the minimum requirements for the documentation of the commissioning and drawing up of a research, and also the requirements for the provision of information to the public.

[1 November 2012]

Section 10. Restrictions on Giving Financial Resources and Property as a Gift (Donating)

(1) A public entity is prohibited from giving financial resources and property as a gift (donate), except for the cases specially provided for in the laws and Cabinet regulations.

(2) The capital company may give financial resources or property as a gift (donate) in accordance with the procedures laid down in Sections 11 and 12 of this Law if the following conditions exist at the same time:

1) the gift (donation) is provided for the promotion of culture, art, science, education, sport, environment, or health protection, and also for the promotion of social assistance;

2) a possibility exists to control the use of the gift (donation);

3) the relevant capital company has paid all taxes to the State or local government and wages to the staff at the moment of giving the gift (donation);

4) the relevant capital company has operated with profit in the previous reporting year;

5) the gift (donation) will not affect the fulfilment of the obligations undertaken by the relevant capital company in the corresponding financial year, including the repayment of State loans.

(3) Within the meaning of this Law, a gift (donation) is the transfer of the financial resources or property of a public entity or the capital company into the ownership of a private individual or another capital company without compensation, and also the transfer of the financial resources or property of the capital company into the ownership of a public entity without compensation.

[5 February 1997; 6 March 2008; 2 September 2010; 1 November 2012; 5 October 2023]

Section 11. Provisions for Giving Gifts (Donations)

(1) The capital company is allowed to allocate no more than 1.5 per cent of the profit of the previous reporting year for giving gifts (donating).

(2) [5 October 2023]

(3) A meeting of shareholders (stockholders) shall determine the cases when the executive board of the capital company has the obligation to receive an authorisation of the supervisory board or the meeting of shareholders (stockholders) prior to giving a gift (donation).

(4) The Cabinet may determine the State capital companies or capital companies in which the share of the State in the equity capital exceeds 50 per cent and capital companies in which the share of one or several State capital companies in the equity capital separately or combined exceeds 50 per cent to which gifts (donations) may be given only with the authorisation of the Cabinet.

(5) A body of a derived public entity may determine such capital companies of the derived public entity or capital companies in which the share of the equity interests of the derived public entity exceed 50 per cent and capital companies in which the share of the equity interests of one or several capital companies of the derived public entity separately or combined exceed 50 per cent to which gifts (donations) may be given only with the authorisation of the relevant body of the derived public entity.

(6) In order to receive the permit referred to in Paragraphs three, four, and five of this Section, the executive board of the capital company shall justify the conformity of the gift (donation) with the conditions referred to in Section 10 and this Section of this Law and its efficiency, and also the conformity with the medium-term operational strategy and budget of the capital company.

[2 September 2010; 1 November 2012; 13 March 2014; 5 October 2023]

Section 12. Gift (Donation) Contract

(1) If the amount of an individual gift (donation) exceeds EUR 1500, the gift (donation) may be given only by entering into a written contract with the recipient of the gift (donation). The purpose of the gift (donation), and also the procedures by which the giver of the gift (donation) shall check whether the received financial resources and property have been used lawfully and efficiently shall be provided for in the contract.

(1¹) If a gift (donation) is not used for the purpose provided for in the contract or other violations of the provisions of the contract are made, the person giving the gift (donation) is entitled to unilaterally withdraw from the gift (donation) contract and reclaim from the recipient of the gift (donation) the financial resources and property given as a gift (donation) or their value if the property cannot be recovered.

(2) The gift (donation) contract shall be entered into on the basis of a standard contract approved by the Cabinet.

(3) [6 March 2008]

(4) A true copy of the gift (donation) contract entered into by the capital company of a local government shall be sent to the audit committee of the relevant local government within 10 days after entering into the contract.

[6 March 2008; 2 September 2010; 1 November 2012; 13 March 2014]

Section 13. Control of the Use of Financial Resources and Property

(1) The State Audit Office has the right to examine whether the persons referred to in Section 10, Paragraph three of this Law have lawfully and efficiently used the financial resources and property given as a gift (donated) or transferred thereto by the capital company for use without compensation.

(2) The audit committee of a local government council has the right to examine whether a private individual or the capital company has lawfully and efficiently used the financial resources and property given as a gift (donated) or transferred for use without compensation by the capital company of the relevant local government or the capital company in which the share of the equity capital owned by the local government exceeds 50 per cent, or a capital company in which the share of the equity capital owned by the capital company of the relevant local government exceeds 50 per cent.

(3) A public entity and also the capital company which has given its financial resources and property as a gift (donation) to a private individual or another capital company have the right to check whether the granted financial resources and property are used lawfully and efficiently in accordance with the procedures laid down in Section 12, Paragraph one of this Law.

(4) A public entity and also the capital company which has transferred its property to a private individual or another capital company for use without compensation have the right to check whether the granted financial resources and property are used lawfully and efficiently in accordance with the procedures laid down in Section 5, Paragraph six and Section 5.¹, Paragraph four of this Law.

[1 November 2012]

Section 14. Public Access to the Given Gifts (Donations)

The gift (donation) contracts concluded by a public entity or the capital company and also information on the gifts (donations) given in accordance with the procedures laid down in Section 10 of this Law shall be considered generally accessible information which shall be made public on the website of the person giving the gift (donation) within two months after giving the gift (donation) and shall be available to everyone in accordance with the Freedom of Information Law.

[6 March 2008; 1 November 2012; 5 October 2023]

Section 15. Liability for the Fulfilment of the Provisions of this Law

(1) Persons who have violated the provisions of this Law and other laws and regulations regarding the handling of financial resources and property of a public entity or capital company shall be held liable in accordance with the law. If the abovementioned provisions are violated by a collegial institution, the provisions of the relevant law on the liability of the members of the collegial institution shall be taken into account when holding the members of such institution liable.

(2) If violations of this Law have been established by the State Audit Office during an audit, the unit audited shall inform the State Audit Office of the results of the evaluation of the liability of the persons referred to in Paragraph one of this Section within six months after the decision of the State Audit Office to approve the audit report has entered into effect. If the audit report refers to several units audited, the unit audited shall perform an evaluation only for the parts relating to this unit audited. If, within three weeks after the decision to approve the audit report has entered into effect, a higher institution has not informed the State Audit Office and the unit audited that it itself will exercise the right to perform an evaluation of the liability of the officials of the unit audited, it shall be performed by the unit audited and the State Audit Office and the higher institution shall be informed of the results of the evaluation.

(3) If an official or employee has caused losses to a public entity or the capital company by his or her actions and does not reimburse them voluntarily, the losses shall be recovered if not more than four years have passed from committing the violation. Termination of service, employment, or office relationships shall not be grounds for not recovering the losses.

(4) If losses have been caused due to gross negligence, they shall be reimbursed in the amount of not more than the monthly wage of one year of the relevant official or employee, taking into account the average monthly wage calculated in the year of committing the violation after deduction of taxes.

(5) The following circumstances shall not be considered gross negligence:

1) the reason for unlawfulness of action is incorrect application or interpretation of the legal norms if the opinion which formed the grounds for action of the official is considered legally adequate. The fact that a higher institution or court has later expressed another opinion is not a confirmation that the opinion of the official had been legally inadequate;

2) action upon fulfilling instructions binding on the official or employee (internal legal act, order of a higher institution or official);

3) action of the official or employee within the scope of the relevant obligations is usually related to a high risk of causing losses.

(6) An official or employee shall reimburse losses in the amount which could have been reasonably foreseen at the time of unlawful action as the eventual consequences of such action unless the action has occurred due to a malicious intention.

(7) Losses caused as a result of a criminal offence shall be reimbursed (including the limitation period and the amount of losses shall be determined) in accordance with the Criminal Law and the Criminal Procedure Law accordingly.

[6 March 2008; 13 March 2014; 16 May 2019 / See Paragraph 13 of Transitional Provisions]

Transitional Provisions

[5 February 1997]

1. Authorities which supervise State and local government undertakings and incorporated companies, and also the holders of the State or local government capital shares in companies in which the share of equity interests of the State or local government separately or combined exceeds 50 per cent, and the authority performing privatisation shall establish a register of pledges, suretyships and guarantees until 1 May 1996, including therein the pledges, suretyships and guarantees entered into or issued up to the day when the Cabinet Regulation No. 136 of 10 April 1996, Amendments to the Law on Prevention of Squandering of Financial Resources and Property of State and Local Governments, comes into force.

2. With the coming into force of this Law, the Cabinet Regulations No. 86 and No. 136, Amendments to the Law On Prevention of Squandering of Financial Resources and Property of State and Local Governments, issued in accordance with Article 81 of the Constitution (Latvijas Republikas Saeimas un Ministru Kabineta Ziņotājs, 1996, No. 10, 11), are repealed.

3. The functions referred to in Section 4 of this Law towards State undertakings and companies shall be performed by the non-profit organisation valsts akciju sabiedrība "Privatizācijas aģentūra" [State joint-stock company Privatisation Agency] up to the moment the Cabinet has issued an order regarding the authority performing the alienation of State property and these functions are transferred to the relevant authority.

[15 November 2001]

4. Section 6.¹ of this Law shall come into force on 1 May 2010. The Cabinet shall, by 30 April 2010, issue the regulations referred to in Section 6.¹, Paragraph three of this Law.

[17 September 2009]

5. The provisions of the Law which were in force during conclusion of the relevant lease contract shall be applied to lease contracts which were concluded until the day of coming into force of Section 6.¹ of this Law and do not conform to the requirements of Paragraph one of the abovementioned Section. The lessor shall consider the possibilities of terminating a contract which does not conform to the requirements of Section 6.¹, Paragraph one of this Law, and the expediency of such action.

[17 September 2009]

6. The provisions of the law which were in force during conclusion of the relevant contract shall be applied to the contracts which were concluded before the day of coming into force of Section 9.¹ of this Law and do not conform to the requirements of Paragraphs one and two of the aforementioned Section. A public entity shall consider the possibilities of terminating a contract which does not conform to the requirements of Section 9.¹, Paragraph one of this Law, and the efficiency of such action.

[17 September 2009; 1 November 2012]

7. The Cabinet shall issue the regulations referred to in Section 6.² of this Law no later than until 1 January 2011.

[2 September 2010]

8. Until conclusion of the purchase contract for the relevant immovable property to be privatised by the State or local government or completion of the privatisation process, Section 6.¹, Paragraph one of this Law shall not be applied if the lease contract for the property to be privatised by the State or local government has been concluded before the day of coming into force of the relevant Paragraph and the term of validity thereof expires during the privatisation process of the relevant immovable property.

[1 November 2012]

9. The Cabinet shall approve the new sample of the standard gift (donation) contract provided for in Section 12, Paragraph two of this Law no later than by 1 March 2013. Until the day of coming into force of the relevant Cabinet regulations, a public entity or the capital company shall also determine the procedures in the contract for a gift (donation) by which the person giving the gift (donation) shall check whether the received financial resources and property have been used lawfully and efficiently.

[1 November 2012]

10. Amendments regarding the replacement of the words and number "a land lease contract shall be concluded for a period which does not exceed 30 years, and a lease contract of another immovable property shall be concluded for a period which does not exceed 12 years" in Section 6.¹, Paragraph one of this Law, the supplementation of Section 6.¹ with Paragraph 1.¹, and the supplementation of this Law with Section 6.⁵ shall come into force on 1 January 2018. Until the day of coming into force of such amendments, the Cabinet shall issue the regulations referred to in Section 6.¹, Paragraph 1.¹ and Section 6.⁵, Paragraph three of this Law.

[28 September 2017]

11. If the lease contract for an immovable property of a public entity has been concluded before 1 January 2018 and the lease fee has not been reviewed within the last six years from the day of concluding the contract, then Section 6.¹, Paragraph 1.¹ of this Law may be, upon evaluating expediency considerations, applied to the review of the lease fee in the following cases:

1) the contract provides for the lessor the right to unilaterally review the amount of the lease fee if the legal acts provide for another amount of the lease fee or procedures for the calculation of the lease fee;

2) the contracting parties agree thereupon.

[28 September 2017]

12. Amendments to Section 6.², Paragraph three of this Law regarding the delegation to the Cabinet to determine the procedures for compiling information on the immovable properties used by State institutions shall come into force on 1 January 2020.

[16 May 2019]

13. The limitation period referred to in Section 15, Paragraph three of this Law shall not be applicable to such losses which have been caused before the day of coming into force of the relevant Paragraph.

[16 May 2019]

14. A property which has been recognised as being under the ownership of the State until 31 December 2024 shall be handled by the State Revenue Service.

[30 May 2024]

This Law has been adopted by the Saeima on 19 July 1995.

Acting for the President,
the Chairperson of the Saeima A. Gorbunovs

Rīga, 2 August 1995

¹ The Parliament of the Republic of Latvia

Translation © 2025 Valsts valodas centrs (State Language Centre)